2009 Federal Stimulus Impact

March 16, 2009

To: All Clients
From: Rick Belgarde
Subject: Stimulus Plan
Date: March 16 2009

First time home buyer credit:

· Effective from January 1, 2009 to November 30, 2009.
· Must not have owned a home in the previous three years.
· The amount of refundable credit is $8,000 or 10% of purchase price, whichever is lower.
· AGI phase out is $75,000 ($150,000 MFJ). Complete phase out at $95,000 ($170,000 MFJ).
· http://www.irs.gov/newsroom/article/0,,id=204672,00.html

Making work pay credit:

· A new refundable credit is for 2009, 2010.
· 6.2% of tax payer’s earned income or $400, whichever is lower.
· AGI phase out is $75,000 ($150,000 MFJ). Complete phase out at $95,000 ($190,000 MFJ).
· The IRS has revised its withholding table to effectively accelerate the credit.
· http://www.irs.gov/newsroom/article/0,,id=204447,00.html

Economic Recovery payments:

· Eligible recipients include Social Security, railroad retirement, veterans’ disability and pension benefit, as well as eligible for SSI benefit receive a one-time payment of $250.
· No action is needed. Federal government will automatically send the payment.
· There will be no double benefit: you will qualify for either Making work pay credit or Economic Recovery payment.
· This is not treated as gross income.
· http://www.ssa.gov/payment/

New Deduction of Sales Tax for new car purchases:

· Car purchased on February 17, 2009 and January 1, 2010.
· Taxpayer can deduct the sales tax as an itemized deduction or an addition to the standard deduction.
· The deduction is limited to the tax attributed to the first $49,500 of car purchase price.
· AGI phase out is $125,000 ($250,000 MFJ). Complete phase out at $135,000 ($260,000 MFJ).

Exclusion for Unemployment compensation:

· First $2,400 will be excluded as compensation.

Hope credit enhanced:

· Qualifying period is the first 4 years of college.
· The maximum credit is $2,500 per year.
· May offset AMT.
· Qualified expenses include tuition, fees and materials.
· Up to 40% of the credit is refundable.
· AGI phase out is $80,000 ($160,000 MFJ). Complete phase out at $90,000 ($180,000 MFJ).

2009 California New Budget Impact

March 16, 2009

To: All Clients
From: Rick Belgarde
Subject: Stimulus Plan
Date: March 16 2009

California personal income tax will increase for tax year 2009 and 2010:

· The increase can be from .125% to .25%.
· The amount of the increase is dependent on total federal funding.

California sales tax rates increase on April 1, 2009:

· The sales tax rate will be increased by 1%.
· Make major purchases prior to this date.
· http://www.boe.ca.gov/sutax/0401TaxIncrease.htm

California DMV registration fees will increase on May 19, 2009:

· The Vehicle License Fee will increase from 0.65 % to 1.15 %.
· http://www.dmv.ca.gov/faq/faq_vlf.htm

California new homebuyer’s credit for purchasing a new home:

· On or after March 1, 2009
· Must purchase a qualified principal residence that has been previously unoccupied (new home).
· The $ 10,000 credit must be taken over a successive 3 year tax period.
· The credit is first come first serve on the first $ 100 Million or equivalent 10,000 houses.
· Be sure to complete Form 3528-A within the first week of closing (your escrow person will process this form on your behalf).
· http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

California small businesses hiring credit:

· Beginning on January 1, 2009, there is a $3,000 tax credit for new hires.
· The credit is available for employers with 20 or less employees.
· http://www.ftb.ca.gov/businesses/New_Jobs_Credit.shtml

New Mailing Services Prices Effective Monday, May 11, 2009

February 25, 2009

On May 11 the price for a 1-ounce First-Class Mail stamp will increase from 42¢ to 44¢. Prices for other mailing services — Standard Mail, Periodicals, Package Services (including Parcel Post), and Extra Services — will also change, see attached charts as provided by the USPS. According to the USPS the average increase by class of mail is at or below the rate of inflation as measured by the Consumer Price Index. For additional information you can follow the following link: http://www.usps.com/prices/pricechanges.htm.

New IRS Rules for Single Member Limited Liability Companies

December 19, 2008

To: All Clients
From: Rick Belgarde
Date:19th December 2008

For Wages paid on or after January 1, 2009, single member limited liability companies (SMLLCs) that have not elected to be treated as corporations may be required to change the way they report and pay federal employment taxes and wage payments. A SMLLC with one owner is referred to as a “disregarded entity.” Or an entity disregarded as separate from its owner, unless it has made an election for it to be treated as a corporation by filing Form 8832-Entity Classification Election with the IRS. For wages paid before January 1, 2009, disregarded entities choose how they want to file and pay their employment taxes using either the name and EIN assigned to the LLC or the name and EIN of the single member owner.

However, new regulations effective January 1, 2009 outline a new procedure that should be followed by SMLLCs that are (1) owned by one individual, and (2) have or will have employees. The new regulations require that the SMLLC obtain its own EIN for employment tax reporting. All employees and all employment tax returns and deposits must be reported under the EIN assigned to the LLC, not the owner’s EIN. F the owner’s EIN is used, complicated tax issues may arise.

Accountants should take this opportunity to ensure that their clients SMLLCs are prepared January 1, 2009. For more information on this topic, visit www.irs.gov and search under “single member LLC”.

Time Off for Voting on Election Day

10th November 2008

To: All Clients
From: Rick Belgarde
Date: 10th November 2008

Related Link: California Election Codes

This memo is to advise our clients of the California State policy regarding paid time off to vote in statewide elections.

An employer must allow up to two hours with pay either at
the beginning or end of the employee’s regular shift, if the employee
does not have sufficient time outside working hours to vote at a
statewide election. (See Cal. Elec. Code §§14000.)

Since the polls are normally open from 7 a.m. to 8 p.m., in most cases, employees will be able to vote outside of working hours and thus should not be given paid time off. It is only in special cases, such as when an employee is required to work overtime, the polls are open only for a limited time, or some other equally good reason, that employees would need to be given paid time off to vote. Please realize, however, that when a good reason does exist, an employee is entitled by law to paid time off to vote.

IRS Approves Increase in Tax-Free Commuter Benefit

November 7, 2008

To: All Clients
From: Rick Belgarde
Date:7th November 2008

Related Link:

The IRS has approved an increase in the monthly maximum allowable tax-free amount toward commuter benefits. Starting January 1, 2009, the new monthly maximums allowed for transit and vanpool costs will be $120.00 (previously at $115.00). Please let me know if you wish to change your commuter benefits to the new allowed maximum by December 5th, 2008.

2 New Laws Wireless Phones While Driving

July 23, 2008

To: All Clients
From: Rick Belgarde
Date: 23rd July 2008

Related Link:

Effective July 1, 2008, all drivers are prohibited from using a handheld wireless telephone while operating a motor vehicle, (Vehicle Code (VC) §23123). Motorists 18 years and over may use a “hands-free device”.

The law allows a driver to use a wireless telephone to make emergency calls to a law enforcement agency, a medical provider, the fire department, or other emergency services agency. The base fine for the FIRST offense is $20 and $50 for the subsequent convictions. With the addition of penalty assessments, the fines can be more than triple the base fine amount.

Drivers under the age of 18 may NOT use a wireless telephone, pager, laptop or any other electronic communication or mobile services device to speak or text while drivin in any manner, even “hands-free.” EXCEPTION: Permitted in emergency situations to call police, fire or medical authorities (VC §23124).