Stortz and Associates
September 2008 Newsletter

first time homebuyer tax credit

Congress recently passed the Housing and Economic Recovery Act of 2008.  One important part of this housing act is a First-Time Homebuyer Tax Credit of up to $7,500 for first-time homebuyers.  A person is considered a “first-time homebuyer” if he or she had no ownership interest in a principal residence during the three-year period before the new home is purchased.  Here are the highlights:

  • The tax credit is available for first-time homebuyers only.
  • The maximum tax credit amount is $7,500.
  • The credit is available for homes purchased on or after April 9, 2008 and before July 1, 2009.
  • Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
  • The tax credit works like an interest-free loan and must be repaid over a 15-year period.

We are available to assist not only with your tax planning, but also with your financing needs.  Stortz & Associates is licensed as a First Mortgage Broker with the PA Dept. of Banking.  For mortgage rates and information, contact Mike Pletz at 610-967-4711. 

Be sure to check our October newsletter for even more information on this new tax credit!

 

deductible investment expenses

The cost of a day-trading seminar is not a deductible investment expense, according to the Tax Court.  Expenses incurred for investment seminars can be taken only as business expenses, including costs of the seminar, books, travel and meals.  The day trader in this case conceded that he didn’t buy and sell frequently enough for his securities trading activities to qualify as a business (Jones, 131 TC No. 3).

Source:  Kiplinger Tax Letter, August 8, 2008

 

business tip - printing labels

Sending out a mass mailing to your customers?  Or perhaps you don’t have a pre-addressed envelope to mail your check to your vendors?  If you are thinking that you could save so much time doing these administrative tasks if only you had Customer and Vendor Labels, then your accounting software can help do just that!

If you are a Peachtree user:

To print customer labels for Peachtree version 2007 and older:

  • Go to REPORTS, and select ACCOUNTS RECEIVABLE.
  • Scroll down towards the bottom and click on LABELS – CUSTOMERS.
  • Select the label form that you want, and at the top of the screen click on PREVIEW, and select desired filters.
  • If you are satisfied with the results, click PRINT.  Make sure the labels are in your printer before you start your printing. 

To print vendor labels:

  • Go to REPORTS and select ACCOUNTS PAYABLE.
  • Scroll down towards the bottom and click on LABELS – CUSTOMERS.
  • Select the label form that you want, and at the top of the screen click on PREVIEW, and select desired filters.
  • If you are satisfied with the results, click PRINT.  Make sure the labels are in your printer before you start your printing. 

For Peachtree versions 2008 and 2009:

  • Go to REPORTS and FORMS and select FORMS.
  • Scroll down to choose either customer labels or vendor labels.
  • Select the label form that you want to print, and on the right side of the screen click PREVIEW & PRINT.  Select desired filters; then
  • Select print preview to review what is going to print, or select print/email.  Make sure the labels are in your printer before you start your printing. 

If you are a QuickBooks user:

  • Go to FILE, select PRINT FORMS, and choose LABELS.
  • Select desired filters and sorting options and click OK.
  • In the print screen select your printer and select the label form that you wish to print on and the printing directions.
  • You can either print straight from this screen or preview what you are going to print.
  • Make sure the labels are in your printer before you start your printing. 

Please call our office if you need any further assistance creating your labels.  Happy printing!

 

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how to relieve your bank failure fears

National bank failures seem to be a recurring theme in recent news headlines, causing concern for many consumers.  Is my money safe?  How do I know if my bank is in trouble?  According to experts, most banks and credit unions are financially sound, despite the doom and gloom on the nightly news.

Banking customers are making a record number of inquiries to the Federal Deposit Insurance Corp. (FDIC) – the organization which insures bank deposits.  The FDIC claims it’s received ten times its usual number of hits on its website from people looking for answers.  While it may be tempting to check up on your bank’s status, it’s more important to make sure your deposits are fully insured.  That way you’re guaranteed to get your money back if your bank goes broke.  Here’s some ways to make sure you’re covered:

The FDIC’s web site:  The FDIC publishes financial information reported by lenders quarterly and other historical information on their web site, www.fdic.gov, under “Bank Find”.  You can find similar data on the National Credit Union Administration’s site, www.ncua.gov. 

