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Tax Tips Newsletter
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October 2008 - Vol 3, Issue 6
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Greetings!
Linda Head Short 0608

Gosh, has it really been 3 months since the last newsletter? Well, it's been a very busy and exciting time.

With the recent financial crisis many of you have been calling with questions. One of the articles this month has to do with the recently signed "Emergency Economic Stabilization Act of 2008". I also urge you to contact your financial advisor if you have questions about your current investments. If you are not working with a financial advisor, I will be glad to provide some referrals.

I'm very pleased to announce that Felix Orona, CPA has been working with us since August 1st. Felix has been a good friend for many years. His association with my firm has been a win-win situation for all of us and I'm very happy to have such a talented professional on board. I hope that all of you will have the opportunity to meet and work with Felix in the future.

I will be on vacation from October 30 - November 16th. As usual, my staff will be here to handle any emergencies that may come up.

Wall Street
On October 3, 2008, President Bush signed the "Emergency Economic Stabilization Act of 2008" (H.R. 1424).

The main thrust of this new law is to make funds available to the credit market and keep the economy going. In addition to the $700 billion bailout provisions, the law includes some tax law changes that could affect your tax planning.

The law provides relief from the AMT for 2008, includes energy and disaster relief provisions, temporarily increases FDIC insurance on bank accounts, and extends many tax breaks that had expired or were due to expire.

Among the tax breaks that were extended through 2009 were the following:
* The optional itemized deduction for state and local sales taxes.
* The deduction for qualified higher education expenses.
* The above-the-line deduction for classroom supplies purchased by teachers.
* The additional standard deduction for property taxes paid by those who don't itemize.
* Tax-free contributions from IRAs to charities by older taxpayers.
* The business research and development credit.
* 15-year straight-line cost recovery for qualified leasehold, restaurant, and retail improvements.

The law increased the 2008 alternative minimum tax exemption amounts to $46,200 for singles and $69,950 for couples.

To see how these and other changes in the tax law might affect your tax planning, please contact us. We are here to help you identify tax-saving options that fit your particular situation.
1040 with pen and calculator
Don't forget these two tax breaks that you and your family members could benefit from this year.

First, taxpayers who take the standard deduction instead of itemizing deductions will be allowed an increase in their standard deductions for property taxes paid this year. This special deduction is limited to $1,000 for married couples filing jointly and to $500 for single filers.

Second, first-time home buyers may qualify for a tax credit of up to $7,500. The home must be the first one owned in the past three years, and it must be purchased after April 8, 2008, and before July 1, 2009. The credit phases out for singles with income over $75,000 or married couples with income over $150,000. Also, the credit has to be paid back over a 15-year period that starts two years after taking the credit.

For more information on these two tax breaks, give me
Golden Egg
The Tax Tip this week list 3 of the most common tax myths. These are items that people commonly think will help them avoid taxes, but they just don't.

The Business Tip of the Month has tips on financing a new business.

The Financial Tip of the Month deals with making your retirement funds last. These are just general rules, but good to review especially in this market.

The Fraud Alert deals with protecting yourself from retirement scams. A good thing to review if you are considering moving your funds right now.

Photos © Bigstockphotos.com, istockphoto.com

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

phone: 626-577-0979
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