Anthony Cali's Blog

Temporary Deductions for New Car Buyers

2010-02-02T14:54:00Z

Did you buy a new car last year and are confused with how this new car tax deduction works? Then let’s go over some of the information. This deduction was included in the 2009 stimulus package and basically allows those who buy a new car, light vehicle, recreational vehicle or motorcycle in 2009 to deduct state and local sales tax as well as any excise tax charged in the purchase.

Who does this apply to?

This applies to taxpayers who purchased after Feb 16, 2009 and before Jan 1, 2010.

How does the deduction work?

Let’s say for example you purchase a car for $25,000, and had a trade-in of $5,000. Typically states would tax the difference at $20,000. At a tax rate of 6%, your deduction would be $1200. This would be equivalent to buying a new car at $20,000, with no trade-in.

***Note: The deduction is limited by purchase price (up to $49,500) and qualifying income ($125,000 for individuals and $250,000 for couples). Also, purchases made in states without a sales tax can also qualify for the deduction. For more information please reference the IRS website Special Tax Break Available for New Car Purchases This Year.

The best part, this deduction is available whether you itemize deductions or not. Here are some common Questions & Answers you may have regarding this deduction.

Make sure to take advantage of this deduction if it applies to you. Then you can take the extra money and drive it straight to the bank! Literally!

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

Military Tax Tips

2009-11-02T14:54:00Z

With tax season right around the corner, now is the time to pay heed to the many deductions and credits out there for the armed forces. Being in both the tax industry and a highly dense military town I see a lot of military members and their families surprised at what our tax preparers educate them on in a simple 15 to 30 minute tax interview when filing. There is a lot of information out there for you to look into in anticipation to file your next tax return so let’s catch up and get some education!!!

Military Tax Tips

The IRS gives you 10 military tax tips to help you when filing your return next year. You can learn about Moving Expenses, Combat Pay, Extensions of Deadlines, and Joint Returns just to name a few. I know it can be boring stuff but it may just be the difference in reducing your tax liability and increasing the size of your refund!

Exclusions – Combat Zone Service

You probably already know this but Combat zone pay is generally not taxable unless you are an officer. (In that case there are limits to the maximum amount) Learn more about the military pay exclusion to see if you qualify.

Tax Information

There is a lot of information out there for you to learn and take advantage of:

Publication 3, Armed Forces' Tax Guide (in depth look into the special tax situations of active members of the U.S. Armed Forces)
Armed Services Tax Assistance 2009 - Podcasts
New Law: Additional Military Families to Get Stimulus Payments This Fall
And much, much, more!!!

The information is out there! If it seems like too much information and not enough time don’t worry there are great people out there to assist. Whether you file yourself or use a paid preparer please make sure to utilize all the advantages you have as a service member! If you have any questions contact your local Liberty Tax Service office to assist.

Starting Your First Job

2009-09-21T14:54:00Z

When I look back to starting my first job, one of the things that stick out most is the amount of money taken out of my paycheck each and every week. My luck, I was employed by a great company in the tax industry Liberty Tax Service. (Yes taxes can be fun!) Being around the information that affects your pay check as well as the tax return you file at the beginning of each year makes it that much easier to learn the information.

So what does affect your paycheck?

To keep it basic, the amount your paycheck is reduced by is the amount of tax withheld by your employer for federal, state, and local income tax as well as social security benefits. What you may or may not know is that you actually have some control as to how much or how little that amount withheld will be.

One of the initial forms you will fill out for your employer is the W-4 Employee's Withholding Allowance Certificate. This will let your employer know the amount of federal income tax to withhold from your paycheck based off of your “personal allowances”. Realize that everybody’s situation is unique so ask questions to your Human Resources staff if unsure about anything to make certain you are filling it out properly.

As you learn more about it and life situations change that influences your tax circumstances, you will be able to update your W-4 to reflect what is going on. Marriage? Children? Multiple Jobs?

I see a lot of people learn the hard way filing their tax return unaware that their refund or balance due is affected by the allowances taken throughout the year. So take ten minutes to download the W-4 and read up on the information. You will be better off knowing your tax outcome when you receive your W-2 Wage and Tax Statement in January, run to file your tax return, and understand why the amount came out to be what was it was.