August Client Newsletter 2008

Posted: 8/1/2008

Dear Client,

“A perfect summer day is when the sun is shining, the breeze is blowing, the birds are singing, and the lawn mower is broken.” We hope you are enjoying summer and have taken time to relax in the shade or air conditioning with family and friends.

Here at Arend, Laukhuf & Stoller, Inc., we continue to keep you informed of important tax and business issues. We have listed a few changes that occurred during the first half of 2008.

Section 179 Almost Doubles!

	Old	New	Increase
Section 179 expense	$128,000	$250,000	$122,000
Annual acquisition limit	$510,000	$800,000	$290,000

Immediate versus deferred deduction:

Section 179 allows taxpayers to immediately write off $250,000 in qualifying purchases as opposed to depreciating the cost over the asset’s life.

Annual acquisition limit phaseout:

When the cost of qualifying property purchased exceeds the annual acquisition limit, it reduces the amount of section 179 expense allowed dollar for dollar. For example, if a taxpayer purchases $900,000 in qualifying property the section 179 expense allowed is reduced by $100,000 down to $150,000 ($250,000 - $150,000).

50% Bonus Depreciation returns!

moneyIf a taxpayer buys new qualifying property, 50% of the cost can be expensed immediately. Used property and property with a depreciable life of more than 20 years will not qualify.

Tax planning summary:

For taxpayers considering new investment or expansion, the incentives for proceeding during 2008 are greater than waiting until a later year. Current year deductions allowed by the section 179 expensing and bonus depreciation can reduce the effective cost of purchasing new machinery and equipment.

Checking the mail for your stimulus check?

The last batch of stimulus checks should have been mailed by the IRS on July 11 provided you filed your return on April 15. If your return is on extension you must file your return by October 15 to receive your stimulus check this year.

IRS Releases 2009 Contribution Limits for HSAs:

For calendar year 2009, the annual limitation on deductions for Health Savings Accounts (HSAs) for an individual with self-only coverage under a high deductible health plan is $3,000 ($5,950 for an individual with family coverage). For calendar year 2008, the annual limitation for an individual with self-only coverage is $2,900 ($5,800 for family coverage).

0% Tax Rate? - Capital Gain Opportunity:

Beginning this year and continuing through 2010, a zero tax rate applies to most long-term capital gain and dividend income that would otherwise be taxed at the regular 15% and/or the regular 10% rate (last year, a 5% rate applied to such income). The amount of income taxed at the 0% rate depends on several factors so check with us to see if you can take advantage of this rate.

Present & Future Minimum Wage Increases:

Effective January 1, 2008 an increase to Ohio’s minimum wage took effect:

• $7.00
• $3.50 for tipped employees (plus tips)

Exceptions: The Federal minimum wage applies to these categories:

• $6.55 for those employees whose employers gross under $255,000
• $6.55 for 14 & 15 year olds

Note: The Ohio minimum wage will increase each year by the rate of inflation. The federal minimum wage rate is scheduled to increase to $7.25 in the summer of 2009.

Worker’s Compensation Increases Rates:

BWC has effectively increased the cost of coverage for Ohio employers by reducing the group-rating discount from 90% to 85% effective starting in July. BWC hopes that by increasing premiums paid by employers enrolled in a group program, it can reduce premiums paid by businesses not covered by a group plan.

Sales Tax Change: Ohio will reverse prior decisions and now will allow businesses to charge sales tax based on location of store as opposed to based on destination of delivery.

Vote! Election Year:

The tax climate in Washington is subject to change depending on the results of the upcoming election. The current lower rates for taxes may have limited days. As the nation votes to choose leaders, we will continue to watch for changes that will affect you, your family, your business and your future.

Thank you for reading this update! We are honored to serve you. Please give us a call if you have any questions. Every tax situation requires individual attention and the information included in this letter is in no way intended to give definitive advice. We would love to talk to you in person, over the phone or by email. Let us know how you are doing.

Sincerely,
Arend, Laukhuf & Stoller, Inc.

Please contact us and we will be happy to meet with you.

Back to Top >>