The Tax Goddess Blog

Nine Tax Deductions That Will Dissappear This Year

2009-10-05T09:33:51-07:00

Here are the top nine ways to say your money that will only be good through the end of 2009!

1. Up to $2,400 of unemployment compensation is excluded from the gross income of the recipient, good until 12/31/09.

2. You can claim a deduction for sales or excises taxes paid on the purchase of a new vehicle (may depend on your income), good before 12/31/09.

3. If you haven't owned a home in the previous three years, you can claim a first-time home buyer credit of up to $8,000 (phased out at higher income levels) for the purchase of a principal residence. The credit can be claimed only for homes purchased before December 1, 2009. It is rumored that this credit may rise to $15,000 in 2010, but that's still just a rumor.

4. If you are covered by employer-sponsored health plans and are laid off before January 1, 2010, you can qualify for subsidized plan continuation (COBRA) coverage for up to nine months. Employers can claim a credit against employment taxes for the subsidies provided to employees.

5. For tax years beginning before 2010, teachers in grades K-12 and other eligible educators can claim an above-the-line deduction for up to $250 of their out-of-pocket expenses for books and supplies used in the classroom.

6. You can claim an additional 50% depreciation allowance for qualifying business machinery and equipment placed in service before January 1, 2010.

7. You can claim a Section 179 expensing deduction for the first $250,000 of qualifying equipment and machinery placed in service during this year. For tax years beginning after December 31, 2009, the maximum Section 179 deduction drops to $125,000.

8. Employers may claim a 20% income tax credit for qualifying differential pay paid to employees on active military duty. The credit expires for payments made after December 31, 2009.

9. Eligible contractors may claim a credit of up to $2,000 for each qualified new energy efficient home that the contractor constructs and that is acquired from the contractor for use as a residence. The credit does not apply to homes acquired after December 31, 2009.

Looking our for your best interests,

Your Tax Goddess~
Shauna~

Contractor vs Employee Status

2009-10-02T13:22:35-07:00

Independent Contractor (Self-Employed) or Employee?

It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

If you are an independent contractor and hire or subcontract work to others, you will want to review the information below to determine whether individuals you hire are independent contractors (subcontractors) or employees.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services.

The person performing the services may be -

An independent contractor

An employee (common-law employee)

A statutory employee

A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules
Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker's job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no "magic" or set number of factors that "makes" the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

If you have any questions on how you should be taxing your staff or vendors PLEASE speak with your CPA to get more information (our Tax Goddess can be found here if you have any questions)!

Looking our for your best interests,

Your Tax Goddess~
Shauna~

New Credit Card Rules Go Into Effect

2009-10-02T13:19:37-07:00

Credit card rules have changed, in ways to help protect customers against changing terms without notice.

Starting Thursday, August 20th banks must now comply with parts of the recently passed Credit Card Act of 2009 by

mailing bills at least 21 days before their due dates; currently this is set to 14 days in advance

providing at least 45 days' notice before making a significant change to their rates or fees. Currently this is set to a 15-day notice of altered fees or rates.

Banks will also be barred from increasing fees and rates without warning when a consumer misses a payment or exceeds a credit limit.

Consumers will be allowed to avoid future interest-rate increases and pay off any outstanding balance over time under the original rate terms. Currently, if a consumer gets hit with a penalty rate, for example, they aren't given the option to reject the rates.

Additional changes will follow in Feb of 2010, but for now, this is a great start towards helping customers maintain healthy credit and work towards payment in full of these debts.

According to Consumer Action's 2009 credit-card survey, more credit cards now come with minimum cash-advance fees and higher balance-transfer and foreign-transaction fees. The banks have used this time frame to make the changes they wanted as freely as before so as not to fall under today's implemented rules.

For now, things you should check:

Your statement due dates (to make sure you are getting the additional time required)

Check around for better deals. In a good competitive nature, many cards are offering great benefits and rewards, and some even have better rates.

A good example of these benefits is with Chase: (Taken from WSJ Online Edition)

"Consumers are likely to find better credit-card deals if they also have a checking account at the bank. Under Chase Card Services' Chase Exclusives program, for example, Chase Freedom card holders who also have checking accounts at the bank can earn up to 10% more points on their spending. The bank also rolled out a new credit card, "Slate From Chase," that automatically refunds the 12th month's interest charges each year if customers enroll in the bank's AutoPay program from a Chase checking account."

