2009 changes

Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
• The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

Interest Rates Drop for the First Quarter of 2009

The Internal Revenue Service today announced in Revenue Ruling 2008-54 that interest rates for the calendar quarter beginning Jan. 1, 2009 will drop by one percentage point. The new rates will be:

• Five (5) percent for overpayments [four (4) percent in the case of a corporation];
• Five (5) percent for underpayments;
• Seven (7) percent for large corporate underpayments; and
• Two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.
  

(Source: IRS)

IRS Speeds Lien Relief for Homeowners

The Internal Revenue Service an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. (Source: IRS)

HOW TO CLAIM CASUALTY LOSSES

A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, and unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.

If your property is not completely destroyed, or if it is personal-use property, determine your loss from a casualty by first figuring the decrease in fair market value of your property.

If the property was held by you for personal use, you must further reduce your loss by $100. The total of all your casualty losses of personal-use property must be further reduced by 10% of your adjusted gross income.
If your business or income-producing property is completely destroyed, the decrease in fair market value is not considered.
If your main home, or any of its contents, is damaged or destroyed as a result of a disaster in a Presidentially declared disaster area, do not report any gain due to insurance proceeds you receive for unscheduled personal property, such as damaged furniture, that was part of the contents of your home.
You can choose to postpone gain from any other insurance proceeds received for your main home or its contents if you purchase replacement property within four years after the close of the first tax year in which any gain is realized. For this purpose, insurance proceeds received for the home or its contents are treated as being received for a single item of property, and any replacement property you purchase that is similar or related in service or use to your home or its contents is treated as similar or related in service or use to that single item of property. Again, postponement of gain is only available if the amount you spend on replacing or repairing your property is equal to, or exceeds, the insurance proceeds you receive. Otherwise, you must recognize gain to the extent that the insurance proceeds are more than the cost of your replacement property. Renters qualify to choose relief under these rules if the rented residence is their main home.
If your home is located in a Presidentially declared disaster area and your state or local government orders you to tear it down or move it because it is no longer safe to live in, the resulting loss in value is treated as a casualty loss from a disaster. Figure your loss in the same way as any other casualty loss of personal-use property. The State or local government order must be issued within 120 days after the area is declared a disaster area. This are the general rule, and they are exceptions. (Source IRC.)

Hurricane IKE disaster relief

IRS:
IF you live in a IKE disaster area:
Tax return filing, tax payments, and certain other acts are postponed ‘til Jan 5, 2009. Applies to individuals as well as businesses. However, you must inform the IRS before taking the relief.
Casualty losses can either be claimed this year or on last year tax return, you have the option. Call your accountant which alternative benefits you the most.
State of Texas:
If you live in the IKE disaster area:
Labor charges for repair or remodeling performed on residential property are not subject to sales tax. However, materials used during the repair or restoration are taxable, even in a disaster area. Make sure that the contractor calls for a single charge that includes materials and labor.
Motel and Hotel taxes suspended for 14 days beginning Sept. 8, 2008.

Debt Relief Act of 2008

This law exclude from income any debt forgiven or cancelled as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
Usually, debt forgiven or cancelled by a lender must be included as income on your tax return as income. What the new law does for you? The new law allows you to exclude certain cancelled debt on your principal residence from income.
Do you need to report it on your ax return? Yes. As a general rule, must taxable and non taxable items are reportable events, and this one is reportable.
What about debt on a second home, credit card or car loans? Not contemplated under this provision. This provision applies to your principal residence. The law can be used for taxable years: 2007, 2008, and 2009.

On Retirement

Penalty for early withdrawals from pension plans or IRAs prior to attain age 59 1/2. If you make withdrawal before attained the required age, you will be penalized 10% of the amount withdraw.
After tax IRA. If you have an after tax IRA, you need to keep track of your basis on the IRA by filing Form 8606. Why?. The IRS needs to know the after tax portion of your IRA, and so do you. You do not want to pay taxes a second time, Do you?
Rollover a 401K and/or a traditional IRA. Generally, do not result in a taxable transaction if is roller over within 60 days from the distribution date.

What is the date you should start receiving your minimum required distributions (MRD) payments after reaching 70 1/2? If you reach 70 1/2 in March 5, 2007 (or any date in 2007), you should begin making your 1st MRD by April 1, 2008 , and his/her second distribution by Dec. 31, 2007. VERY IMPORTANT. (Exceptions apply.)

Owe money to the IRS, consider these tax payment options.

