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from-alwaystiltingblogspotcom1Last week we detailed how the most recent stimulus bill will affect individuals.

And I was going to focus on the provisions meant to help the small businesses this week.

But I think it’s important to touch on what the FINAL provisions of the bill (about $787 Billion worth) are, and how they may affect you and me.

Here are some provisions you may be interested in :

1.  Credit for First-Time Home Buyers.  The amount has been increased to $8,000 if you buy a home between 1/1/09 adn 12/31/09.  You don’t have to pay back this refundable credit anymore (unless you sell the home within three years of buying it).

2.  Make Work Pay.  In 2009 and 2010, everybody working will get an extra $400 at tax time ($800 if a married couple works) through the “Make Work Pay” credit.  It will be a refundable credit, calculated at 6.2% of your earnings.  But I thought working already paid – it’s called a paycheck.  Man, that will barely get me a Kindle 2 from Amazon

3.  Payments to Retirees.  A one time payment of $250 will go to retirees, disabled individuals and those receiving Social Security Income.  That will only get you about 11 Snuggies (as seen on TV).  I guess you could give them as gifts!

4.  More on the Earned Income Tax Credit.  If you have a third kid, you can get more on the earned income credit now.  Strategy: the married couple needs to keep that income down to just over $21k or it will start to phase out.

5.  Lower Tax on Unemployment Benefits.  If you are getting unemployment checks, then you won’t pay federal tax on the first $2,400 of the money.

That’s all for now, maybe I’ll highlight the business savings in the bill next week.

Peace to you.

Thanks, Jason M. Blumer, CPA

I’m listening to Tom Siebel, formerly of Siebel Systems (which later merged with Oracle Corporation) on a Stanford Technology Ventures Program podcast called Entrepreneurial Thought Leaders

Tom Siebel

Tom Siebel

They have fascinating guests on this program, some of which are so smart I can’t quite understand what the heck they are talking about.  Well, Tom’s pretty smart and I understood him to say:

1.  Growth in the world wide human population will be what drives substantial opportunities for innovation and growth.  As a matter of fact, by the year 2050, there will be a lot of older people in our own country.

2.  New opportunities for innovation will be about food, water, population growth, energy and health care (not information technology, computers, plastics, the Internet, etc.).

3.  Government regulation will continue to drive many areas of major production, innovation and growth.

4.  Tom Siebel and some other philanthropic individuals are giving away a $20 million prize to anyone who can create an energy-free (a zero energy footprint) home at the current costs of traditional residential construction – very hard to do.  That is how much he cares about the future responsible uses of energy.

5.  He said get on a boat and get off at Shanghai if you want to see what the US is competing with.

Be careful with what you perceive as the future of your industry and business.  It may not be what you think it is.  Maybe it is, maybe it isn’t.

As you look 30, 40 or 50 years out in your career, are you focused on the right opportunities and career?  How will you change the world?  Tell me in the comments section of this post.

from-alwaystiltingblogspotcomI thought it necessary to detail for our clients and readers the highly anticipated stimulus bill flying through the House and Senate just a few days after our new President’s inauguration.  This is the new New Deal.  We are about to chunk down a bill for our grandchildren to pay that will keep our country talking for many years to come (adding an estimated $347 Billion in interest costs alone to the national debt over 10 years).  The bipartisan “love” promised by our new President is being watched closely under the initial negotiations of this bill.

The stimulus bill has passed the Democratically-controlled House (cited as the American Recovery and Reinvestment Act of 2009), and has just passed the Democratically-controlled Senate 61 to 36.  Over $838 Billion is included in this Senate version of the bill, with supposed tax cuts for individuals who work, and the unemployed needing health coverage to the largest overhaul of our out-dated energy grid to stabilizing state and local governments operating in the red.  Only a third is for tax cuts while a whopping two-thirds, or $550 Billion, is for new spending.

Now it’s time for the House and Senate to come together and negotiate the details before ‘Bama receives the final bill to sign (hopefully, by mid to late February). 

Here are some things the individual may expect.  Tax benefits for the businesses will be the focus of next week’s Tuesday Tax Time post.