So there are some great deals to be had, you just, as usual, have to call around and find them!

If you have any questions on how to find a credit system for you, or if you shoukld be using a credit system at all PLEASE speak with your CPA to get more information (our Tax Goddess can be found here if you have any questions)!

Looking our for your best interests,

Your Tax Goddess~
Shauna~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
If you think that you might need some help growing your business and saving you tax please make sure that you talk to a good CPA who can help you find the right way to move ahead on track!

Energy Effecient Tax Incentives

2009-10-02T13:15:20-07:00

The American Recovery and Reinvestment Act (ARRA) provides numerous tax incentives for individuals to invest in energy-efficient products.

Some of the more useful ones are:

1) Residential Energy Property Credit (Section 1121):

if you are adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems you can receive up to a 30% CREDIT (dollar for dollar) (maximum of $1500) of all the costs!

A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 and that The IRS has issued guidance that will allow manufacturers to certify that their products meet these new standards.

Until the guidance is released, homeowners generally may continue to rely on manufacturers' certifications that were provided under the old guidance.

For exterior windows and skylights, homeowners may continue to rely on Energy Star labels in determining whether property purchased before June 1, 2009, qualifies for the credit.

2) Residential Energy Efficient Property Credit (Section 1122):

This nonrefundable energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines.

The new law allows for a credit equal to 30 percent of the cost of qualified property.

3) Plug-in Electric Drive Vehicle Credit (Section 1141):

The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009.

To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity.

The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity.

4) Plug-In Electric Vehicle Credit (Section 1142):

The new law also creates a special tax credit for two types of plug-in vehicles - certain low-speed electric vehicles and two- or three-wheeled vehicles. (Like Golf Carts!)

The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.

To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours.

A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable.

More information can be found at the IRS website along with additional information on the ARRA.

If you have any questions on how these new credits could apply to you PLEASE speak with your CPA to get more information (our Tax Goddess can be found here if you have any questions)!

Looking our for your best interests,

Your Tax Goddess~
Shauna~

Today I am learning about tweetdeck!

2009-07-09T09:57:55-07:00

This is way too cool! And if you need a private one on one training, I recommend Dave Barnhart with Business Blogging Pros!

Dave can be found on twitter at: dbarnhart

Want to Learn how to Budget?

2009-03-06T06:47:21-08:00

Then this new SWC educational class is for you!

Click here for the registration information

If you are looking to have a personalized budget when you leave this class, you've come to the right place! Your budget will be ready to implement when you walk out the door!

I am so excited about this offering and can't wait to be out there helping our community gain some control back into their lives!

Shauna, your Tax Goddess!

What about marketing to professionals?

2009-02-25T17:37:48-08:00

I am currently sitting on a conference call that is talking about how to market to professionals. I like the speaker, Dr. Pauline Wallin, she is going thru both online and offline marketing techniques. Getting down and dirty and figuring out what your real target market is!

I just wanted to post quickly, to remind people - don't forget, everyone loves to get a copy of an article that they were in mailed to them!

If you want to start marketing to your niche market, don't forget the simple phone call or handle written note!

Handling stress in these times,...

2009-02-10T07:07:47-08:00

Good Morning all!

Oh, you don't think it's a good morning? Are you stressed out today?

A few things that may help you get a great outlook on your day:

1) Eat a healthy breakfast, and for that matter, eat more healthy all around (This can be a deduction if your Doctor tells you to do it!)
2) Listen to your favorite happy song in the morning. (Don't forget to deduct your XM radio if you are a salesman traveling all over the place!)
3) Think good thoughts (Gosh darn I look beautiful this morning! :) (Beauty can be a deduction if you are in the right industry!)
4) Organize your day when you get to work. That way more stress won't creep in! If you can get your top 3 things to accomplish done that day, you should be good to go! (This is just good for everyone, but if you need help, a professional organizer would be a deduction as well!)

Just a few pointers that I personally do when I wake up in a grumpy mood! I hope they help!

