Friday, August 28, 2009
YOU THINK TAXES ARE HIGH NOW...YOU AIN'T SEEN NOTHIN YET!
The attached Wall Street Journal article gives us a good idea of what we are looking at to balance the budget. It ain’t pretty. Oh, and forget about “read my lips,” this does not just hit those with income greater than $250,000, it hits all of us. Taxes too high? Wall Street Journal.
Wednesday, August 26, 2009
I AM GETTING MARRIED, NOW WHAT?
I finally found the man of my dreams and we are getting married this month. Is there anything I need to do before for taxes?
Mona
Mona, congratulations. I wish you well. I remember a toast that I gave at a wedding when I was honored to be the best man. “A man marries a woman thinking she will never change, and a woman marries a man thinking that they can change them - and they are both wrong.” The toast did not work because four years later they were divorced. Speaking of divorce, consider talking to your lawyer about a pre nuptial agreement. Not a bad document to have just in case.
Enough of that… here are the tax things that you need to think about.
1. Notify the Social Security Administration to report any name change, so your name and SSN will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security card at your local SSA office. The form is available on SSA’s Web site at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.
2. Notify the IRS If you have a new address. You should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from the IRS website IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
3. You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.
4. Notify Your Employer(s) to report any name and address changes to ensure receipt of your Form W-2, Wage and Tax Statement after the end of the year.
Also consider checking your withholding. If both you and your spouse work (I hope he does. If he is unemployed you might want to think about this), your combined income may place you in a higher tax bracket. There is an IRS Withholding Calculator at www.irs.gov that will help you and will even provide you with a new Form W-4, Employee's Withholding Allowance Certificate. You can print it out and give it to your employer so they can withhold the correct amount from your pay.
Best of luck and again congratulations.
Larry Kopsa CPA
Mona
Mona, congratulations. I wish you well. I remember a toast that I gave at a wedding when I was honored to be the best man. “A man marries a woman thinking she will never change, and a woman marries a man thinking that they can change them - and they are both wrong.” The toast did not work because four years later they were divorced. Speaking of divorce, consider talking to your lawyer about a pre nuptial agreement. Not a bad document to have just in case.
Enough of that… here are the tax things that you need to think about.
1. Notify the Social Security Administration to report any name change, so your name and SSN will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security card at your local SSA office. The form is available on SSA’s Web site at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.
2. Notify the IRS If you have a new address. You should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from the IRS website IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
3. You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.
4. Notify Your Employer(s) to report any name and address changes to ensure receipt of your Form W-2, Wage and Tax Statement after the end of the year.
Also consider checking your withholding. If both you and your spouse work (I hope he does. If he is unemployed you might want to think about this), your combined income may place you in a higher tax bracket. There is an IRS Withholding Calculator at www.irs.gov that will help you and will even provide you with a new Form W-4, Employee's Withholding Allowance Certificate. You can print it out and give it to your employer so they can withhold the correct amount from your pay.
Best of luck and again congratulations.
Larry Kopsa CPA
Tuesday, August 25, 2009
GOVERNMENT TRUE-ISMS
A government which robs Peter to pay Paul can always depend on the support of Paul. -George Bernard Shaw
Monday, August 24, 2009
ARTICLES ON CAP-AND-TRADE
'Nebraskan: Cap-and-trade bill would be final nail in coffin for U.S.'
