January 2008
Tax Alert
Cathy Cavanagh Alerts to new Tax Laws
In This Issue
2008 Update
Early Business Filings
Deducting Business Mileage
Tax Alert Archive
 
Tax Alert September 07
Tax Alert August 07
Tax Alert July 07
Tax Alert June 07
 
 
On Going Education
Newsletter
Welcome to our Tax Alert-News Flash .  If you would like to continue receiving these Alerts, you are already on the list.  If not, just click on the the "safe removal" option at the bottom of the Tax Alert.  Be sure and check the website for past Tax Alerts that may be helpful to you, as well as information about my monthly more comprehensive Newsletter. 
 
The information contained in this Tax Alert is current as of today.  If you are reading this at a later date, the information may not be correct for current tax law.  Always check with your tax professional to confirm the current tax laws before you make any investments or decisions pertaining to your real estate investments.

 

 CLICK HERE for '08 Tax Filing Deadlines

2008 TAX SEASON UPDATE

 

AMT AND FILING
 

The IRS really stepped up to the plate with the last minute change to the tax code by congress.  There are very few tax filers that will have to wait to file because of the changes (for the better) in the computation of the Alternative Minimum Tax.  Check with your tax accountant to see if it affects you.  Remember to still get all your information in as soon as possible so the return can be processed in a timely manner.  There are no extensions due to this tax change.

 

THE FAFSA
 

For those of you with college students, you have probably seen the brand new format for filling out the required financial information for any type of financial aid for your college students - or yourselves.  It takes a little getting used to, but once I got through it, I liked it.  It makes it real easy to file early with a projected taxable income and finalize later with the actual numbers.  Make sure you understand that you do not include the value of your primary residence or your business assets if you employ less than 100.

Class Schedule

For the most up-to-date class schedule check out the web site. There are many classes schedule for 2008.
 
 
CHECK OUT THE CLASS SCHEDULE

EARLY 2007 BUSINESS RETURNS 

The first of the business returns are being filed already.  It appears 2007 was a mixed year for local Northwest businesses.  A lot of Realtors were down from 2005 and 2006, but still did quite well.  Investors had properties on the market longer, but still made a nice return on their investments for the most part.  Those who decided to get into the "flipping" market generally lost everything on that last transactions bringing to mind my mantra "flippers flop".

As always, the restaurants and retail seem to hit the hardest in a slow down because that is where all of us can easily cut down on spending.  It is more necessary than ever to pay attention to an actual business plan.  My May newsletter will emphasize that issue and give you a good outline for a business plan.
 
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BUSINESS VEHICLE DEDUCTION
 
Basics
 
There are two Methods for deducting your business vehicle expense.  Both methods require that you know the total business Miles for the year. 
 
The first is the MILEAGE METHOD.  Using this method you can apply a fixed rate to your total business miles.  The rate changes and in 2007 it was 48.5 cents per mile for business miles.  There are different rates for medical trips and charitable trips. 
 
The second method is based on ACTUAL COST and requires a little more work.  For this method you will need to know the total mileage for the year for all work use vehicles.
 
 
Record Keeping
 
Start Jan 1st of every year by writing down your current odometer reading(s).
 
Keep a log either on your computers calendar and scheduling software or in a good old day timer.  Use this to record your business activities.  Remember the IRS wants to know where you went, who you saw, and what you did.
 
At least once a month write down your mileage and record how much of it was for business trips.  Write the computed mileage in your calendar.
 
Keep these records for 5 years!
 
Tips
  • Keep a separate business account for all gas and maintenance expenses on your business vehicle and other business expenses.
  • If you have more than one vehicle designate one as a business only car.
  • Research whether Buying or Leasing makes more sense and if you Buy then BUY USED AND DRIVE UNTIL IT DROPS! 
There will be a full article in my February Newsletter about choosing the best method, and determining what miles are considered "business miles".
 
KNOWING HOW TO TAKE THESE DEDUCTIONS CORRECTLY MAY SAVE YOU THOUSANDS OF TAX DOLLARS EVERY YEAR!