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Week of March 6, 2009 • Issue No. 035
This Week in the iNews:
▲ THE MAKING WORK PAY TAX CREDIT
▲ SALES TAX DEDUCTION FOR VEHICLE PURPOSES
▲ THE ECONOMIC RECOVERY PAYMENT
▲ LUNCH & LEARN SERIES– FINANCIAL PLANNING IN TODAY'S ENVIRONMENT
▲REASONS WHY YOU MAY WANT OR NEED A BUSINESS VALUATION IN 2009 4 OF 9
The IRS has issued updated withholding tables to help you implement the withholding adjustments required by the new economic stimulus law. More details about the Making Work Pay credit will be available soon in Publication 15, (Circular E), Employer’s Tax Guide.
For 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns.
This tax credit will be calculated at a rate of 6.2% of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes in early spring. These changes may result in an increase in take-home pay. The amount of the credit must be reported on the employee's 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return.
It is not necessary to submit a Form W-4 to get the automatic withholding change. However, an employee with multiple jobs or married couples whose combined incomes place them in a higher tax bracket may elect
to submit a revised W-4 to ensure enough withholding is held to cover the tax for his or her combined income
The American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, recreational vehicles and motorcycles through 2009. The deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A. Purchases before Feb. 17, 2009, are not eligible for this special deduction.
The deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle. The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.
▲ The Economic Recovery Payment
President Obama recently signed the American Recovery and Reinvestment Act of 2009. This act provides for the one-time payment of $250 to individuals who get Supplemental Security Income (SSI) or Social Security benefits.
A one-time payment of $250 will be made in 2009 to:
The IRS will not make this payment — unlike last year's economic stimulus program.
The Social Security Administration expects everyone who is entitled to a payment to receive it by late May 2009. No action is required on your part. They are currently working on the details regarding how they will issue nearly 55 million one-time payments to beneficiaries.
The economic recovery payment will be a reduction to any Making Work Pay credit for which the recipient qualifies. The Making Work Pay credit will be claimed on the recipient's 2009 tax return filed in 2010.
▲ LUNCH & LEARN SERIES – MARK YOUR CALENDARS
Please join us on Thursday, March 19, 2009 for the second installment of our 2009 Lunch & Learn Series Program – Financial Planning in Today’s Environment from a CPA’s Perspective. Each program will begin at noon and end around 1:00 p.m. Lunch and parking will be provided.
Please contact Michelle Ripley at mripley@pmcpa.com or at 616.774.9004 for your reservation for any of the programs.
Seating is limited. Don’t miss out!
▲MAY OR NEED A BUSINESS VALUATION IN 2009 – 4 OF 9
Reason 4 of 9 – Buy-Sell Agreements
Many buy/sell agreements require a business valuation so that your or their ownership will be transferred at fair market value. Agreements between partners or shareholders should be based upon an independent business appraisal rather than a rule of thumb formula because formulas may yield an unrealistic value.
If you are planning for or find yourself in this type of situation, please contact Les Prangley, CPA, CVA to see if a business valuation is needed or required at 616.774.9004 or lprangley@pmcpa.com.
See next week for Reason 5 of 9!