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Missed the rebate from your 2007 return? You can still get it for 2008.

Those of you who missed out on the Recovery Rebate based on your 2007 return will still have a chance to claim it for 2008. To qualify for the rebate, you need either:

1. Tax liability (you don't get all of your withholding back) or
2. At least $3,000 in earned income, or otherwise qualifying income (generally social security, tier 1 railroad retirement benefits, certain veteran's benefits, or nontaxable combat pay)

Your rebate may be reduced based on your income or your tax liability.

If you qualify for a larger rebate in 2008 than you received in 2007, you can claim the difference. If you qualify for a lower rebate in 2008 than you received in 2007, you don't have to repay the difference.

Tax Planning Opportunities in a Down Market

You may have heard that losses on sales of items like stocks and bonds can reduce your tax bill. Here are some ways you might be able to make lemonade out of our recent bumper crop of economic lemons:

Sell your losers: Generally, individual taxpayers can use up to $3,000 of net capital losses each year to reduce other taxable income. If your net capital losses exceed $3,000, you can carry the remaining losses forward to the next year. Warning — if you sell an equity at a loss, and then purchase an equivalent equity within 30 days (before or after) or the sale, the IRS considers this a “wash sale” and the loss is disallowed for most taxpayers. Contact your investment advisor for strategies you can use to keep your portfolio balanced.

• Retirement planning: If your IRA has been slammed by the down market, this may be the year to convert it to a Roth. When a traditional IRA is converted to a Roth, you pay tax on the value of the account converted — a lower value means less taxable income. Please note that a taxpayer cannot be married filing separately or have a “modified adjusted gross income” (generally your total reportable income) exceeding $100,000 in the year of the conversion.
• The future of the estate tax is extremely uncertain.

  Current legislation calls for the estate tax exemption to increase from $2 million in 2008 to $3.5 million in 2009, with a complete elimination of the estate tax in 2010. In 2011, the estate tax returns to 2001 limits.

  Congress still has time to change those figures, and odds are good that they will.

  Estate planning: Using planned gifting, taxpayers may reduce the eventual amount of their taxable estate by making gifts to potential heirs ahead of time. Generally, the gifts are up to the amount that triggers gift tax ($12,000 in 2008, increases to $13,000 in 2009). This year, the $13,000 yearly limit could include a lot more stock than it used to.
• Sell your winners: If you have highly appreciated equities that you've been afraid to sell because of the capital gains income, this may be the least expensive year to cash out. You may also want to use this strategy for equities that you inherited when their value was much lower, or that were given to you by someone who purchased them at a much lower price.

Depreciation's Great in 2008

2008 will see the amount of assets you can expense in the year of purchase nearly double. Also, for qualified assets purchased and placed in service in 2008, taxpayers can claim 50% bonus depreciation, as well as the usual depreciation on the remaining 50%. California, of course, doesn't conform.

Emergency Economic Stabilization Act of 2008

Known for and as the “bailout,” this act, which contained the Energy Improvement and Extension Act of 2008 and the Tax Extenders and Alternative Minimum Tax relief Act of 2008, also has significant tax implications as well, including the AMT Patch discussed below. Here are some highlights:

Tax Extenders and Alternative Minimum Tax Relief Act of 2008

• Increased FDIC insurance limit from $100,000 to $250,000 through 2009 — see the article on how the FDIC limits are calculated.
• Extended through 2009 some popular deductions that were set to expire, including:
• • Sales tax deduction
  • Tuition deduction
  • Standard deduction for property taxes
  • Enhanced charitable contribution deductions for qualified computer and book inventories to schools and the enhanced deduction for food inventories.

Midwest Disaster tax relief includes

• Removing income limits on deductible charitable contributions for the Midwest disaster area, and an increase in the mileage rate for deductible volunteer miles
• Doubling the maximum Hope and Lifetime learning credits for students at a qualified institution and allows additional types of expenses to be used towards those credits
• Allowing a $500 exemption deduction for taxpayers housing Midwest disaster victims.
• Removing thresholds for deductible casualty losses for any federally declared disaster area in 2008 and 2009. This act also increases the tax benefit of casualty loses for taxpayers who don't itemize deductions.