E-options?
These options offer taxpayers the easiest and fastest way to make a full or partial payments. You can either pay by phone, online or using your credit card.
A short-term extension gives a taxpayer up to 120 days to pay without processing fee, but the late payment penalty and interest still apply.
A monthly payment plan or installment agreement gives the taxpayer more time to pay. Under this method the interest still apply but the late payment penalty is cut in half to 0.25 percent for any month an installment agreement is in effect.
Penalties for filing or paying taxes late.
Filing late. You must pay a failure- to-file penalty. The penalty is usually 5% per month for each month that a return is late, not to exceed 25%. The penalty is based on the tax not paid by the due date.
Paying tax late. The penalty is 0.5% of your unpaid taxes for each month that the tax is due. This could increase to 1 percent per month after a notice of deficiency is received.
Combined Penalties. The penalty for filing late is reduced by the penalty for paying late for that month, unless the minimum penalty for filing late is charged.
Accuracy related penalties. If due to understatement could reach 20 percent. (Source: IRS)

A Tax Incentive you should know.

This Act provide some incentive for businesses, among those you find;
50 Percent Special Depreciation deduction Allowance-to recover the cost of assets placed in service.
New depreciation limits on Business Vehicles-the maximum that can be taken for assets placed in service is $3,160 to $11,160.
Section 179 Expensing deduction was double from last year. -Business can expense up to $250,000 in assets placed in service in 2008.
These incentives are created to stimulate the economy. (Source IRS

A perspective on the social security fund.

Do you think that by the time all baby boomers retire will be enough social security (SS) money to pay everyone in the system?
That is a good question, for which they are multiple good answers if you consider this or that... Common wisdom tells you that the Social Security System is a pay as you go system. Meaning, those that work pay for those that are retired. They also say, that the ratio of workers to retire will continue to shrink to the point where there will be four workers for every retiree, 10 to 30 years into the future.
Based on those premises alone, the numbers do not add up to pay all retirees.
Is that really the case?
Consider this; a worker who earned $40,000 each thru most part of his working life will be supported by four new workers earning a salary of over $100,000 each.
Perhaps, the total contribution of these new workers could possible be enough to pay out one retiree.
Maybe true or maybe false! I do not know, until I do the math. If anyone can do the math right...

Charitable Gifts! How much you want to give out.

If you gave any one person gifts in 2007 that are valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value..
There are some exceptions to the tax rules on gifts. The following gifts generally are not taxable and do not count against the annual limit:
· Tuition or Medical Expenses that you pay directly to an educational or medical institution for someone's benefit
· Gifts to your Spouse
With the consent from your spouse, you can make a gift of up to $24,000 ($12,000 x 2) to the same person without making a taxable gift. This is commonly known as splitting gifts between spouses. Essentially, it means a gift by you or your spouse to a third person can be considered as made one-half by each of you provided there is consent by both spouses. (Source IRC)

Are you ready for a Tax Audit?

In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.

Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.

If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.

Child Investment Income

Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well.

This special method of figuring the federal income tax only applies to children who are under the age of 18. For 2007, it applies if the child's total investment income for the year was more than $1,700. Investment income includes interest, dividends, capital gains, and other unearned income.
Alternatively, a parent can, in many cases, choose to report the child's investment income on the parent's own tax return. Generally speaking, this option is available if the child's income consists entirely of interest and dividends (including capital gain distributions) and the amount received is less than $8,500. However, choosing this option may reduce certain credits or deductions that parents may claim.

For 2007, these special tax rules do not apply to investment income received by children who are age 18 and over. In addition, wages and other earned income received by a child of any age are taxed at the child's normal rate.
Source: IRS

Consumer Price Index

Percentage change for 12 months-ending December—Year comparisons:

|<——————————NATIONAL———————————————–>| |<—Houston———>|
CPI-U by Category 2004 2005 2006 2007 2008 (6 mo.) (12 mo.) 2 month

Combined 3.3 3.4 2.5 4.1 5.5 4.9 2.5

Food and beverages 2.6 2.3 2.2 4.8 6.6 5.9 2.4

Medical Care 4.2 4.3 3.6 5.2 2.7 4.8 0.3

Energy 16.6 17.1 2.9 17.4 29.1 24.3 17.6

Apparel -0.2 -1.1 0.9 -0.3 -1.9 -9.2 -9.2

Housing 3 4 3.3 3 4.3 4.9 3.5

(Source: U.S. DOL)

Saving for your child education?

