Tuesday, July 21, 2009

New Car Tax Deduction/Rebate: Is is worth it?

Currently there are two laws concerning new vehicle purchases that are not for Hybrids. The first is a tax deduction (meaning it will lower your taxable income and not refundable), this deduction is for the sales tax paid on new vehicles (under $49,500) bought after 2/17/09 and before 1/1/10. I have seen a news report on TV were the salesman stated that you will get back the sales tax on your tax return. This is false. You can deduct the sales tax off your taxable income so you will only save your tax rate. (example: you pay $1000 in taxes and you have a 10% tax rate you will save $100 not the full $1000). RV's are included, but only the sales tax on the first $49,500 is duductible. Iowa technically doesn't have a sales tax on autos, but the tax you do pay is deductible none the less.

The second is a separate rebate, and is not on your tax return. The car allowance rebate system is the name of the program and has many limitation to get a maximum of $4,500. They include: Vehicle less than 25 years old, get less than 18 mpg, be drivable and have owned it for 1 year (no going to the junk yard for the trade in) & proof of insurance for that one year!

Both programs are getting some coverage but neither of them is a great deal unless you were already in the market for a new car. You see, cars lose their value very quickly and if you simply wait and buy an ’08 now, or a ’09 after the 2010 models are out, you most likely will save more in the discount then these credits will get you, without jumping through the hoops. It might be bad for the auto makers but my advice is for the consumers and clients and their best interests.

Link to sales tax deduction for more details
Link to “Cash for Clunkers” for all the facts.

Remember to bring in your purchase agreement to get the sales tax deduction on your 2009 tax return.

Monday, July 13, 2009

E-filers enjoy benefits:

Faster refunds. With IRS e-file, taxpayers get refunds in half the time it takes to file a paper tax return and receive a refund check. E-filers who choose direct deposit can receive their refund in as few as 10 days.

Paperless. A taxpayer eliminates paperwork by creating his or her own Personal Identification Number (PIN) and filing a paperless return using tax preparation software or a tax professional. There is nothing to mail to the IRS.

File now, pay later options. Taxpayers can file early and pay later by scheduling an electronic funds withdrawal any time through April 15, 2009. Taxpayers can also pay by credit or debit card when they e-file their returns. By enrolling in the Electronic Federal Tax Payment System, taxpayers can make all federal tax payments online or by phone.

More accurate returns. In addition to the error checks built into return preparation software, additional checks are done during the transmission of software enabled e-file returns. These checks reduce the chance a taxpayer will receive an error letter from the IRS.
Quick electronic confirmation. E-filers are notified that their returns have been received. Convenient Federal/State e-filing. Taxpayers in 37 states and the District of Columbia can e-file their federal and state tax returns in one transmission to the IRS. The IRS forwards the state data to the appropriate state tax agency. In 2008, 46 million taxpayers filed federal-state electronic returns in Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, Wisconsin and the District of Columbia.

Link to full article (here)

ArmyPost Accounting will be able to give you instant confirmation on your return at the appointment begining January 2010. Call us about other benefits @ 515.285.5544

Wednesday, July 1, 2009

Home Owners Energy Credits 2009

American Recovery and Reinvestment Act (ARRA)

"(The) ARRA provides for a uniform credit of 30 percent of the cost of qualifying improvements up to $1,500, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. The new law replaces the old law combination available in 2007 of a 10-percent credit for certain property and a credit equal to cost up to a specified amount for other property."

This Link gives a breakdown of all the credits for 2009 & 2010.

If you want to read the full IRS text (click here)

Make sure it says "Energy Star", you don't have to bring to the tax appointment, but you do have to keep them for your records.