Shauna, your Tax Goddess!
I can make getting in a better mood a deduction! I love my work! :)

Budgeting Tips for a downtrodden economy!

2009-02-08T09:11:51-08:00

Sometimes people in a booming economy are used to spending money that they don't have. Living on credit cards, racking up debt. Sometimes, once the economy turns down, it is hard to get back on track and start living within your means.

Here are some of the common things that I see, as a CPA, in people's expenses that are easy ways to turn down your expenses:

1) Check your insurances. Their may be the same coverage, with an equally good company, for cheaper.

2) Install the energy efficient light bulbs in your home. A bit of cost up front, but TONS of savings on your electric bill.

3) Change your "standard" temperature in your home (up or down a few degrees can make a ton of difference)

4) Look at your spending habits. For 2 weeks, write down EVERYTHING that you spent money on (kind of like being on a diet for your wallet!). How many times di you REALLY go to Starbucks? Could a coffee from home save you some $?

5) Write out a list of the following 3 items: Mandatory expenses (mortgage, Groceries, savings); Flexible Spending (Cable); "Fun" Spending (Dining Out, Massages). Categorize all of the items that you spend into one of those three categories. What can you cut? What is Mandatory? Does your monthly take home cover at LEAST the mandatory? If not, where can you cut? If so, go down the list from Mandatory to Fun and pick which ones you want to keep!

If you need any help creating a budget for yourself, or some additional tips, please don't hesitate to email me! I would be happy to help!

Get your income on your 2008 tax return or get hit with Higher Tax Rates!

2008-12-05T13:45:57-08:00

So, Obama, once he is in office, is going to raise taxes

- Capital Gains Rates are going to increase
- Income tax rates for those over $250k are going to raise

It is important then to do year end planning. Try and get as much income as possible into the 2008 tax year (where it is most likely that the rates will not change) if your adjusted gross income is more than $200k.

So, just an FYI - if you are making money - PLAN IN ADVANCE!!!!

The new depreciation limits - $250k - they want us to spend!

2008-11-26T06:10:37-08:00

Morning everyone,

So, if you didn't know - the depreciation limits for the §179 deduction have been raised to $250k for this year (2008) and going forward. This limit applies to any equipment, major manufacturing dollars spent, etc.

Be warned! Do NOT listen to many of the car manufacturers as only CERTAIN vehicles can use this limit, most autos are capped at the $25k limit for depreciation in a single year.

If you want to know if your new potential car or truck falls under the new raised $250k limit, you need to know that in order to qualify the vehicle must be:

Vehicle must weigh more than 6000 lbs GVWR and
Vehicle must be built on a TRUCK chassis or
Vehicle bed must be more than 6 feet in length or
Vehicle can seat more than 9 passengers behind the driver

(there are more regulations that are for more specific types of vehicles, so make sure you ask your Tax Goddess if you have more questions!)

So, for those of you who need more deductions at year end, want a new truck?

How to Survive an Audit

2008-11-24T07:04:26-08:00

One of the biggest questions that I get is "how long do I need to retain my documents for tax purposes?"

Well, for any normal circumstances really only 7 years
(if you plan on committing tax fraud, keep them forever- the IRS can go back and look at ALL of your tax filings, forever, if you commit fraud!)

Now, what should you keep?

- Anything relating to real estate (Keep these FOREVER as well - you never know what the IRS is going to try to pull when it comes to these larger dollar amounts)

- Receipts for anything you are trying to deduct. The IRS accepts bank statements, original bank statements, (with the creases from the mail and everything, not the printed out ones that you can manipulate from the computer), about 80% of the time to back up a deduction. The receipt with WHO, WHAT, WHERE, WHEN & WHY is the only 100% acceptable method of proof for most agents

- Daily planner, or meeting book, or a print out from your PDA of your meetings, the same 5W's as above apply! This helps you with your mileage backup!

These are just a few of things things necessary to help you survive an audit! If you are in an audit already, make sure you CALL FOR HELP to your CPA (Shauna can be reached at 602-357-3275 or at shauna@swcbe.com

Tax Planning - the best idea yet!

