Ohio Energy Efficient Appliance Rebate Program

Ohio will be issuing 89,000 rebate vouchers to Ohio residents who replace their old refrigerators, clothes washers, dishwashers, hot water tanks, and electric heat pumps with new energy efficient ones that have the ENERGY STAR label. In addition, the hot water tanks must be replaced with a gas water heater certified after 1-1-09. The clothes washer must be certified after 7-7-09 and the dishwasher after 8-11-09.
The rebates are $100 for the refrigerators, dishwashers, and gas hot water tanks. They are $150 for the clothes dryer and $250 for the heat pump. The vouchers are issued on a first come - first served basis and when they are gone, their gone. There will be approximately 20,000 vouchers each for the refrigerators, clothes dryers, and dishwashers. there will be approximately 15,000 vouchers for the hot water tank and 2,000 vouchers for the heat pumps. You old appliance MUST be hauled away and recycled so they are no longer used. The new appliance MUST be purchased during the program, which is scheduled to begin in March, 2010. The official start date will be announced by the State of Ohio no later than March 31, 2010.

You may be subject to California Taxes and not know it!

The California legislature has passes a bill to make many people who believe that they are not subject to taxation by California. This bill states that you are subject to tax if you "enter into an agreement with a California business or other entity under which the California entity, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property." "The referral could be by a link or an Internet Web Site or any other means." If you have an independent sales rep or any affiliates in California, you could be subject to California taxes. If the governor signs this bill into law, you will suddenly discover you are subject to California taxes even though you have never been to the state. Worse yet, twenty-one other state are looking into this method of increasing their taxes. New York started this scam with the so-called Amazon Tax. All we can do is petition Congress to forbid this scam under the Commerce Clause of the U.S. Constitution. The time to fight this monstrosity is now.

Hatian Relief Donations Qualify for 2009 Deduction

Taxpayers who make cash donations to charities providing earthquake relief in Haiti between January 11, 2010 and February 28, 2010 can choose to deduct these donations on their 2009 or 2010 tax returns, but not both. This deduction does not cover donations of property, but only cash given to local, not foreign, organizations.

You must itemize your deductions if you wish to claim this deduction. The Federal record keeping requirements are in effect. A copy of your telephone bill showing the name of the donee organization, the date of donation, and the amount of the donation will be acceptable for text donations. For all other cash donations, you need the bank record (cancelled check)or a receipt from the charity showing the name of the organization, the date of donation, and the amount of donation.

2009 Ohio Tax Changes

Ohio Governor Ted Strickland and the ohio legislature has postponed for two years (2009 and 2010) the scheduled tax rate reduction for 2009. By not lowering the tax rate for 2009 and 2010, Ohio has effectively raised your taxes for these two years.

Ohio now requires that all 2009 and later income tax returns to be filed electronically.

Beginning January 1, 2010 Sales tax is now sourced to the location where the order is recieved, not where it is delivered. This does not apply to sales of autos, trucks, boats or sales of out-of-state vendors which will still be sourced to the point of delivery.

2009 Ohio Income Tax Changes

2009 Homebuyer's Credit

The IRS has issued new instructions about the documentation that must be attached to your 2009 Federal Income Tax Return if you wish to claim the new homebuyer's tax credit. All taxpayers must attach a copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed form HUD-1 Settlement Statement.

In addition, those taxpayers who qualify for the long-time resident of the same main home, must attach the following documentation covering a five-consecutive-year period. Form 1098 Mortgage Interest Statement, or Property Tax Records, or Homeowner's Insurance Records.

If the required documentation is not attached, the claim will be denied! The need to attach this documentation to your Federal return means that you will not be able to E-file your Federal return. Ohio residents are required to E-file their Ohio state income tax returns. Also, the IRS expects those returns claiming this credit to take at least an extra 3 weeks to process.

2008 Business Year-end Tax Planning

Disregarded entities (generally LLC's that are taxed as sole proprietorships or LLC's wholly owned by a corporation or partnership) are treated as if they have no separate existence but are rather a part of their owners for tax purposes. For this reason they use their owners identification number and report their activities on their owners returns. Effective January 1, 2009, their is a major change. For payroll purposes only, they will now need their own separate identification number and will report all payroll taxes as if they were a separate entity. This means that all LLC's that are disregarded entities must obtain a new identification number for payroll purposes only and register as a separate payroll taxpayers with the IRS, state withholding agencies, state unemployment agencies, workers compensation, and city withholding agencies NOW! These LLC's will still report their income taxes as part of their owners with their owners identification numbers. This is sure to cause much confusion with both the LLC's and the taxing agencies as they attempt to match the payroll returns with the income tax returns.

