Welcome to Our Tax Tips Newsletter:

Continuing our effort to provide you with valuable, practical tax information, we will periodically update this page with useful income tax tips and income tax advice from the best sources -- information on issues that you commonly deal with. Be sure to check our newletter from time to time to stay on top on of the latest and most effective tax strategies.

TaxEdge will provide income tax tips that will help you save money when it’s time to file your tax returns. It’s a good idea to use a well planned strategy so that you aren’t surprised in April. Using TaxEdge Income Tax Preparation Software and keeping good records could mean the difference between paying a large chunk of money in April and receiving a big refund check. Use our income tax tips as part of your ongoing preparation.

Have you been running your household or small business on a shoestring, relying on your oil-burning, gas-guzzling 1995 Chevy Caprice station wagon with 205,000 miles on it to take you just a little bit further down the road before you have to bite the bullet and get a new car? Well, Congress is trying to make it easier for you to trade-up to a new fuel efficient car. Starting later this summer, our government will chip in $3,500 to $4,500 toward the purchase of your new car if you trade-in the old wagon for a new fuel-efficient car. And you won't have to include the payment in your taxable income for the year!

How is this possible, you ask? Congress passed new legislation on June 18, 2009, to establish a program informally dubbed "Cash for Clunkers" to encourage gas-guzzlers to go green and to give a boost to the automobile industry. The program offers a $3,500 or $4,500 voucher to owners of old gas-guzzlers who trade in their old cars for new fuel efficient vehicles during the four-month period between July 1 and November 1, 2009 (in fact, because of administrative issues, it will be closer to August 1 before the program gets underway). The voucher will be paid directly to the dealer from whom the new vehicle is purchased. It is in lieu of any trade-in value you would otherwise receive.

The voucher can apply to either the purchase or the qualifying lease (with at least a five-year term) of new vehicles only. To be eligible, your trade-in must be a vehicle that has been registered to you and properly insured continuously by you for at least 1 year, is in drivable condition, is less than 25 years old, and has a combined fuel economy rating of 18 mpg or less. The new vehicle you purchase must be priced at $45,000 or less and must meet minimum mpg and mpg improvement requirements. If you buy a passenger car, it must at least rate a combined 22 mpg according to federal standards and improve mpg over your trade-in by at least 4 mpg for the $3,500 incentive or 10 mpg for the $4,500 incentive. If you buy an SUV or smaller-sized van or pick-up (a category 1 truck), it must rate a combined 18 mpg and improve mpg over your trade-in by 2 mpg for $3,500 and 4 mpg for $4,500.

Before taking advantage of this incentive program, do your homework and carefully consider your decision. Be careful not to let the tail wag the dog. If a $4,500 payday from Uncle Sam is the only thing prompting you to think of buying a new car, then you should probably think again. But, if your plans for the year do include a new car purchase, then see if the program can help you. You can combine the voucher with other tax incentives available for new car purchases, like the sales tax deduction described in last month's newsletter.

To review more of the specifics, see our full story on this one-time opportunity to have Uncle Sam foot part of the bill for your next car purchase.

Income Tax Tips from the 2010 Tax Guide

Keeping Automobile Records
Have you been thinking about making a road trip out of one of your business conferences this summer? Or maybe you're ready to volunteer yourself and the family van to haul a youth group on a summer mission trip. In either event, you may want a reminder on how to keep records of deductible expenses for business or charitable use of your car, or use for medical or moving purposes.   For a quick review, please read Keeping Automobile Records.

The Credit for Child and Dependent Care
Summer creates challenges for dual-earner households with school-aged children. Not only do they need to develop creative family vacation plans, they also need to be creative in finding child care solutions to take the place of school during the work day.   To learn how the tax code attempts to help you meet the financial challenges of child care, please read The Credit for Child and Dependent Care.

Selling Your Home
While the market has been slow for selling homes recently, the new government incentives that are intended to "prime the pump," such as the first-time homebuyer credit, are starting to have an impact. And with the coming of summer, many people with children are eager to complete their residential transactions before school begins in the fall. Therefore, if you are in the market to sell your home, now is a good time to review the tax implications of selling your home.   For an overview of these tax implications, take a look at Selling Your Home.

Business or Hobby
Some of us passionately pursue a pastime or activity that does not fit easily within the category of either a business or a hobby. We may do it more for the love of it than anything. Sometimes we make money; sometimes we don't. But if you want to take advantage of the tax opportunities resulting from treatment as a "trade or business" by the IRS, then there are things you need to know.   For a refresher course on what is and isn't a trade or business, please review Business or Hobby.

Tax News

Employer-provided Cell Phones: Target for Enforcement or Repeal
Today's business persons can be seen perpetually linked to their offices and customers--and their friends and families--via cell phones and blackberries belonging to their employers. They use these employer-provided devices oblivious to the law that requires employees to treat the value of personal use as taxable income. IRS Commissioner Douglas H. Shulman announced on June 16 that the IRS supports easing the compliance obligations on cell phone use.    For the rest of the story, read Employer-provided Cell Phones: Target for Enforcement or Repeal.

IRS Reminder on Summer Employment
The Internal Revenue Service has issued a reminder to small businesses to apply the proper tax treatment to workers hired for the summer season. For many businesses, summer traditionally brings an influx of part-time or seasonal workers into the work force. Often, businesses hire summer help for sporting events, fairs, holidays, harvest season or tourist season. Some routinely hire high school and college students during summer break. Whatever the case may be, businesses must ensure they are treating these workers properly for employment tax purposes. Furthermore, they must remember that part-time or seasonal workers who are employees are subject to the same tax withholding rules that apply to other employees.    For more on this story, please read Hiring Summer Help.

IRS Expands Tax Deduction for Sales Tax on New Autos
The Treasury Department and the Internal Revenue Service recently announced that the new income tax deduction for sales tax paid on the purchase of a new motor vehicle in 2009 will now be available even in states that do not have a sales tax.    To find out why, read IRS Expands Tax Deduction for Sales Tax on New Autos .

No End to Lawmakers' Generosity to Homebuyers
It began in 2008 when Congress offered a generous $7,500 first-time homebuyer tax credit to serve as a loan to any first-time homebuyer who met the income eligibility requirements. In early 2009, Congress stepped in again, increasing the credit to $8,000, transforming it from a loan into a gift, and extending its availability through November 30, 2009. Under a new legislative proposal, the tax credit would be available to any homebuyer, not just a first-time homebuyer, regardless of income level, and would be increased to $15,000. It would be extended through most of 2010, though the credit could still be taken on the 2009 income tax return.    For more on how this budget proposal could affect your taxes, please read No End to Lawmakers' Generosity to Homebuyers.