2008-11-07T15:10:16-08:00

So, I will make it brief,...

most people like to budget, know when their $ is going to be needed.

Wouldn't you also want to do that with your taxes? Be prepared - be ready to pay the amount owed on April 15th rather than wait until April 15th to know?

So - the idea is to "plan" for your taxes, thus the year end taxes planning meeting. You figure out what you want to owe by figuring out what you would hypothetically owe and then make decisions to alter your final tax outcome (like contributing to a retirement plan, etc.)

Point is - if you haven't done your planning, you are playing into the government's taxing hands. Do you want that?

No? Then Setup a planning meeting with your CPA (or with me! I can always help you in this area!) by sending them an email asking for some planning.

Always yours,

Your Tax Goddess.

Sorry it's been so long! - but new news on how to increase the value of your business for sale!

2008-11-05T15:37:54-08:00

Do you Know???

So, the other week I went to a fabulous presentation put on by some Exit Strategy folks down in Mesa. They were discussing how to increase the value of your business upon sale. Below are some of the tips and tricks that they were talking about, and a lot of them are items that you would want to begin implementing now - many years before the sale - so that the true value can be obtained!

Run Your Business Like a Business:

Do not use the business bank account as your personal bank account!
Taxes should not be the main motivator (hmmmm??? well, I guess you are right there!) i.e. don't always lower your taxes or your bottom line looks horrible to a buyer!
You WANT to have Profits, a strong bottom line, and positive cash flow!

Present your Business Like a Business
- It is important the visual appeal of your location and image
- your Books should be accurate and well maintained
- Your records should be well documented (Sales, customer lists, contracts, etc.)
You want to have characteristics that will LOWER the perceived risk for your potential buyer
- Have Stable, Motivated Management
- Have operating systems that help with cash flow
- have a solid and diversified customer base
- have a realistic growth strategy
- have effective financial controls
- use Customer Relationship Management programs
- have office documentation (an owner's manual to your office)

All of these together will increase the value of your business to a potential buyer!

So, If you have any questions on other ways to make your business more valuable PLEASE speak with your CPA (our Tax Goddess can be found here if you have any questions)!

Looking our for your best interests,

Your Tax Goddess~
Shauna~

Taxpayer runs his car into an IRS building -

2008-09-01T07:12:00-07:00

Now, that was just a funny title,.. but it's happened!

Many disgruntled taxpayers or people in trouble with their finances have done some crazy things when it comes to the IRS!

1) Write out your check to them on a shirt "the shirt off your back!"

2) Obviously, driving your car into their building is pretty extreme

3) Prank calling agents - not so smart with caller ID these days!

Anyway - just a few, but have heard of any good ones?

Let me know!

Shauna, Your Tax Goddess!

What else can you do to keep your business afloat?

2008-08-29T07:12:39-07:00

1) have you tried running discounts? Sales?

2) What about attending more free networking events, getting your name out there?

3) What about putting up free adds? On places like Craigslist?

4) Do you have any outstanding receivables? When was the last time you called them? What about going to their location and asking for your payment?

Just some more ideas!

Your Tax Goddess~
Shauna~

What can you do to keep your business afloat?

2008-08-22T07:04:47-07:00

So, everyone is trying to figure out ways to handle the down-turn in the economy.

I figured perhaps I should, as a consultant to many of my business clients, publish a list of the ideas that I have seen for keeping your business afloat in these times.

1) Are you overstaffed? Many people, when times are good, fail to look at their human capital expenses. They are paying huge medical premiums, paying their staff at salary raises that were put into place in boom times, and are failing to look at the business' real need for the staff person themselves. Be careful that you only have on staff those people that you need!

2) Owner's, what are you doing? Are you doing the work in the business, or have you stepped back and let your managers run the business. What about some of the actual technical work? Have you thought about your own time and if your time would be a good contribution to the output of your company?

3) What about your banking and financing? Many businesses have thought about calling the banks and credit card companies to see if they can get better payment terms, or rates. But have you thought about calling your vendors? Can you switch from a Due on Receipt to a term of 15 or 30 days out?

I will post some more ideas in my next blog post, but thinking about it this way - As Dan Kennedy says - when times get tough, think tougher - have you sat down and figured out the possibilities? What would happen if you had to fire your secretary today? Who would handle her job? And when you figure out the answer to that, is that answer better than the way you are currently running?

