Year End Tax Strategies Part 2
- First Time Homebuyer Credit - Rules and Deadline
- Sales Tax deduction for New Vehicles - Rules and Deadlines
- 2009 Standard Mileage Rates
- Immediate Write-Offs for Business Assets
- Energy Incentives and Residential Energy Credits
- Business Solar Energy Credits and Funding Sources
- Energy Savings Deductions (Section 179D)
- Domestic Production Deduction(Section 199)
- Net Operating Losses
- Cobra Premium Assistance and PA Minicobra
- PA Educational Improvement Tax Credit (EITC)
First Time Home Buyer Credit
- Tax credit equivalent to 10% of purchase price
- Applies to first time buyers defined as those who haven't owned principal residences for three years before making purchase
- Income Limitations - Single $ 75,000 and $150,000 married couples
- Must be purchased by December 1,2009
- No payback of credit as applied to the 2008 credit
- Taken on tax return - not at settlement
- Will it be extended ? to be determined
Sales Tax Deduction for Vehicle Purchases
- Deduction available for taxes on the purchase of new cars, motor homes,and motorcycles
- Available for vehicles purchased February 17,2009 through December 31st, 2009
- Available whether or not person itemized
- Deduction phases out for higher incomes - $ 250,000 to $ 260,000 for joint and $ 125,000 to $ 135,000 for others
Standard Mileage Rates for 2009
- Business Usage of Auto - 55 cents per mile
- Medical and move related mileage - 24 cents per mile
- Charitable - 14 cents per mile
Residential Energy Credits
- No credits available for 2008
- Nonbusiness energy property credit of 30% of the cost of certain energy efficient property or improvements placed into service in 2009
- Includes high-efficiency heat pumps, air conditioners and water heaters.
- Property also includes energy-efficient windows, doors, insulation materials and certain roofs.
- Credit has been expanded to include certain asphalt roofs and stoves that burn biomass property
- Total credit is limited to $ 1500 for 2009 and 2010
- "Home" is defined as "your main home"
- No limit on Solar electric property costs, qualified solar water heating property costs and qualified geothermal heat pump property costs (other than the 30% rule)
Business Energy Improvement Costs
- 30% of the costs of the solar property used for heating or electrical generation- no limit on credit; can offset AMT
- Coordinates with Renewable Energy Grants from Department of Energy in lie of the Credit
- Grant claimed once the property is placed into service
- Must be placed into service beginning in 2009 through 2014
- Proceeds of the grant are not includible in the taxpayer's income but the grant amount is subject to recapture if the property is disposed of or otherwise ceases to qualify.
PA Incentives for Solar Energy
- The Pennsylvania Sunshine Program will provide $100 Million in rebates on a first-come-first served basis to approved applicants. Funding will be deployed in the form of rebates for residential and small business owners.
- Small business owners defined as less than 100 employees
- All applicants for the solar program, either residents or small businesses, have to use an installer from department's approved list. Please, refer to his link http://www.depweb.state.pa.us/ energindependent/cwp/view.asp?a=3&q=545926
- The list below describes incentive levels and other program rules as they stood at the date of program opening.
- Residential PV: $2.25/W for systems of 1-10 kilowatts (kW). Systems larger than 10 kW are eligible, but incentives are limited to first 10 kW.
- Small Business PV: $2.25/W for systems of 3-10 kW; $2.00/W for next 90 kW; and $1.75/W for next 100 kW. Systems larger than 200 kW are eligible, but incentives are limited to first 200 kW
- Weatherization Assistance Program: Federal money to increase the energy efficiency in you home. Income standards are similar to the Low Income Home Energy Assistance Program(LIHEAP). Expected to expand during the next administration go to: for more information click her or contact Karl A Kimmel at 717-720-7439 or firstname.lastname@example.org
- Keystone Home Energy Loan Program: Low-interest loans funded by PA Treasury Dept. for home efficiency projects and the installation of alternative systems, managed by AFC First, a private lender.
- Energy Efficient and Alternative Energy Mortgages by Fannie and Freddie Mac for Energy efficient home mortgages that help you finance improvements. Click here for a complete guide with list of providers – This is primarily for residential customers but may be a helpful site for contractors and/or home builders.
- Currently only a few private lenders offer loans for alternative energy improvements. See for example Beneficial Bank.
- Philadelphia Tax Credit Opportunities
- Please refer to this web page for more information - Philadelphia Solar Energy
- New deduction for updating or constructing commercial building property to be more energy efficient
- Suitable for older building owners considering significant updates to make building more economical to operate
- Immediate deduction
- Limited to $1.80 per square foot
- Reduce remaining basis of property by the deduction
- Qualifying property consists of:
- interior lighting
- HVAC systems
- The building "envelope" defined as including the wall and roof assemblies, insulation, air/vapro retardeers, windows and weather-stripping and caulking.
- Certification Process
- Governmental buildings can pass out the credit to the designer
Purchase of Regular Business Assets
- ARRA continues Sec 179 expensing in 2009 for assets up to $250,000-no assurance that this will continue in 2010-schedule to revert to $ 133,000
- Phases out for purchases over $ 800,000
- States such as PA do not allow more than $25,000
Net Operating Losses
- 2008 Losses can be carried back two years and forward twenty
- Special five year expanded carry back for certain small businesses but must be filed by October 15th, 2009
- Better to have a "bird in the hand"
- States generally don't allow carry back
Cobra Medical Coverage Credit
- Eligible former employees, enrolled in their employer's health plan at the time they lost their jobs, are required to pay only 35 percent of COBRA coverage. Employers must treat the 35 percent of the cost by eligible former employees as full payment, but the employers are entitled to a credit for the other 65 percent of the COBRA cost on their payroll tax return.
- COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. COBRA generally covers health plans maintained by private–sector employers with 20 or more full and part-time employees. It also covers employee organizations or federal, state or local governments. It does not apply to churches and certain religious organizations. The new COBRA subsidy provisions also apply to insurers required to offer continuation coverage under state law similar to the federal COBRA.
- Effective July 10,2009
- Eligible Employees are covered up to nine months
- More compliance responsibilities for insurer, not employer
- Similar 65% subsidy but advanced by insurer not employer
Stuart Katz Biography
Stuart Katz is a Manager in EisnerAmper's Tax Department. He provides federal, state and local income tax compliance and planning services to businesses and individuals. His areas of emphasis include estate and gift planning, trust taxation, business continuation planning and multi-state taxation for families, partnerships and S corporations.
He is a member of the American Institute of Certified Public Accountants, the Pennsylvania Institute of Certified Public Accountants and currently serves as treasurer of the Jenkintown Community Alliance.
Stuart received a Bachelor of Science in Accounting from Drexel University, and a Master's degree in Taxation from Widener University.
Gary S. Master Biography
Gary Master is the Partner-in-Charge of EisnerAmper‘s Construction and Real Estate Services Group. Due to his extensive knowledge of the industry, Gary has earned an excellent reputation as a specialist who supports contractors, builders, and developers in maximizing their profitability. He has also provided expert reports on a number of construction litigation matters. His diverse clientele also includes closely-held, middle-market companies in the wholesale distribution, manufacturing, and advertising industries.
Gary is an active member of the Pennsylvania Institute of Certified Public Accountants, the American Institute of Certified Public Accountants, the Homebuilders Association of Bucks and Montgomery Counties, the Air Conditioning Contractors Association - Delaware Valley Region II, the Association of Builders and Contractors, and the General Building Contractors Association.
Gary is a graduate of American University with a Bachelor of Business Arts degree in Accounting. He has earned accreditation as a Construction Industry Technician (CIT) and a Construction Document Specialist (CDS).