• 2008 Tax Tips
• Changes to S-Corporation Health Insurace Laws
• How Your High School or College Graduate Impacts your Taxes
• How to Deduct Travel Expenses
• Other Newsletters

2008 Tax Tips

• There are a number of Hybrid and Alternative Motor vehicles that qualify for the Energy Policy Act of 2005. Please call us before you purchase a Hybrid or Alternative motor vehicle to verify it qualifies. Also, we can tell you how much of a federal and state credit you might receive on your taxes.



• 2008 Mileage Rates:
  • Standard mileage rate: 50.5 ¢
  • Charitable mileage rate: 14 ¢
  • Medical mileage rate: 19 ¢



• Don’t Forget to make Estimated Tax Payments for 2008. Estimated Tax Due dates are April 15, June 16, September 15, and January 15, 2009.



• 2007 Tax due dates:
  • January 31st - W-2's and 1099's are required to be provided to recipients
  • March 17th - Corporation tax returns are due
  • April 15th - Individual, Partnership, Trust and Estate tax returns are due
  • September 15th - Extension for Corporation returns expires
  • October 15th - Extension for Individual, Partnership, Trust and Estate returns expires



• If you're right on the fence from itemizing or taking the standard deduction, group your deductions that benefit you the most when you can itemize. For example, pay your January mortgage payment in December, donate the junk in your basement and maybe get those knees fixed the year you itemize and not next year when you take the standard deduction.



• Make your IRA contributions earlier so that you can start earning your tax-deferred interest earlier.



• Take advantage of a retirement plan that you have at work. If your company has a retirement plan try to maximize your contributions since it is pre-taxed. Or, if your employer matches a portion of your contributions take advantage of that since it is "found money".



• Take advantage of flexible spending accounts to reimburse yourself tax-free for medical expenses or dependent care expenses.



• Take advantage of energy breaks such as installation of energy efficient home improvements.



• Review your investment portfolio. Do you have any mutual funds, stocks or bonds that are at a loss that could offset any capital gains?



• Do you have credit card debt? Maybe a home equity loan makes sense.

Changes to S-Corporation Health Insurace Laws

Recently the IRS retracted their opinion requiring owners of S-Corporations to have their health insurance policies in the company's name. Therefore, we are no longer recommending HRA's to deduct your health insurance premiums.

For more than 2% shareholders, the health insurance policy can be either in the name of the S-Corporation or in the owner's name.

Health insurance premiums for owners of S-Corporation must be reported on Form W-2 as wages in order to deduct the expense on your personal income tax return. Partners and more than 2% shareholders may be able to amend prior year returns to take any self employed health insurance deductions allowed under the new rules explained above. Shareholders should write "Filed Pursuant to Notice 2008-1" at the top of any amended return.

How Your High School or College Graduate Impacts your Taxes

Do you have a child that will soon graduate from high school or college? If your child takes a full time job, you may not be able to claim them as a dependent anymore. To claim the Child Tax Credit of $1,000 per child, your child must be under the age of 17 at the end of the tax year and not provide over half of his or her own support, as well as several other criteria. The Child Tax Credit is phased out at certain income levels.

If you are helping pay your child's college expenses and claiming your child as a dependent, you're most likely receiving a tax benefit such as the Lifetime Learning or Hope Tax Credit or deduct tuition. Once you stop claiming your child as a dependent on your tax return, you're no longer eligible for these education deductions or credits.

Saving for college? Don't forget that 529 plans offer a number of advantages, including:

• Tax free withdrawals for qualified higher education expenses
• Tax deferred investing
• Account owner control/Easy to change beneficiary

If you need advice or further information on any of these topics related to your high school or college age student, contact us at info@krugercpas.com.

How to Deduct Travel Expenses

Properly planned trips that combine business with pleasure will allow you to deduct the cost - or at least a portion of the cost - of nearly everything you do. While such trips must benefit or advance your business to qualify as a tax deduction, there's no reason why a business convention cannot coincide with your vacation.

Deductible travel expenses while away from home include the costs of:

• Travel by airplane, train, bus, or car between your home and your business destination.
• Using your car or a rental car while at your business destination.
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another.
• Laundry or dry cleaning expenses while traveling.
• Tips you pay for services related to any of these expenses.
• Meals and lodging.

View the June 2008 Newsletter for more information.

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