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A collection of practical tax and financial tips, articles, and resources targeted to help you watch your wallet and keep what you earn.
We'll get to the articles, but first, we wanted to let you know that if you've got your tax data ready (or almost ready), we're ready for you. Schedule or bump-up your tax appointment and avoid the rush!
In this issue, we have a quick summary of the recent stimulus package, as well as a few other features:
Economic Stimulus Package Offers Business Tax Cuts
— Tax Strategy
 You've probably read that President Bush and Congress have agreed on a $150 billion "stimulus" package to prop up the economy and help prevent a recession. News reports have focused on "tax rebates" for individuals. But you may not realize that the package includes generous incentives for buying business equipment as well.
Need More Cash In Your Pocket?
The bill reduces the 10% federal tax bracket to zero for 2008. It also delivers the cash now in the form of rebates ranging up to $600 for unmarried individuals, $1,200 for married couples, and $300 per child up to a maximum of $600. This break phases out at income levels above $75,000 ($150,000 for joint filers) at 5% per $1000. For example, that means no check for a married couple making $174,000 with no kids. That same couple with 2 kids will get a $600 check.
Checks for are also coming those with $3,000 in earned (key word) income last year. Seniors, disabled veterans and veterans' widows who can show $3,000 in Social Security or veterans' disability benefits last year would be eligible for $300 payments.
These checks will not be an advance on your 2008 refund. They do not need to be paid back by you, at least directly. There has been no corresponding tax increase, nor spending cut. They're added straight to the deficit - they're checks from the future! They are being targeted to start arriving in May.
Accelerated Deductions For Business
The bill also gives us a 50% bonus depreciation deduction for new equipment we buy for our businesses in 2008. It raises the Section 179 first-year expensing limit from $125,000 to $250,000. And it doubles the phaseout for Section 179 deductions from $400,000 to $800,000. This is great news if you're planning to buy vehicles or equipment for your business.
Normally, businesses have to write off (depreciate) assets over their useful life, no matter when they pay for them. This change in the depreciation rules allows businesses to deduct their new equipment sooner. It's not a tax reduction, as in lowering the total amount of tax the business pays over time, but rather it's a deduction acceleration, allowing businesses to take larger current deductions for current purchases of equipment. It lowers the current-year taxes of businesses that take advantage of the incentive, with the idea being to stimulate the economy (jobs, tax revenue, etc.) through the purchases.
This is a special, limited-time break, so before you buy new equipment, be sure to call us at 760-747-4605.
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