Weirding Word®

12 Tax Deductions That Will Disappear This Year

A guest blog by Brian Wendroff

To address the budget and other issues, Congress is enacting more and more tax provisions on a temporary basis. Some become permanent while others expire by the end of the year. While CPA firms strive to stay on top of ever change in the Tax Code, it's almost impossible for the individual taxpayer.

So check out the following list of 12 last-chance opportunities for personal tax savings in 2009. Or see the complete list of 21 last-chance opportunities for business and personal tax deductions. That way you can at least say you saw it coming. Or going, as it were.

1. Income. Up to $2,400 of unemployment compensation is excluded from the gross income of the recipient. However, this exclusion will not be available for benefits received in tax years beginning after 2009 [IRC Sec. 85(c)].


2. Personal deductions. You can claim a deduction (whether you itemize or claim the standard deduction) for sales or excises taxes paid on the purchase of a new vehicle. The deduction (phased out at higher income levels) does not apply to purchases after December 31, 2009 [IRC Sec. 164(b)(6)(G)].


3. Personal deductions. If you claim the standard deduction, take an additional deduction for state and local property taxes, up to a maximum of $500 ($1,000 for joint return filers). The deduction is not available for tax years beginning after 2009 [IRC Sec. 63(c)(7)].


4. Personal deductions. You can elect to take an itemized deduction for state and local general sales taxes instead of an itemized deduction for state and local income taxes, but the election is available only for tax years beginning before Jan. 1, 2010 [IRC Sec. 164(b)(5)(I)].


5. Personal deductions. You can claim an above-the- line deduction for "qualified tuition and related expenses" paid for the enrollment or attendance of yourself, your spouse or a dependent at an eligible institution of higher education. The deduction cannot exceed $4,000 (phased out at higher income levels) and applies only to tax years beginning before January 1, 2010 [IRC Sec. 222(e)].


6. Personal deductions. The maximum deduction allowed annually for charitable donations is increased in the case of "qualified conservation contributions." The increased deduction is not available for donations after December 31, 2009 [IRC Sec. 170(b)(1)(E)].


7. Personal tax credits. If you haven't owned a home in the previous three years, you can claim a first-time homebuyer credit of up to $8,000 (phased out at higher income levels) for the purchase of a principal residence. The credit can be claimed only for homes purchased before December 1, 2009. It is rumored that this credit may rise to $15,000 in 2010, but that's still just a rumor. [IRC Sec. 36].


8. Alternative minimum tax. You can offset nonrefundable personal tax credits, such as the child and dependent care credit and the Lifetime Learning credit, against their alternative minimum liability. The offset will not be available for tax years beginning after 2009 [IRC Sec. 26(a)(2)].


9. Alternative minimum tax. In 2010, the exemption amounts used in calculating a client's alternative minimum taxable income of $70,950 for married couples filing a joint return and $46,700 for singles and heads of households are scheduled to drop to $45,000 and $33,750, respectively [IRC Sec. 55(d)(1)].


10. Retirement plans. The requirement that an IRA owner age 70 ½ or over must receive a minimum distribution annually is suspended for 2009, but will be reinstated in 2010 [IRC Sec. 401(a)(9)(H)].


11. Retirement plans. An IRA may exclude from income distributions of up to $100,000 annually if paid directly by the IRA trustee to charitable organization. The exclusion expires in tax years beginning after 2009 [IRC Sec. 408(d)(8)].


12. Employee benefits. If you are covered by employer- sponsored health plans and are laid off before January 1, 2010, you can qualify for subsidized plan continuation (COBRA) coverage for up to nine months. Employers can claim a credit against employment taxes for the subsidies provided to employees [IRC Sec. 6432]. This might change after 2010, so now's the time to get fired (just kidding).

Wendroff & Associates, LLC is a CPA firm that specializes in individual and business tax preparation, strategic financial consulting and outsourcing.

IRS Circular 230 Disclosure: Please be advised that the tax advice contained herein (including any attachments) is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding any U.S. tax- related penalties that may be imposed on the taxpayer.

Weirding Word®, a division of G.L. Honeycutt Consulting, LLC, is a virtual publication department that provides editing, freelance writing, and publication and web design services.

Copyright 2007-2009 Gaea L. Honeycutt. All rights reserved.

Tax Talk for 2009

What's the difference between the legal and tax liabilities of sole proprietorship, S-corps and LLCs? How about the number of IRAs the IRS allows? Or the restrictions of the First-Time Home Buyer Credit in the stimulus bill? Accountant Joan Davion and CPA Shanda Gottlieb laid out tax basics, tips, common mistakes and more during the Morning Essentials: Tax Talk seminar hosted by the Northern Virginia Black Chamber of Commerce. 

