Knight Accounting and Technology

This just in…Congress is talking about expanding the homebuyers credit beyond first time purchases, and giving a $6,500 credit to buyers who’ve owned a home for five of the last eight years.  While this hasn’t passed yet, it’s food for thought if you are in the market to purchase a house and you can hold off until November 30th when the new law is set to be enacted!

There’s a new, albeit small, benefit this year if you’re in the market for a new car.  If you purchase a new car between 2/17/09 and 12/31/09, you can take a deduction for the sales tax paid on that purchase up to the first $49,500 of the purchase price.  This is phased out for those with Adjusted Gross Income above $250,000 for MFJ and above $125,000 for all other taxpayers.  How does this help you?  If you purchase a $40,000 vehicle and your local sales tax rate is 7%, then you would get a tax deduction of $2,800.  You would then multiple $2,800 times your effective tax rate, and that’s your savings.  Let’s say your effective tax rate (your tax liability on line 56 divided by your total income on line 43) is 15%, then your savings would be $420.  So, does this make me want to run out and buy a new car?  Definitely not.  But, if you’re in the market for a new car and the deals are good, it makes sense to make the purchase before year-end rather than wait until 2010 (unless, of course, the government extends this tax deduction, but we won’t know that until late December).

Check out my latest Summit Daily Article, the Perils of Paperless Banking.

The American Opportunity Tax Credit was buried quite deep in the stimulus package…to be honest, I’m just now seeing news of it over the various IRS newswires, but it’s pretty darn cool!  It basically extends the HOPE Credit, which has been around for years and offered families with incomes less than $96,000 (or singles less than $48,000), a credit of $1,800 off their taxes for their children’s first two years of education.  But, the extension is bigger and better!  The income limits are increased to AGI’s of $160,000 for married filing jointly ($80,000 for singles) and the credit is increased to $2,500 and up to four years of education!   Forbes has put together a good website with all the details, but I just wanted to make you aware of the potential benefit to your family!  If you have a way to do a little tax planning at year end to keep your income under the $80,000/$160,000 income limits, this may be a great year to do so!  And, if you know anyone else who may benefit from this information, please forward it along to share!

A great question keeps resurfacing about which energy efficient improvements qualify in 2009. As you may remember, this credit was available in 2006 and 2007, then disappeared in 2008, but has been passed again for 2009 and 2010. They don’t make it easy, do they?!?!? As it stands for 2009 and 2010, the credit is available for certain Windows, Doors, Insultation, Roofs, HVAC, Water Heaters, and Biomass Stoves, and is equal to 30% of the cost of equipment up to $5,000 (which is a credit of up to $1,500). This maximum $1,500 credit is spread over the two years, so while you can purchase items in separate years, there is a maximum of $1,500 total, not per year. Now for the tricky part…every category has VERY specific requirements, right down to the R-value of the insulation. For more details on which purchases qualify, please visit the Energy Star website.  As a side note, qualified solar, geothermal and wind systems earn a credit of 30% with no cap on the cost, so if you’re looking into those, the benefits are far greater.

I’m new to this whole blog thing, so I don’t know what people find interesting, but I’m just fascinated by this, so I wanted to share!  Thanks to the power of the internet, Dave & I have just discovered amazing things about 2 of our famous relatives!  Dave’s grandfather, Harry Knight, is famous in the rodeo circles, but I never knew just how famous he was until reading this article: http://www.ellensburgrodeohalloffame.com/inductees/harryknight.html.  And, I’ve always known that my Great Uncle, Homer Facto, served on PT59 with JFK, but until this morning I didn’t know he had followers!  Doing a google search for him brough up 173,000 hits, including this site (http://www.vintagememorabilia.com/index.cfm/page/john-f-kennedy-typed-letter-signed-autographed-pt59-boat-crewmate) where someone paid $1,000 for a letter that JFK wrote to him.  I’ll always remember him as Uncle Homer, the beloved old Uncle who made us watch the history of PT Boats EVERY Thanksgiving, but it turns out that military historians think pretty highly of him as well!  Isn’t the internet wonderful?  These articles make great scrapbook material for Jacob who will never have the pleasure of meeting these great men, but will always know how wonderful his ancestors were!

