The Internal Revenue Service has announced that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year. “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.” The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.
The SEC’s investigation into the subprime mortgage mess now includes examinations of the financial statements of the mortgage lenders who are generally blamed for creating the disaster that has swamped the global economy. Lenders suspected of misstating loss reserves, asset values, or the prices on foreclosed properties are going to be pursued by the SEC, according to commissioner Elisse Walter. If a lender’s disclosures about loan quality, credit risks, rates of default, mortgage delinquency, and exposures to the subprime market were inaccurate, then chances are, its executives are going to be paid a visit from the SEC’s enforcement staff. Walter was testifying during a March 20, 2009, House Financial Services Committee hearing on investor protection and enforcement during the subprime meltdown.
So far, the agency’s enforcement division has filed nine cases involving subprime issues, and it has many other subprime matters under active investigation, Walter told lawmakers.
The subjects of the investigations to date are primarily subprime lenders, credit rating agencies, home builders, and companies that provided mortgages to investors to enable them to finance securities purchases. The agency is also looking at the investment banks that bundled the mortgages into securities and then sold them into the secondary market.
Source: WG&L Accounting & Compliance Alert Checkpoint 3/23/09
Did you know?
The average american family spends $1.22 for every $1 earned. Get on the financial scales and determine your current financial situation. What do you own and what do you owe (your net worth)? How much money do you make and how do you spend it? How much of it is used for things you absolutely need, such as rent, insurance premiums and credit card payments (fixed expenses)? How much do you spend for pleasure, on things like a new cell phone, pet care, clothing or vacations (variable expenses)?
A free budgeting worksheet is available at www.ValueYourMoney.org.
Dear CPA: Does this legislation affect 2008 returns?
Dear Taxpayer: Generally, no. The new legislation does not have any major impact for the vast majority of individuals preparing their 2008 tax returns due April 15. Instead, these changes will largely impact 2009 tax returns filed next year, in 2010. Taxpayers should continue to prepare their 2008 tax returns as they normally would. And remember, the sooner you provide complete and adequate information to your CPA, the sooner your return will be prepared!
An employee who expects to be eligible for the earned income credit (EIC) and expects to have a qualifying child is entitled to receive EIC payments with their pay during the year. To get these payments, the employee must provide the employer a properly completed Form W-5, Earned Income Credit Advance Payment Certificate. Employers are required to make advance EIC payments to employees who give them a completed and signed Form W-5.
Certain employees who do not have a qualifying child may be eligible to claim the EIC on their tax return. However, they cannot get advance EIC payments.
For 2009, the maximum amount of advance payments an employee can receive is a total of $1,826.
I am working on my retirement planning and definitely need to increase the amount that I am saving. How can I look up the tax bracket that I am in so that I can figure out the net I should deposit into a Roth on a monthly basis?
The tax bracket that you are in does not directly affect the computation of your Roth IRA deduction. The absolute amount of your adjusted AGI is the important figure. The phase out limits are listed here. The amount that may be contributed for 2008 by April 15, 2009, is generally $5000 per person. I recommend contributing for 2009 as early in the year as possible to gain an extra year of tax free growth.
From Bob Owen CPA, of the Texas Society of CPAs: