Business Related News

Telephone Credit
There is a telephone excise tax credit available for business.  There is no “standard amount” or easy way to obtain this figure.  The best way for you to take advantage of this credit is to pull out your business telephone bills from March 1, 2003 to July 31, 2006 and add up the long distance federal excise tax that you paid during this period.  This will be the amount of credit you will receive. 

Section 179 Deduction
The Section 179 maximum deduction for 2006 is $108,000 and the phase-out begins at $430,000 in purchases of qualified items.

Domestic Production Activity Deduction
Your company may qualify for the Domestic Production Activity Deduction if you pay wages and have a profit.  Service entities do not qualify but farmers and various construction companies as well as manufacturers do.  Check with your preparer for more details.

Mileage Rate
The standard business mileage rate for 2006 was 44.5 cents per mile.  For 2007, it has increased to 48.5 cents per mile.

Personal Related News

Kiddie Tax
There has been a change in the “Kiddie Tax” that you should be aware of.  This used to be when children under 14 had unearned income that was taxed at the parent's rate.  Now this rule applies to children under 18.  If the child has over $1,700 in interest, dividends and other unearned income, their taxes will be computed using the parent’s tax rate.

529 Plans
The law that created 529 plans (Qualified Tuition Programs) has been made permanent.

Donations
Cash donations now will require substantiation by bank record or acknowledgement from the organization.  This rule will apply starting in 2007.  For contributions of clothing and household items after August 17, 2006, items contributed must be in good condition, no deduction for items of minimal value such as used socks or undergarments and contributions of a single item over $500 must include a qualified appraisal with the return.

Interest
Tax exempt interest will be reported on your 1099-INT.  Don’t forget to give us this figure if you do not give us the actual 1099’s.

Energy Credit
There is a residential energy credit available for 2006 and 2007.  There is a special credit for new home contractors.  Check with your preparer for details.  Some cars qualify for an energy credit as well.  Your dealer would have given you the details when you purchased the car.

Telephone Excise Tax Refund
There is a Telephone Excise Tax Refund that you will receive in 2006 on your personal telephone bill.  This will be automatic.  If you have one exemption, the credit will be $30; 2 will be $40; 3 will be $50; and 4 or more will be $60.  Persons who do not have to file a return will also qualify for this refund.  If you have elderly parents that no longer file, they can file a 1040EZT to claim the refund.

IRA Distributions
Certain taxpayers will be allowed to make charitable contributions of their otherwise taxable IRA distributions.  The distribution must be made after the IRA owner turns 70 ½.  Check with your preparer for further details.