A Coverdell Education Savings Account (ESA) is an account created as an incentive to help parents and students save for education expenses. The total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary. Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to qualified higher education expenses as well as to qualified elementary and secondary education expenses. The Hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.
If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. The beneficiary receives a qualified scholarship. (Source IRC.)

Business Tax Relief for 2008

Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

* 50.5 cents per mile for business miles driven;
* 19 cents per mile driven for medical or moving purposes; and
* 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The business miles rate was increased two cents, the medical and moving purposes was reduced one cent, and the rate for miles driven in service of charitable organizations has remained the same.

(Source: IRS)

US Economic health

We are well into the summer, and the raise in oil prices have taken a toll on our purchasing power. Almost everything is up; from gasoline, food, services, to the price we pay for mowing our lawns.
I placed five of the most followed CPI averages on page four for your perusal. Keep in Mind that these are National averages and may be different by region and by state.
For example: While the national CPI average in the last 12 months ending in June grew to 5.5 percent (as shown in page 4), for Houston was 4.9 percent. For Housing it was 4.9 percent; fuel and utilities was 12.8 percent, and energy was 24.3 percent higher.
What is this mean for you? Prices at most levels are going up, nothing you don’t know already. But, is this a temporary event? I hope it is, but demographics and global changes are telling us different. With the economic explosions in Asia commodities prices have to go up, no matter what.

The price of oil should come down a bit, in part because of the unsustainable growth rate in Asia cannot last forever. Some people say; “To much of a good thing is bad for you”.
The economies of Asia are slowing a bit; China expect to growth at a clip of 10% or less in the future, from a 15% growth. And, India may growth at a less than 8% rate. The economic slow down would temper down the consumption of oil and we are seeing the markets are discounting that fact right now.
Most economies in the world are experiencing inflation across the board, and at rates much higher than the United States. .
What investors should do? Wait patiently and take advantage of these economic cycles. Some companies that export goods overseas are growing fast and making lots of money.

Tax, Accounting, and Auditing: Contabilidad para los Negocios

Tax, Accounting, and Auditing: Contabilidad para los Negocios

Contabilidad para los Negocios

Que es contabilidad?
Conceptos y Principios Basicos.
Ecuacion Basica de contabilidad.
Metodos de Contabilidad
Como Reconocer Ingresos y Gastos usando el metodo de caja u el de Acumulacion.
Metodos de valoracion de inventario
Estados Financieros
Ingresos y Gastos
Estado de Situacion
Estado de flujo de caja
Estado de ganancia retenida
Control Interno
Eficiencias operacionales
Contabilidad Gerencial

Texas Franchise Tax Extension form

You may need an extension fi you cannot file your tax form. Now, you need to file the extension by June 15, 2008.

Single, no children

Single, No children.

1. Wages of $4,000 and AGI up to $10,000: Stimulus could be $300.
2. AGI of $12,000 and fed tax liab of $325; Stimulus could be $325.
3. AGI of $35,000 and fed tax liab of $600; Stimulus could be $600.
4. AGI of $80,000 and fed tax liab of $600; Stimulus could be reduced to $350.

Married, No children:

Married, No children:

1. Wages of $4,000 and AGI of $20,000, no or with federal tax liability. Stimulus of $600.
2. AGI of $25,000 and Fed tax liab of $750. Stimulus of $750.
3. AGI of $60,000 and fed tax liab of $1,200. Stimulus of $1,200
4. AGI of $160,000 and tax liab >$1,2000. Stimulus reduced to $700.

Stimulus package-married with children

Married with children- list is not all inclusive:

1. MFJ with two children with AGI of $25,000: MFJ- $600; Children-$300/each. (not more than 2 children).

2. MFJ w/2 children with AGI of $35 K: Approx $1,670
3. MFJ w/2 children w/ AGI of $80K: Approx $1,800
4. MFJ w/2 children w/ AGO of $160K: Approx $1,300 (begin to phase out due to AGI to higher.)

Texas Franchise Tax

The NEW MARGIN TAX.
The Texas franchise tax is a privilege tax imposed on each corporation and limited liability company chartered/organized in Texas or doing business in Texas. (This is a new way of calculating the Texas Franchise Tax.)
Taxable entities: (domestic or foreign)
Corporations
Limited Liability Companies
Partnerships (General, Limited, and limited liability)
Business Trust
Professional Associations
Joint Ventures
Other legal entities with statutory liability protection

Non Taxable Entities
Sole proprietorships
General Partnerships (directly and wholly owned by natural persons)
Passive Entities
Estates
Escrow
REITs
Trust (non business trust)

Latest News:
The deadline for the extension has been extended to JUNE 15...from May 15, 2008 . Sounds like a big relief to TP.
Calculating the Tax
Most entities pay at the rate of 1/2% to 1%.. Retailers pay the 1/2% and wholesalers 1%.
They are three ways to calculate your tax liability; the..
Cost of Goods Sold Method
Compensation Method
Alternative Method
For the initial report, the net taxable capital rate is prorated over the initial period.
New forms and instructions for 2008 are here now.