FOR THE INDIVIDUAL…

  1. Protection From The AMT (Alternative Minimum Tax).  The Senate version of the stimulus package increased the minimum exemption (which keeps individuals from paying the AMT) to $70,950 for those filing joint tax returns, and $46,700 for those filing single.  Before this measure, you could expect to be hit by the AMT (an alternate “tax code” for the rich, so to speak) if you were married and only made $45,000.
  2. Home Buyer Tax Breaks.  This one is really cool.  The first time home buyers credit is getting pumped with some serious cash… payable to you (potentially).  If you buy a home within 12 months after the signing of the bill (and hold and occupy the home for 2 years), you could receive up to 10% of the purchase price on the home you purchase (with a $15k cap on that amount) in a refund at tax time next year.  And you don’t have to pay it back, as the current home buyers credit stipulates, and it’s not just for first time home buyers anymore!  If the President signs the bill as written currently, you can expect a lot of people to be buying and selling homes, as this will become a very profitable endeavor for the year 2009.  Hello real estate market – hang on to your britches.
  3. Payments to Individuals.  There is a new “Making Work Pay” Credit included in both the House and Senate versions of this stimulus bill, where if you work, you’ll get up to $500 of earnings at tax time (up to $1,000 if a married couple both work).  This credit is actually 6.2% of your earned income, so it will apply to those receiving W-2s and the self-employed.  Another payment to individuals is the additional child tax credit, which is being beefed up in this proposed legislation (this is the credit you normally get if you don’t have immediate tax liability to warrant the regular child tax credit).  And the limits on receiving the Earned Income Credit are being raised to get those with lower incomes (and kids, bless their hearts!) more cash in their pocket come tax time.     

Here’s a pretty cool table showing you how much cash you might expect (from The Tax Foundation post):

Table 1: Tax Savings in 2009 Under House and Senate Stimulus Packages

 

Current Income Tax

 

House Bill (H.R.598)

Senate Bill

(S.350)

Tax

Savings

Tax

Savings

Couple with two children earning: (a)

         

$40,000

($1,721)

($4,115)

$2,394

($3,865)

$2,144

           

$60,000

$2,900

$900

$2,000

($233)

$3,133

           

$80,000

$5,604

$3,604

$2,000

$2,318

$3,287

           

$100,000

$10,180

$8,180

$2,000

$4,778

$5,403

       

$200,000

$35,750

$35,750

$0

$30,191

$5,559

Single parent with two children earning: (a)

         

$20,000

($5,274)

($6,774)

$1,500

($6,524)

$1,250

           

$40,000

$0

($1,200)

$1,200

($1,200)

$1,200

           

$60,000

$4,753

$2,453

$2,300

$1,753

$3,000

           

$80,000

$9,103

$7,379

$1,724

$6,303

$2,800

           

$100,000

$14,105

$14,105

$0

$13,953

$153

       

$200,000

$41,113

$41,113

$0

$37,746

$3,367

(a) The couple is assumed to be a two-earner couple with equal earnings and income from no other source. One child is assumed to be under age 17 and the other child of college age with college expense of $4,000. Itemized deductions are assumed to be 18 percent of earnings. It is assumed that the taxpayer does not purchase a home in 2009. The same assumptions apply for the single parent.Note: Calculations in italics indicate that the taxpayer is subject to the alternative minimum tax (AMT),

Tune in next week for the update on how this stimulus will help businesses. Woot, woot! 

 

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) any such tax advice is written in connection with the promotion or marketing of the matters addressed; and (iii) if you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.

Total cars in the world now = 700 million.

Total cars in the world in 2050 = 3 billion.

And it’s estimated that China will own more cars in 2050 than there are cars currently in the world today.

What are you going to be doing by 2050 to meet the demands of this new market?

I met with a client the other day to do some high-end tax planning for all of his entities.  He is a manufacturer, so I thought it might be doom and gloom in this economy.  Not so…

He is like a lot of our other clients – innovative, with an eye to his business… not the economy.  The economy is down due to uncertainty with the housing market, and the seizure of credit.  But that is not affecting my client.  Their businesses are still humming, and they have a lot to offer.

One reason he is still doing well is because his company’s motto is “American Quality and Ingenuity,” and boy does he live up to his motto!  He freakin’ knows what he is doing, can do it better than the next guy, runs his company well, preaches “quality” to everyone and is always innovating, trying new things, and reshaping his operational structures for higher efficiency and profitability.  He always aims for better than last time…

You can too.  Your business can be innovative with a high focus on quality.  You can thrive in this marketplace, no matter what the newspaper says.  The newspaper doesn’t know anything about YOUR business.  Watch your business, be innovative and be commited to quality, and you’ll be noticed.

By the way, this American manufacturer just quoted and brought back a bunch of jobs from India and China!  How’s that for American Ingenuity?

Thanks, Jason M. Blumer

Just Tweeted by @JasonBlumer…

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