Thoughts to get you going in the morning,

Shauna~ Your Tax Goddess.

Being tied in to your business,....

2008-08-21T06:24:34-07:00

So, the other day I was speaking with a business / life coach. He was telling me about how many business owners begin taking on their business as if it were a child. Becoming emotionally attached to the people, the business, it's outcome as if it were their own flesh and blood (not saying it's not!) but almost too much, emotionally rather than looking at it as if it were a business.

One of the main things that my family always told me was fire quick and hire slow. There are too many businesses that get dragged down by their employees (or held up by them) but more because the owner wouldn't make a fast decision when there was no money to let go or cut hours on the employees.

Now, in these times of economic hurt, i urge all business owners to at least LOOK at what and where they are. Look for thins that you could do better, if possible, involve outside opinions and thoughts, someone who has a tremendously successful business, and ask their opinion, use other peoples knowledge.

As small business owners people often believe themselves to be an island - NOT TRUE! There are hundreds if not thousands of other business owners out there who are in the same place you are, just ASK!

Anyway - if anyone needs some help and feedback, I would always be happy to oblige -

Best of luck to all the owners out there - remember this is business, not personal!

Your Tax Goddess,

Shauna~

International Business Openings

2008-08-18T07:11:53-07:00

So, Friday morning I went to a meeting of AZIGG, an organization dedicated to helping Arizona businesses grow internationally. I was VERY impressed by not only the size of the crowd that attended this event - a panel of speakers on how to break out into foreign countries - but also by the quality of the people there. Many attendees were from large corporations (or at least what smaller Arizona only businesses look at as large) and there were also many political and state people in attendance, so and so from xyz board, etc.

The thing that caught me the most was the real drive to help Arizona businesses. Kahala hosted the event (Cold Stone Creamery) and the head of International Operations was there. He was great, very kind, and knowledgeable, and even offered his contact information as a way to move into international waters if anyone had any questions.

So, I am writing this not only because international tax is a section of something we all deal with, but also because you never know who you are going to meet by trying new things!

Don't forget to get out and network!

your Tax Goddess,

Shauna~

$7500 "Tax Credit" for new home buyers? Interesting Phrasing.

2008-08-11T07:24:56-07:00

Well,

The government has passed another new bill that is supposed to help the American public to buy homes (you know, the ones that most people cannot afford but are buying anyway!)

The new "tax credit" (and please notice that I am putting this name in quotes) is more like an interest free loan rather than a tax credit - you have to pay it back over the next 15 years. You will owe the payback on each years tax return or when you sell the property as a tax out of your gain on the property (if you have one, at a loss, there is no payback or if you die no additional payback from your heirs).

At least you are getting up to $7,500 per couple on this thing, interest free,.. that's a good start. Of course, when you ask people what they are doing with the $7,500 that they had started to save up to use as a down payment, most of them are talking about spending on goods (new TV's, Cars, Etc.) (now I wonder if the government knew that additional spending was coming ::said sarcastically::?).

Another interesting thing about this is the date range for which this applies - homes bought between April 9th, 2008 and July 1st, 2009. Tough Bananas if you bought your home earlier in the year,... So now would be the time to start planning!

Anyway - I normally don't like being so tough and sarcastic, but sometimes the push to fix the economy, instead of working for the money, saving, and having like minded goals as people did in the 50's I feel is driving our economy into a new pit, only farther to crawl and fight our way back up.

Reporting on new tax news!

Your Tax Goddess,

Shauna~
PS - If you can get this $, by all means go for it - it's still $7,500 interest free! :)

hat tip to: mymoneyblog

Retirement Options - TALK TO YOUR FINANCIAL PLANNER (OR HIRE ONE!)

2008-08-01T08:43:00-07:00

If you don't have a financial planner (or even a plan!) now is the time to get one. Many people, especially those who are young, put off retirement planning because they believe that someone else will take care of them (social security - which I believe will be long gone before we get there (the 20-30 somethings)) or that they will save money later,....