The Energy Improvement and Extension Act of 2008

• Authorizes a comprehensive review of the tax code to determine which provisions have the most effect on greenhouse gas emissions.
• Creates a $2,500 credit (or more) for plug-in electric vehicles (will phase out based on the number of cars sold)
• Extends renewable energy credits and per gallon biodiesel production tax credit through 2009
• Extends credits for solar energy, fuel cell, and microturbine property through 2016 and eliminates the $2,000 cap on solar electricity generation credit.

Sources:
http://www.bricker.com/publications/articles/1368.pdf
http://www.bnasoftware.com/News_Articles/Articles/Emergency_Economic_Stabilization_Act_of_2008_Effect_on_Business_Returns.asp
http://www.blankrome.com/index.cfm?contentID=37&itemID=1697

Charging Deductible Business Expenses:

• Expenses are deductible as of the date they are charged to your credit card — not when the credit card is paid.
• If you use a credit card exclusively for your business expenses, the interest on the credit card may be deductible as well.

Everything You Wanted to Know about FDIC Insurance

With the implementation of the recent “Bailout” bill, FDIC insurance coverage increased from $100,000 the $250,000 per depositor per bank. But, if you have multiple accounts, or joint accounts, how much of each account is used to determine your limit for FDIC coverage?

• Accounts held at different branches of the same bank are combined in determining the total amount of FDIC coverage; accounts at different banks would be treated separately. If two separate banks merge, you generally have six months of FDIC coverage as if the accounts were still at separate banks (possibly longer if the money is in a CD that doesn't mature within six months.
• Amounts held by joint account holders are included towards their FDIC limits based on their “share” of the account.

For example, in addition to personal and joint accounts at the You Trust National Bank, Mary Moneybags also has business account for her shipping company, “Proud Mary's”:

But wait, there's more. Because she listened to her tax preparer several years ago, Mary also has a balance of $250,000 in an IRA account at You Trust National Bank. The FDIC insurance limit of $250,000 for qualified retirement plans (IRAs, SEP and SIMPLE IRAs, as well as self-directed Koegh and 401(k) plans) is calculated separately from her other deposits.

FDIC also insures the beneficiaries (not the account holder's) interest in certain revocable trusts. So if Mary has a named two beneficiaries on her bank account (this is known as a Totten Trust or payable-on-death (POD) account), the FDIC will insure both qualifying beneficiaries interests up to their coverage limits ($250,000 each or $500,000 total). To qualify for this treatment, beneficiaries must be identified by name in the bank's account records; only beneficiaries with certain relationships to the owner are qualified (generally spouses, siblings, parents, and descendents)

Sources:
http://www.fdic.gov/deposit/Deposits/insured/basics.html
http://www.palmbeachdailynews.com/biz/content/business/2008/09/06/biz_liberman_0907.html
http://moneysmartlife.com/fdic-insurance-coverage-and-limits-for-your-bank-accounts

From “7 Ways to Control Chaos in Your Small Business”

by Susan Ward, About.Com

“I know it's here somewhere.” l'll have to get back to you about that.” Where's that ____________?”

Sound familiar? If so, chaos has crept into your small business. What to do? Control chaos by applying these basic office management principles:

1. Set up routines for handling paperwork and office systems:. Try to handle each piece of paper that comes into your office only once — act upon it and file it.
2. Set up clearly delineated responsibilities. [Put] one person in charge of ordering all equipment. Have one person responsible for the security of your computer system and keeping track of things such as accounts, passwords and software.
3. Keep records — and keep your business records current: When you get a new customer or client, for instance, it only takes a moment to enter him into your contacts database. Then it will only take another moment or two to update the record after you've spoken to him on the phone.
4. Take a walk through your office and have a seat: When you walk through the office, do you have to detour around obstacles or run the risk of tripping over something? When you sit down at a desk, could you actually work comfortably there? Are things logically arranged so that the things that you would use most at the desk are closest to hand?
5. Schedule the scut work: If you are a small business owner who's in the position of not being able to assign whatever you view as scut work to someone else, force yourself to get to it regularly by scheduling time each week for it.
6. Delegate and outsource: Delegating and outsourcing can not only improve your small business's office management, but free you to focus on your talents as well, thereby improving your bottom line.
7. Make business planning a priority: Many small business owners spend their days acting and reacting — and then wonder why they seem to be spinning their wheels. Spend time every week on business planning. If you have staff, involve them in business planning, either formally or informally.

Source: http://sbinfocanada.about.com/od/smallofficehomeoffice/a/officemgt1.htm

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