CPA On Call, LLC [Tax Tips Page] - Meeting all of your accounting needs. Specializing in small business start ups, payroll, tax services, and bookkeeping.

TAX TIPS

Tax Planning Tips:

Economic Stimulus Checks - It’s not too late to claim your stimulus payment. IRS will issue checks through the end of the year. IRS urges people to file by October 15 to ensure they receive a payment prior to year’s end. People who have no tax liability or filing requirement can receive a minimum of $300 ($600 for married couples, plus $300 for each qualifying child). To be eligible, individuals must have at least $3,000 in qualifying income.
Home Office Deduction - You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively as your principal place of business for any trade or business. The amount you can deduct depends on the percentage of your home that you use for business (need square footage of office divided by square footage of entire living space of your house). This percentage is then applied to expenses such as real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs.
Deducting Meals & Entertainment Expenses - To be able to deduct business meals and entertainment expenses, you must have documentation for the expense including business purpose, names of persons being entertained, date and location. While traveling on business, you can either use the actual cost of the meals and incidental expenses or use a standard meal allowance that has reduced recordkeeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent.

Entertainment expenses for clients, customers, or employees may be deducted if they meet one of the following tests: Directly-related test (main purpose is the conduct of business, and taxpayer had expectation of receiving income or benefit at a future time. Associated test (associated with the active conduct of taxpayer’s business and occurred before or after a substantial business discussion.

Many other tax planning strategies are available to deal with how this change effects your specific situation. Please call our office for a tax planning appointment.

For more information or questions regarding tax services offered by CPA On Call, please contact CPA On Call using the form on the Contact Us page.

2008 Tax Law Changes:

Traditional IRAs and Roth IRAs
Contributions to Traditional IRA and Roth IRA increases to $5,000 for 2008 and catch-up provisions for investors age 50 and over remains at $1,000. So,those over 50 can contribute $6,000.

401(k)s, 403(b)s, 457(b)s
401(k)s, 403(b)s, and 457(b)s, contributions remain at $15,500 and catch-up for investors age 50 and over remains at $5,000. So, those over 50 can contribute $20,500

SIMPLE IRA Plans
Contributions remain at $10,500 and catch-up provisions for investors over 50 remain at $2,500. So, those over 50 can contribute $13,000. Deadline is October 1, 2008 to set up a SIMPLE plan for 2008.

Profit Sharing Plans/Keogh
Corporate - 25% up to $46,000 (% applied to compensation)
(a special formula may allow higher contributions for highly paid Individuals for profit sharing plans)

Keogh (SE) - 25% up to $46,000 (% applied to compensation)

SEP Plans
SEP (SE person) - 20% up to $46,000 (of net self-employed income after self-employment tax deduction)

SEP (Employees) - 25% up to $46,000

Standard Mileage Allowances
Business - $.505 per mile from 1/1/08 to 6/30/08 and $.585 from 7/1/08 to 12/31/08

Medical/Moving - $.19 per mile from 1/1/08 to 6/30/08 and $.27 from 7/1/08 to 12/31/08

Charitable - $0.14 per mile (unchanged)

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