(Norfolk Daily News) -- NorfolkDailyNews.com reports that U.S. Sen. Mike Johanns visited "with about 30 manufacturing, utility and business leaders" in Norfolk, Neb. recently. During the meeting, Don Heller, a Stanton County farmer and member of the Stanton County Public Power District board of directors, said: "This (cap and trade legislation) would be the final nail in the coffin in the America we have known for 50 years - and it doesn't solve anything." The article notes the climate legislation is "a priority of the Obama administration," and would create "an artificial market for various industries to buy, sell and trade" what are known as carbon emission allowances. Johanns said he expects the issue to come up by late September after health care reform is dealt with. Johanns said "China has said it won't consider similar legislation for at least 10 years. India doesn't even buy into the concept of global warming. A legislative body in Australia just voted down similar legislation." A spokesperson with Nucor Steel in Norfolk said "the environmental irony of cap and trade legislation is that, if it passes, it will put Nucor and other U.S. companies at more of a competitive disadvantage," meaning China's steel industry "will produce even more and do so without any kind of concern for the environment." See the story at <http://www.norfolkdailynews.com/main.asp?SectionID=3&SubSectionID=104&ArticleID=18126&TM=63564.57>
'Business Owners Weary of Cap and Trade'
(INC.com) -- INC.com reports that "business groups remain concerned about cap and trade (global warming legislation), which they say could place an unnecessary burden on U.S. companies." The story notes: "In a letter to Congress, the National Federation of Independent Business, a small-business advocacy group, asserted its opposition to cap-and-trade. ... With the nation still reeling from the burst of housing bubble, which was fueled in large part by the subprime mortgage market, the commodities market that would be created by carbon credits is also something to worry about, according to David Ridenour, vice president of the National Center for Public Policy Research. 'Not only would cap-and-trade drive up the costs of energy, but it has the potential to create a dangerous new commodities bubble.'" Senate Majority Leader Harry Reid (D-NV) has given committees a September 28 deadline to produce a bill. See the story at <http://www.inc.com/news/articles/2009/08/cap.html>
'Anti-Cap-And-Trade Rallies Begin Tuesday'
(FarmFutures.com) -- FarmFutures.com reports that a coalition of business organizations will kick off "a series of rallies throughout the country to decry efforts to enact a 'cap and trade' bill." According to the article, the coalition, known as Energy Citizens, includes industry and interest groups such as the American Petroleum Institute, National Association of Manufacturers, American Farm Bureau, and FreedomWorks. "Many of the Energy Citizens rallies will take place in the home states of Senators viewed as key swing votes on climate legislation, especially moderate Midwestern Democrats from coal, farm and manufacturing states that fear that their home industries could suffer under a system that would raise costs for coal, oil and gas use. Additional rallies will be held in New Mexico, Ohio, Indiana, North Dakota, Missouri, Alaska, Nebraska, Pennsylvania and Michigan." See more at <http://farmfutures.com/story.aspx?s=30841&c=17>
(Norfolk Daily News) -- NorfolkDailyNews.com reports that U.S. Sen. Mike Johanns visited "with about 30 manufacturing, utility and business leaders" in Norfolk, Neb. recently. During the meeting, Don Heller, a Stanton County farmer and member of the Stanton County Public Power District board of directors, said: "This (cap and trade legislation) would be the final nail in the coffin in the America we have known for 50 years - and it doesn't solve anything." The article notes the climate legislation is "a priority of the Obama administration," and would create "an artificial market for various industries to buy, sell and trade" what are known as carbon emission allowances. Johanns said he expects the issue to come up by late September after health care reform is dealt with. Johanns said "China has said it won't consider similar legislation for at least 10 years. India doesn't even buy into the concept of global warming. A legislative body in Australia just voted down similar legislation." A spokesperson with Nucor Steel in Norfolk said "the environmental irony of cap and trade legislation is that, if it passes, it will put Nucor and other U.S. companies at more of a competitive disadvantage," meaning China's steel industry "will produce even more and do so without any kind of concern for the environment." See the story at <http://www.norfolkdailynews.com/main.asp?SectionID=3&SubSectionID=104&ArticleID=18126&TM=63564.57>
'Business Owners Weary of Cap and Trade'