Ms. Davion stressed the importance of communicating with your accountant, and discussed a business associate's misfiling predicament. Because he didn't understand mileage and car deductions -- and didn't share his process for determining those deductions with his tax preparer - the information was incorrect. "He's now in a lot of trouble and going through a painful process," Ms. Davion said. 

"Don't be afraid of an audit," encouraged Ms. Gottlieb. You never know what it is that the IRS is focused on. When one of her clients was audited, she was able to resolve the matter by refiling after discovering the previous tax preparer had made several of errors. 

Take home points? Review your taxes - even if you hire a preparer. Organize your files so you're not rushing at tax time. And, use the IRS as a resource - call or go to their website if you have questions.

Gaea Honeycutt
blog@weirdingword.com 

Weirding Word®, a division of G.L. Honeycutt Consulting, LLC, is a virtual publication department that provides editing, freelance writing, and publication and web design services.

Copyright 2007-2009 Gaea L. Honeycutt. All rights reserved.

The Debate Over Same-Sex Marriage

This article by Gaea L. Honeycutt was originally published in Average Girl Magazine

May 15, 2008, brought a historic shift in the debate over same-sex marriage. The conservative California State Supreme Court ruled (4-3) that same-sex couples have the right marry, overturning a state law that defined marriage as a union between a man and a woman, and effectively banning same-sex marriages.

In 2004, the City of San Francisco challenged state law by conducting wedding ceremonies and issuing marriage licenses to same-sex couples, which were later nullified by the State Supreme Court. The same year, 61% of Californians agreed that marriage is between a man and a woman through a statewide ballot referendum. This resulted in a move by the state legislature to pass a strong domestic partnership law, granting most rights enjoyed by married couples.

Chief Justice Ronald M. George wrote for the majority, “Our state now recognizes that an individual’s capacity to establish a loving and long-term committed relationship with another person and responsibility to care for and raise children does not depend on the individual’s sexual orientation.” He also stated, “An individual’s sexual orientation – like a person’s race or gender – does not constitute a legitimate basis upon which to deny or withhold legal rights.”

The court found that the domestic partnership law amounted to separate and unequal treatment, and that this resulted in damage to the children and families of same-sex couples. Also, part of what influenced the decision was the history of court decisions from across the nation striking down prohibitions on interracial marriage.

It was the fight over same-sex marriage in Hawaii beginning in 1993, and passage of the U.S. Defense of Marriage Act (DOMA) in 1996 that began the latest series of battles. DOMA defines marriage as a union between a man and woman under Federal law, and allows states to refuse to recognize marriages from other states. There is disagreement over its constitutionality, but DOMA remains unchanged more than 10 years later. Attempts to adopt a constitutional amendment prohibiting same-sex marriage have been unsuccessful.

Most states (41) have laws or constitutional amendments defining marriage as a union between a man and a woman. Connecticut, New Hampshire, New Jersey, and Vermont allow civil unions. Massachusetts allows same-sex marriages, and recognizes same-sex marriages from states where the unions are also legal.

California’s debate isn’t quite over. Opponents plan to place a new referendum on the November ballot that would amend the state Constitution, defining marriage as a union between a man and a woman. However, the next battleground may very well be New York, where Governor David A. Patterson has directed state agencies to revise policies in order to honor same-sex marriages from other states.

Gaea Honeycutt
blog@weirdingword.com

Weirding Word®, a division of G.L. Honeycutt Consulting, LLC, is a virtual publication department that provides editing, freelance writing, and publication and web design services.

Copyright 2008 Gaea L. Honeycutt. All rights reserved.

Promote Yourself When You Speak

A guest blog by Sally Strackbein

When you speak, train or are on a panel, do you use that opportunity to promote yourself? You will stand above your competition when you give an information-packed handout.

I attend a lot of meetings that feature speakers. It amazes me how few give handouts to support their presentations. The speaker at one meeting did have a handout. It had her PowerPoint slides printed in a grainy resolution on cheap quality paper and it had no contact information. Most speakers don't have a handout at all. Some pass out their brochures. These brochures are often beautiful and expensive to produce. I look at them and throw them away as soon as I get home. (Actually, I put them in my recycle bin.) I don't save them.

On the other hand, give me a good handout and it goes in my reference file. A good handout gives me the major points the speaker made with some supporting detail. It gives me an action step to take and it gives me a way to follow up with the speaker.