Rating services:  Some resources provide a rating of your bank or credit union – www.bankrate.com offers a “Safe & Sound” rating by using 22 tests to measure an institutions capital adequacy, asset quality, profitability and liquidity.  Institutions are also evaluated against their peers.  Another site, www.TheStreet.com, gives banks a letter grade from E for “very weak” to A for “excellent”.

Insurance:  Your best protection is to make sure your deposits are fully insured.  The FDIC insures deposits at banks and thrifts in case of a failure.  The National Credit Union Share Insurance Fund offers similar coverage to credit unions.  However, be sure to keep track of your coverage with the FDIC – coverage is not limited to $100,000 per person or per account – depending on the type of accounts you hold, you could end up with additional coverage.

For example, a married couple’s joint account is covered up to $200,000.  If each spouse has their own individual account, each of those accounts is covered up to $100,000.  Any retirement accounts are covered up to $250,000.  Many people have money at risk because they lump their funds into one account which ends up exceeding the insured limit.  Be sure to distribute your money in a way that ensures your assets will be protected in case of bank failure.

To find out if your deposits are covered, use the Electronic Deposit Insurance Estimator on the FDIC’s web site listed above.

Source:  “The Morning Call”, Sunday, August 10, 2008

SURVIVING IN AN ECONOMIC TURNDOWN

Blame it on the banks for making bad loans to people who could not afford the bigger-better-larger homes.  Blame it on the people who should have known better, when they were purchasing homes they could not afford.  Or blame it on whomever you like, but the reality is that we all need to do something during this economic downturn to survive the next few years.

Small businesses are usually hit harder than the “big boys” who can raise capital to weather the financial storm.  Banks today are overly cautious about lending money to anyone since the default rate of their mortgages and loans are the highest they have ever had to deal with in the past.    

The question is what business practices can you implement now to keep your organization on the right track both today and in the future?    

SERVICE, SERVICE, and more SERVICE:  Customers/clients keep returning to businesses that provide service, which goes above and beyond the service their competitors provide.  Most of your new business will come from referrals from your current satisfied clients.  Ask your customers what you can do for them, exceed their expectations, and then ask them to refer friends, relatives and business associates to you.  Sometime it is as simple as picking up your phone and calling customers just to ask how they are doing.  When is the last time you called a really good client/customer to discuss a non-business item, such as their children in college, their birthday, etc?    

BANKING on the FUTURE:  If your business is “fine” now but you anticipate a slow period coming over the next few months or year, then you need to call your banker NOW and get the line of credit or loans in place.  Don’t wait until you need the tourniquet; ask for the money when you only need the band-aid.  The old saying is true “banks loan money to people who don’t need it” The few dollars in interest you pay now will be offset by the sleepless nights you will be avoiding in the future.    

There are plenty of other things you can do to weather this economic slowdown. 

Contact us today and we will help guide you through these trying times.

beware of new identity theft scams

Some taxpayers have received e-mails fraudulently claiming to be sent from the IRS and stating that the taxpayer is eligible for an economic stimulus payment.  The email then instructs the recipient to click on a link and fill out an online form with personal and financial information.  The IRS continues to warn taxpayers that it does not request personal or financial information via e-mail.

Source:  “CCH Weekly”, August 2008

new tax laws when converting vacation home to primary residence

How much it affects you depends on how long you owned the house prior to converting it to your primary residence.  The portion of the profit that’s subject to tax is based on the ratio of the time after 2008 when the house was a second home or a rental to the total time you owned it.  So if you owned a vacation home for 18 years and make it your main residence in 2011 for two years before selling it, only 10% of the gain is taxed.  The rest qualifies for the exclusion of up to $500,000.  Homes owned for a short time prior to a post-2008 conversion fare the worst taxwise.

You can completely avoid the tax hit by converting before January 1, 2009.  Also, the tightening doesn’t apply if you make a primary home a vacation home.  You can still exclude up to $500,000 of profit on the sale of the house if you owned it and used it as your principal residence for two years in the five years before the sale.

Source:  Kiplinger Tax Letter, August 8, 2008

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