Tax Tips Newsletter - June 2009

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Welcome to Our Tax Tips Newsletter:

Continuing our effort to provide you with valuable, practical tax information, we will periodically update this page with useful income tax tips and income tax advice from the best sources -- information on issues that you commonly deal with. Be sure to check our newsletter from time to time to stay on top on of the latest and most effective tax strategies.

CompleteTax will provide income tax tips that will help you save money when it's time to file your tax returns. It's a good idea to use a well planned strategy so that you aren't surprised in April. Using CompleteTax Income Tax Preparation Software and keeping good records could mean the difference between paying a large chunk of money in April and receiving a big refund check. Use our income tax tips as part of your ongoing preparation.

With summer fast-approaching, and vacation season about to begin, long-distance highway travel to your favorite family getaway may be on your mind. And with it, you may be pondering the possibility of a new family car in which to cover the long miles.

If you are considering getting a new car, for that or any other reason, then you should be aware that the environment for car buying has just gotten better.

The Internal Revenue Service announced recently that taxpayers who buy new passenger vehicles during the remainder of this year may be entitled to deduct state and local sales and excise taxes paid on their purchases when they prepare their 2009 income tax returns next year.

"For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year," said IRS Commissioner Doug Shulman. "This deduction enables taxpayers to buy now and get cash back later on their tax returns."

The deduction is limited to the actual amount of the state and local sales and excise taxes paid on up to $49,500 of the purchase price of any qualified new car, light truck, motor home or motorcycle. To be a qualified purchase, the vehicle must be new, its original use must commence with you, and the purchase must be transacted after Feb. 16, 2009, and before Jan. 1, 2010.

As an example of how to calculate your deduction, if you buy a new car for $30,000 and pay 8 percent sales tax on the purchase, you will be able to take a $2,400 deduction on your 2009 income tax return.

The tax deduction for sales tax on the purchase of a qualified new vehicle is available regardless of whether a taxpayer itemizes deductions on the return. But be clear on this, the deduction can only be taken on the 2009 tax return--not on the 2008 tax return filed during 2009.

Be aware, too, that the amount of the allowable deduction is phased out for higher-income taxpayers.

To review more of the specifics, see our full story on this one-time opportunity to save tax money on your next car purchase.

Income Tax Tips from the 2012 Tax Guide

The "Kiddie Tax" on Investment Income
There are special rules relating to the tax treatment of the investment income of minor children. These "kiddie tax" rules result in higher taxes based on the highest marginal rate of the parents.   For clarification of these rules and the options for reporting the taxable investment income, please review Investment Income of Your Minor Child.

Claiming Casualty and Theft Losses
With so many weather-related disasters occurring almost routinely now, it is very possible that you have suffered a casualty loss from fire or flood or other natural cause. If so, or if you have been the victim of a theft or an accident that resulted in loss or destruction of your property, you may be able to deduct some of your loss.   For an overview of the issues related to claiming a deduction for casualty and theft losses, please read Casualty and Theft Losses.

Purchasing vs. Leasing Business Assets
You may plan to acquire new business assets during 2009. While you may want to purchase the assets and take advantage of special expensing and accelerated depreciation to maximize business deductions, you may prefer the simplicity of leasing with its more stable deductions over time.   For some help in determining which option is best for you, take a look at Purchasing vs. Leasing.

Business Income and Self-Employment Tax
If you are a new business owner, don't be surprised at the end of the year by the duty to pay your contributions to Social Security and Medicare. Once you have calculated your net business income for the year, your next task is to calculate your self-employment tax obligations.   For a quick refresher course on SECA taxes, please review Self-Employment Tax.

Tax News

IRS Issues "Dirty Dozen" List of Tax Scams
The Internal Revenue Service on April 13, 2009, issued its 2009 "dirty dozen" list of tax scams, including schemes to hide income offshore, report exaggerated values for in-kind charitable contributions, and file false claims for refunds. It also warned against falling for phishing schemes attempting to steal your personal information.    For more on these important issues, please read IRS Issues "Dirty Dozen" List of Tax Scams.

Phase-Out of Tax Credit for Ford Hybrids Begins
The IRS announced the phase-out of the tax credit for hybrid automobiles and light trucks built by Ford Motor Company, beginning with purchases made after March 31, 2009. If you had purchased a new 2010 Ford Fusion Hybrid before April 1, the IRS would have paid you $3,400 for being such an energy-efficient big spender. Today, Uncle Sam will still pay you to buy the same Ford Fusion, but now you'll only get half the payment.    To find out why, read Phase-Out of Tax Credit for Ford Hybrids Begins.

April 15th--A Perfect Day for a Presidential Tax Policy Message
What better day to tout presidential tax policies than on tax day--April 15th. President Obama did just that, declaring the policies that guide his thinking about taxes. "We start from the simple premise that we should reduce the tax burden on working people, while helping Americans go to college, own a home, raise a family, start a business and save for retirement," he said.    For the rest of the story, read April 15th--A Perfect Day for a Presidential Tax Policy Message.

Congress Approves FY 2010 Concurrent Budget Resolution
On April 29, 2009, the House of Representatives voted 233 to 193 to approve the fiscal year 2010 budget resolution (Senate Concurrent Resolution 13). The Senate approved the measure later in the day by a 53-to-43 vote. The $3.5 trillion budget agreement is said to provide $764 billion in tax cuts over a five-year period (including substantial middle-class tax relief), and also is said to support the President's policy objectives of investing in energy, education and health care. It was approved largely along party lines.    For more on this story, please read Congress Approves FY 2010 Concurrent Budget Resolution.