New assets with a MACRS life of 20 years or less purchased and placed in service during 2008 are subject to a new 50% bonus depreciation deduction in addition to the regular depreciation deduction on the balance. This is not limited to the income of the business like the Section 179 deduction is. Property is placed in service when it is ready and available for its intended use. Property is purchased or acquired when it is in your personal control or possession. Eligible new property includes service station buildings, depreciable land improvements (parking lots, lighting, sewers, etc.) farm buildings, and qualified leasehold improvement property. A qualified leasehold improvement property is any improvement to the interior of a non-residential real property that is more than 3 years old subject to a lease. The interior of the building must be occupied exclusively by the lessee. Enlargement of the building, elevators and escalators, structural components of the common area and structural interior framework of the building are not qualified leasehold improvements. For property with a 10 year life or more and transportation property, the placed in service date is extended to 2009. For used property the 2008 Section 179 deduction is increased to $250,000. This deduction is limited to the profit of the business and cannot create a loss.

The deduction for business mileage was $0.505 for the first half of 2008 and $0.585 for the second half of the year. Be sure to calculate your mileage for each half of the year to calculate the correct deduction. For 2009 the deduction for business mileage will be $0.55. IMPORTANT! REMEMBER: NO BUSINESS MILEAGE LOG = NO BUSINESS MILEAGE DEDUCTION. KEEP ACCURATE RECORDS!

The deduction for medical miles or moving was $0.19 for the first half of the 2008 and $0.27 for the last half of 2008. For 2009 the deduction is $0.24.

The deduction for charitable miles was $0.14 for all of 2008 and is the same for 2009.

If you have any questions about these changes, contact our office.

2008 Individual Year-end Tax Planning

Congress has enacted many changes to the Internal Revenue Code this year that affect individuals. A one year patch has been added to the Alternate Minimum Tax for 2008. This years exemption is $69,950 for married taxpayers who file a joint return, $42,600 for single taxpayers, and $34,975 for married taxpayers who file separate returns. Also, AMT relief in the form of a current year credit for AMT taxes paid in prior years due to cashing stock options is now available.

Non-itemizers can take for 2008 and 2009 an additional standard deduction for real estate taxes paid up to $500 for single returns and $1,000 for joint returns.

The deduction for sales tax instead of state and local income taxes has been extended to 2008 and 2009.

The above the line deduction for educator expenses has been extended to 2008 and 2009.

Contributions to charities from and IRA has been extended for another two years.

The credit for energy saving improvements to the principal residence has been extended until 2010. However, the credit expired 12-31-07 and was extended starting 1-1-09. Therefore, there is no credit for 2008. Solar, wind, and geothermal energy expenditures have been included in qualified improvements.

First-time home buyers (who did not own a home in the last 3 years) may take a refundable credit of 10% of the purchase price to a maximum of $7,500 ($3,750 for a taxpayer filing married filing separately). Starting two years later you begin to repay the credit over a 15 year period. The amount that must be repaid is limited to the profit on the sale of the home if it is sold during the 15 year period. If the property is held for more than 15 years the entire amount of the credit will be repaid. In the mean time you have a tax free loan that you can use as you desire. If you use it to reduce your mortgage balance, you will effectively save the mortgage rate compounded for 15 years.

Sales of vacation homes after 12-31-08 will not receive the entire exclusion available to the sale of your personal residence. A planning note, to insure that you receive the exclusion when you buy a new home while selling your old, be sure to buy the new home after you sell the old home.

The Mortgage Forgiveness Debt Relief Act of 2007 provides that a qualified taxpayer does not need to pay federal income taxes on up to $2,000,000 of debt forgiven on a qualified loan that is secured by a qualified principal residence. This change affects debts forgiven between January 1, 2007 and December 31, 2009. This will prevent the tax disaster of owing taxes on the mortgage forgiven even though the taxpayer suffered a financial loss of the home. Their are many complicated rules that go with this provision. See us to discuss your particular case.

Now that the November election is over and we have a new president and congress, expect many changes to happen in the near future. The new president and congress have stated the the "Bush Tax Cuts" will either be repealed soon or will be allowed to expire at the end of 2010. Either way look for many changes and tax increases.

Ohio Homestead Exemption

Saturday, June 30, 2007, Governor Ted Strickland signed into law a new Homestead Exemption for Ohio home owners and eliminates the old exemption rules. The new exemption will allow home owners to shelter the first $25,000 of MARKET VALUE, not taxable value, from real estate taxation. An application must be filed with the county auditor before October 1st in order to reduce the taxes due in 2008.

To be eligible the homeowner must live in the home as their primary residence and be 65 years old or will be 65 in 2007 or, be certified totally and permanently disabled as of january 1, 2007 or, be the surviving spouse of a qualified homeowner who was at least 59 years old on the date that the spouse died.

If you believe that you qualify, contact your county auditor and request an application form or contact our office for assistance. You MUST file the application before October 1, 2007 to receive the exemption in 2008.