Greetings!  In order to continuing improving my service offerings, I have redesigned by website, www.cpamichele.com, and added a blog.  I strongly encourage you to follow the instructions below and sign up for the blog…I will use it to update you on pertinent tax information in a timely manner.  While I will still send out my annual newsletter, this blog will help me keep you posted throughout the year.

1) Visit www.cpamichele.com.  On the right, you’ll see a link that says “Click here to subscribe to my blog.”
2) The next screen is the registration screen…please create a username and enter your email address.  Then, click on the box next to “Click here to subscribe to email notifications for new posts” and click Register.
3) Your password will be emailed to you, along with a link to log into your subscriptions.
4) Once you log in, you will see a screen that allows you to enter various information (there is no need to!) and also change your password to something easier to remember at the bottom.
5) More importantly, once you are logged in, there is a link to Subscriptions on the left side.  Under subscriptions, you have the option to select or deselect various categories.  When I post a blog, I will assign it to a category…choose the ones that interest you, and you will receive an email when I post a blog to that specific category.

a. Personal – Dave, Jacob and I keep pretty busy, and personal posts will be about the things we do and the places we go!
b. Shopping & Savings – CPA often stands for “Cheapest Person Alive,” so when I get a great deal or find a fantastic bargain, I’ll post it here!
c. Individual Taxes – Sign up here for updates on tax changes that affect you & your family, and I’ll do my best to help you save money on taxes and take advantage of all the tax deductions and credits available to you.
d. QuickBooks – As a QuickBooks ProAdvisor, I often get early notices of Intuit updates and produce releases, and I will communicate those as well as my favorite tips on this post.
e. Small Business Tax & Accounting -  If you own a small business, this is the feed for you!  I’ll keep you posted on tax changes and provide relevant accounting updates as they come across my desk.
f. Urgent – This category will be used sparingly, and only as a means of me communicating the ‘you absolutely need to hear this!’ issues.
g. Not-for-Profit – If you work for, or run, a Not for Profit, these posts will keep you up to date on the ever-changing world of governance and reporting.

Looks like the first big storm is coming through tonight, so I guess that it’s time to say goodbye to summer.  Dave, Jacob and I have had a blast during our first summer in Summit County where I wasn’t either pregnant or dealing with an infant!  Much of my time has been spent on Rotary projects, and I’ve enjoyed every moment.  We also took some great hikes and did a long roadtrip through Colorado.  We have hundreds of pictures posted if you go to the About Us page of this website, then click on Jacob’s Pictures.  Our latest project is fostering a litter of kittens (thanks to Kay Beaton for posting great pictures of them online).  We got them at 4 weeks and 6 ounces, and they are now 8 weeks and 1.5 ounces, so we must be doing something right!

I’m now a columnist for the Summit Daily!  While I’ve published several textbooks in the past and been featured in a national publication, TaxPro Journal, there is something very special about being in our hometown newspaper.  The article itself, How to Protect Yourself from IRS and Email Scams, can be found at this link: http://www.summitdaily.com/article/20090929/BUSINESS/909289980&parentprofile=search.  Please check it out, and if there’s any topics you want to read more about, please let me know!

QuickBooks 2010 was released earlier this week.  While I don’t think you need to update to 2010 if you are currently using 2008 and 2009, I do believe that you should update your QuickBooks at least every 3 years.  If you are planning to purchase QuickBooks 2010 this year, I can get a discount through the ProAdvisor program, so just let me know!  Here’s the prices that I can offer: Pro $150, Pro-3-User-Edition $420, Mac $150, Premier $280, and Premier-3-User-Edition $820.  As always, please let me know if I can help!