It never fails to amaze me how if you put just a dollar a day away now (or even stop drinking starbucks everyday and maybe just 6 days a week!) how much that could translate to in 30 years when you are ready to retire. (Millions if you do it right, and I hope you realize that is what you are going to NEED in order to live in the future - millions to pay the electric bills, and mortgages, etc.!)

I believe FIRMLY that every one needs a financial planner. Everyone needs a specialist who knows this stuff and can help you organize for the best and brightest future,....

INTERVIEW people, lots of people. Ask them questions. Are they interactive? Or are you going to find yourself, 20 years later, no more in the bank, and some "financial planner" who has done nothing for you and hasn't called you in years (except to remind you that you need to pay a fee to update your account each year!)

Anyway - enough with the rant. I just want people to think about it. I know everyone says think about it, but do you really want to be the transient walking on the streets at 70 who no one helps and you were earning 100k+ in your 30's?

Just a thought,

Always,

Your Tax Goddess!
PS - if you need a referral, I've got a few Great Financial planners that I trust immensely!

Economic Stimulus Package -

2008-07-31T08:38:00-07:00

So, everyone is very excited about receiving their stimulus checks ($600 per person - depending on income and $300 for a dependent)

Of course, the government is giving this to us to help booster the economy. Most of the people I've spoken to are using it to pay their mortgages, now isn't that a big suprise!

Anyway - I have been getting a lot of questions as to "where is my stimulus payment?" The best place to check for it is here on the IRS's website (they really are a wealth of knowledge! Go IRS!)

Anyway - Leave me a comment- what are you doing with your $?

Always yours,

Your Tax Goddess!

Foreign Income Exclusion Rules -

2008-07-29T07:04:00-07:00

There are 3 kinds of foreign income exclusions that the IRS allows for income earned in a foreign country:

The foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

In order to claim any of these deductions you must have:

-foreign earned income

-your tax home must be in a foreign country

-and you must be one of the following:

A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

The last one is the one most people qualify for (or under). Normally this allows you to exclude up to $85,700 (in 2007).

Remember, you also have a foreign tax credit (which can be equally as helpful!) This allows for a dollar for dollar credit back to your taxes for any taxes paid to a foreign country (converted to U.S. Dollars).

This is not an easy subject - so if you have any questions, please don't hesitate to ask!

Always Yours,

Your Tax Goddess!

Getting a New EIN # - When do I need one?

2008-07-28T08:59:00-07:00

According to the IRS you need a NEW EIN if:

Sole Proprietors

You will be required to obtain a new EIN if any of the following statements are true.

You are subject to a bankruptcy proceeding.
You incorporate.
You take in partners and operate as a partnership.
You purchase or inherit an existing business that you operate as a sole proprietorship.

You will not be required to obtain a new EIN if any of the following statements are true.

You change the name of your business.
You change your location and/or add other locations.
You operate multiple businesses.

Corporations

You will be required to obtain a new EIN if any of the following statements are true.

A corporation receives a new charter from the secretary of state.
You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.
You change to a partnership or a sole proprietorship.
A new corporation is created after a statutory merger.

You will not be required to obtain a new EIN if any of the following statements are true.

You are a division of a corporation.
The surviving corporation uses the existing EIN after a corporate merger.
A corporation declares bankruptcy.
The corporate name or location changes.
A corporation chooses to be taxed as an S corporation.
Reorganization of a corporation changes only the identity or place.

Partnerships

You will be required to obtain a new EIN if any of the following statements are true.

You incorporate.
Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
You end an old partnership and begin a new one.

You will not be required to obtain a new EIN if any of the following statements are true.

The partnership declares bankruptcy.
The partnership name changes.
You change the location of the partnership or add other locations.
A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).
50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).

Limited Liability Company (LLC)

An LLC is a new entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or sole proprietor. An LLC is always classified by the IRS as one of these types of taxable entities. - So ASK YOUR TAX GODDESS!!!

Entity Formation and Changes can be one of the most confusing tasks when dealing with the IRS -

So, if you have any questions - Don't hesitate to ask!

As Always,

Your Tax Goddess!

Our First Video! How exciting!

2008-07-26T09:43:34-07:00

Now you get to see the tax goddess in Person!

Just an opening video to say hello!