Caution: Every reporting entity must report even if no tax is due.

On Retirement

Penalty for early withdrawals from pension plans or IRAs prior to attain age 59 1/2. If you make withdrawal before attained the required age, you will be penalized 10% of the amount withdraw.
After tax IRA. If you have an after tax IRA, you need to keep track of your basis on the IRA by filing Form 8606. Why?. The IRS needs to know the after tax portion of your IRA, and so do you. You do not want to pay taxes a second time, Do you?
Rollover a 401K and/or a traditional IRA. Generally, do not result in a taxable transaction if is roller over within 60 days from the distribution date.

What is the date you should start receiving your minimum required distributions (MRD) payments after reaching 70 1/2? If you reach 70 1/2 in March 5, 2007 (or any date in 2007), you should begin making your 1st MRD by April 1, 2008 , and his/her second distribution by Dec. 31, 2007. VERY IMPORTANT. (Exceptions apply.)
Do you think you will celebrate your 82 birthday? Well, you may consider applying for SS benefits at age 65 instead. You could receive 25% more in SS benefits per year.

The Mortgage Forgivenss Debt Relief Act of 2007

This law exclude from income any debt forgiven or cancelled as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
Usually, debt forgiven or cancelled by a lender must be included as income on your tax return and is taxable. This new law allows you to exclude certain cancelled debt on your principal residence from income.
Do you need to report it on your ax return? Yes. As a general rule, must taxable and non taxable items are reportable events, and this one is reportable.
What about debt on a second home, credit card or car loans? Yes, but not under this provision. This provision applies to your principal residence. The Provision can be used in 2007, 2008, and 2009.

2008 Stimulus Payments Calendar

Some taxpayers (TP) will see payments in their bank accounts as early as April 28, 2008. (i.e., early filers.)

The first wave of payments will go to people who opted for direct deposit payment (deposit) on their 2007 income tax return and their tax return was already processed by the IRS.

The payment schedule is based on the taxpayer last two digits social security number;
00-20 May 2
21-75 May 9
76-99 May 16

All others are schedule to start on or after May 16 thru July 11, 2008, as follows:
00-09 May 16
10-18 May 23
19-25 May 30
26-38 June 6
39-51 June 13
52-63 June 20
64-75 June 27
76-87 July 4
88-99 July 11










Source: IRS

2008 Economic Stimulus Act- Business Provisions

This Act provide some incentive for businesses, among those you find;
50 Percent Special Depreciation deduction Allowance-to recover the cost of assets placed in service.
New depreciation limits on Business Vehicles-the maximum that can be taken for assets placed in service is $3,160 to $11,160.
Section 179 Expensing deduction was double from last year. -Business can expense up to $250,000 in assets placed in service in 2008.
These incentives are created to stimulate the economy.

IRS Stats Report for 2007

During the fiscal year ending September 30, 2007, the IRS collected approx $2.4 trillion in taxes (net of $295 million tax refunds) and processed around 235 million (3% more than last year) tax returns.
Of the 235 million tax return filed, 139 million of those were Individual tax returns. And, 79 million were filed electronically last year (i.e., 2006 tax returns).
Now, lets look at the days it will take for the IRS to send stimulus checks to households who filed electronically, using 2006 electronically filed numbers. (See page 2 for the IRS Calendar.)
It will take the IRS 14 days (May 2-16) to wire money to approximately 80 million taxpayers across multiple Banks accounts and regions and possible countries if they are living overseas.
That is amazing!
And, if I use the 2006 tax refunds of $295 millions as an example; approximately 21 million dollars a day will be wired out to TP. Now, that is impressive.
Another curious data is in the human resources area. Of the 92 thousand employees currently working now, 45 % work in the examination and collection department, and 28% of them work filing and providing account services (i.e., processing tax returns) to TP. So, the number of employees reviewing tax returns had increased since the advent of the E-file system.
Conclusion; things have change at the IRS and they will be changing once everybody E-file their tax returns.