Do you provide a good handout that your audience will save? People have called me years after a presentation because they were looking through their reference file and found my handout. (Yes, these calls lead to business.)

Here are some handout tips:

• Use your professional photo.


• Use color - at least on the title or cover page.


• Make your layout attractive.


• List your phone number, website and e-mail address on every page.


• Print it on 28lb paper instead of the more common 20lb paper. People can feel the difference.


• Most important, give valuable information.

Use every engagement as an opportunity to promote yourself with your handout. Handouts trump brochures every time!

Sally Strackbein inspires people to discover, clarify and express their value through speaking and storytelling. Her presentations, workshops, and coaching help her clients create and deliver messages that motivate, educate, or sell. She is also the host of the international online speakers directory, www.SpeakerZone.com. You can reach her at www.DefiningStory.com. Or, learn how you can discover your best stories and tell them like a pro at Sally's Storytelling Speakshop, September 12-13, in Reston, VA.

Gaea Honeycutt
blog@weirdingword.com

Weirding Word®, a division of G.L. Honeycutt Consulting, LLC, is a virtual publication department that provides editing, freelance writing, and publication and web design services. Copyright 2008 Gaea L. Honeycutt. All rights reserved.

Know Your Skills, Know Your Market

Many small business owners share the same story of starts, stops, and restarts. All the information one needs about starting a business is out there, and yet, it's not always easy to uncover, understand, and leverage. You find yourself trying to learn in SBA, Women's Business Center, and other seminars while being forced to seek clarification and advice on how things really work from a network of fellow business owners. It's a high-adrenaline, exciting, frightening adventure. In three years, three lessons have shaped my approach to consulting.

Start with, or quickly build, a network.
When I struck out on my own in 2005, I had recently returned to my home state of Virginia. Having spent a dozen years building a broad skill set in project management, research, communications, and development, I knew I could help other organizations achieve their goals. But, I soon discovered that around Washington it's about whom you know and not what you know—and not whom you know in other regions. And I didn't understand networking.

I decided to take a short-term position while working on growing the business. When I returned to the full-time world of entrepreneurship, I became a networking diva, tripling my business and developing an increasingly effective network. Word of mouth is the best advertising. Referrals inherently carry the message of quality and results.

Focus, focus, focus.
I had directed an association and worked in the nonprofit sector. Then I discovered other small businesses
were hungry for our services, especially writing and design, and I began cultivating them. Connecting with the supportive community of local small businesses is energizing. However, I lost focus and found that small-business clients require more personalized services for the same or less revenue.

In addition, the combination of services we provide isn't intuitively understood by the for-profit sector. While the connection between intellectual and creative services is taken for granted in nonprofits and associations, few in business understand how many functions employees in small associations and nonprofits take on regularly. Still, I split the business between intellectual services under the parent company and creative services under a new division. Months later, it was clear that entrepreneurs could not sustain or help grow the firm effectively, and I had significantly changed my business to appeal to that market. I refocused on my target markets and began building a network just as I had among small businesses.

Partner and outsource.
No one can do it all. As one of my clients said, "We are all experts in our own respective industries. Sometimes we attempt to cut costs by becoming an expert in an industry outside of our own … [and] often fall short of the mark … . [My] efforts and time were best spent doing what I do best." Balancing the work of your business and the management of your business is difficult, especially if you don't know what you're doing. I'm not an accountant, and I finally hired one to help me manage my finances. Hire experts to do these things efficiently.

Likewise, I don't provide services outside of my defined business. For example, I actively avoid media relations. There are people who passionately love this field, and I recruit them as partners. Neither is my expertise in the financial industry; I am not too proud to refer potential clients to a marketer who can run with it. Everyone is happier getting what they want and need. Life is too short to create a job for yourself that you don't even like. This way, I cultivate my networks of associates and clients at the same time.

My most satisfied colleagues follow these same principles: They do what they love, they remain focused on their goals and mission, and they build excellent networks. It's the path to entrepreneurial happiness and freedom.

Written by Gaea L. Honeycutt for Associations Now. Reprinted with permission, copyright August 2008, ASAE & The Center for Association Leadership, Washington, DC.

Gaea Honeycutt
blog@weirdingword.com

Weirding Word®, a division of G.L. Honeycutt Consulting, LLC, is a virtual publication department that provides editing, freelance writing, and publication and web design services.

Copyright 2008 Gaea L. Honeycutt. All rights reserved.