(INC.com) -- INC.com reports that "business groups remain concerned about cap and trade (global warming legislation), which they say could place an unnecessary burden on U.S. companies." The story notes: "In a letter to Congress, the National Federation of Independent Business, a small-business advocacy group, asserted its opposition to cap-and-trade. ... With the nation still reeling from the burst of housing bubble, which was fueled in large part by the subprime mortgage market, the commodities market that would be created by carbon credits is also something to worry about, according to David Ridenour, vice president of the National Center for Public Policy Research. 'Not only would cap-and-trade drive up the costs of energy, but it has the potential to create a dangerous new commodities bubble.'" Senate Majority Leader Harry Reid (D-NV) has given committees a September 28 deadline to produce a bill. See the story at <http://www.inc.com/news/articles/2009/08/cap.html>
'Anti-Cap-And-Trade Rallies Begin Tuesday'
(FarmFutures.com) -- FarmFutures.com reports that a coalition of business organizations will kick off "a series of rallies throughout the country to decry efforts to enact a 'cap and trade' bill." According to the article, the coalition, known as Energy Citizens, includes industry and interest groups such as the American Petroleum Institute, National Association of Manufacturers, American Farm Bureau, and FreedomWorks. "Many of the Energy Citizens rallies will take place in the home states of Senators viewed as key swing votes on climate legislation, especially moderate Midwestern Democrats from coal, farm and manufacturing states that fear that their home industries could suffer under a system that would raise costs for coal, oil and gas use. Additional rallies will be held in New Mexico, Ohio, Indiana, North Dakota, Missouri, Alaska, Nebraska, Pennsylvania and Michigan." See more at <http://farmfutures.com/story.aspx?s=30841&c=17>
FIRST-TIME HOMEBUYER CREDIT
I just closed escrow on the purchase of my first ever house in July 2009. Is my Realtor correct that I can file an amended 2008 tax return to claim the special credit for first time home buyers? Is he also correct that this credit is mine to keep forever and doesn’t need to be repaid? I had read somewhere that the credit was just an interest free loan that had to be repaid on future tax returns. It sounds too good to be true.
Owen
Owen, your Realtor is correct that you won’t have to wait until April 15, 2010 to receive this credit, which can be as much as $8,000. You have the option to claim the credit on your original or amended 2008 1040, as long as the purchase has been completed. This can get tricky if your modified Adjusted Gross Income is over $75,000 ($150,000 for married couples) because that places you into the dreaded “Evil Rich” category as defined by our imperial rulers in DC.
In regard to repaying the credit, there was a change in the original program from what we had in 2008. For homes purchased in 2008, the credit must be repaid in 15 annual installments, starting with the 2010 1040. If the home ceases to be the main residence before the 15 year repayment time is up, the remaining amount of the credit will be due in one lump sum on that year’s 1040.
For homes purchased between January 1, 2009 and December 1, 2009 (the current end of the credit qualification period), the credit does not have to ever be repaid if you use the home as your primary residence for at least three years. If you move out of the home, sell it or convert it to business or rental usage before the three year anniversary of your purchase, you will be required to repay the full amount of the credit in one lump sum on the tax return for the year in which the home ceased to be your principal residence.
As with any tax law, there are even more twists to this one; so be sure to work with a professional tax advisor.
Good luck. I hope this helps.
Larry Kopsa CPA
Owen
Owen, your Realtor is correct that you won’t have to wait until April 15, 2010 to receive this credit, which can be as much as $8,000. You have the option to claim the credit on your original or amended 2008 1040, as long as the purchase has been completed. This can get tricky if your modified Adjusted Gross Income is over $75,000 ($150,000 for married couples) because that places you into the dreaded “Evil Rich” category as defined by our imperial rulers in DC.
In regard to repaying the credit, there was a change in the original program from what we had in 2008. For homes purchased in 2008, the credit must be repaid in 15 annual installments, starting with the 2010 1040. If the home ceases to be the main residence before the 15 year repayment time is up, the remaining amount of the credit will be due in one lump sum on that year’s 1040.
For homes purchased between January 1, 2009 and December 1, 2009 (the current end of the credit qualification period), the credit does not have to ever be repaid if you use the home as your primary residence for at least three years. If you move out of the home, sell it or convert it to business or rental usage before the three year anniversary of your purchase, you will be required to repay the full amount of the credit in one lump sum on the tax return for the year in which the home ceased to be your principal residence.
As with any tax law, there are even more twists to this one; so be sure to work with a professional tax advisor.
Good luck. I hope this helps.
Larry Kopsa CPA
Friday, August 21, 2009
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