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Tax Tips Newsletter
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July 2008 - Vol 3, Issue 5
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Greetings!
Linda Head Short 0608

I hope you have been enjoying your summer. The office has been busy getting some new computer equipment and updating our software so that we will be able to service you better. If you have sent an e- mail in the past couple of weeks and have not gotten a response, please resend it as it may have gotten lost during this transition.

Last month I attended the American Institute of CPAs Technology Conference. I picked up some great information so I will be including little technology tidbits in the newsletter over the next few months.

I want to thank those of you who have referred clients to me. I appreciate your confidence in me and will make sure that your friends and colleagues are well taken care of.

BMW
Due to rising gas prices, the IRS has increased the "standard mileage rate" for business drivers in 2008.

The standard mileage rate is an IRS-approved shortcut. Instead of tracking all the actual business expenses of your vehicle, you can use the prescribed flat rate for the year. But you still must keep detailed records of every business trip.

The new rate of 58.5¢ per business mile - up 8¢ per mile - applies to travel during the last half of this year. For the first half, the previous rate of 50.5¢ per mile still applies. In addition, you may deduct any business-related parking fees and tolls.

EXAMPLE: You drive 1,000 business miles a month in 2008. Over the course of the year, you incur $500 in related tolls. For the first six months, you can deduct $3,030 (50.5¢ x 6,000). For the last six months, the deduction increases to $3,510 (58.5¢ x 6,000). When you add $500 in tolls, your deduction for 2008 equals $7,040 ($3,030 + $3,510 + $500).

Note that the IRS also increased its standard mileage rate for medical and job-related moving expenses from 19¢ a mile to 27¢ a mile for the last six months of this year. However, the rate for charitable driving, which is set by law, remains at 14¢ per mile.

Proceed carefully: The new mileage rates are available to many - but not all - drivers. Give me a call if you need details on how the changes affect your situation.
Tax Coffer
This year, one of the biggest tax changes is the zero tax rate on long-term capital gains and qualified dividends for those who are normally in the 10% or 15% regular income tax brackets. Single taxpayers whose 2008 taxable income falls under $32,551 and marrieds with income under $65,101 meet the requirements.

Even if you're not usually in the 10% or 15% tax brackets, you may be able to benefit from this tax break with some 2008 tax planning. You might consider ways to cut your 2008 taxable income if you're close to the threshold amounts.

For example, you might increase deductions such as charitable donations or contributions to retirement accounts. If you assist your parents financially, you might consider gifting appreciated stock to them if their income falls below threshold amounts. They could then sell the stock and qualify for the zero tax rate on the sale.

Unfortunately, the recent change to the kiddie tax rules means that gifting investment assets to a child may not allow the child to qualify for the 0% rate on investment income. This year the kiddie tax applies to investment income exceeding $1,800 for children up to age 19 (up to age 24 for full-time students).

For details and assistance with this and other tax-cutting options you might consider, give me a call.
Laptop network
One of the trends that I heard about at the conference is for software developers to publish their applications on the web. What this means is that now you will only install a small piece of the software on your computer, if that. The application will be web based and you will log into a secure website to use the software.

Google has been doing this for awhile with their Google Docs application. It's a word processor, spreadsheet, and presentation software that is part of Google. The software is FREE. One of the advantages of using this type of software is that you and co-workers can share and collaborate on the application.
Golden Egg
The Tax Tip this week has tips on how to do with reviewing your employee reimbursement policy.

The Business Tip of the Month has tips on whether you should lease or buy your equipment.

The Financial Tip of the Month deals with teaching your kids about money. There are some wonderful programs out there to teach kids about money. If you would like more resources, please let me know.

The Fraud Alert deals with protecting yourself from medical identity theft. There was just an arrest of a man in Texas that had stolen identities of students, faculty and staff at UC Irvine. The common thread was that they all had the same health insurance carrier.

Photos © Bigstockphotos.com, istockphoto.com, Janet Gelfman

Sincerely,
Linda Heineman
Linda L. Heineman, CPA, CITP

phone: 626-577-0979
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