• Long-term Capital Gains: Beginning in 2008, the 5% tax rate on long-term capital gains is reduced to 0. Yes, you read that right. Zero. This special rate is available to taxpayers in the 10 or 15% tax brackets. (This is taxable income (after deductions) of $33,950 or less, $67,900 or less on Married Filing Joint returns.) This rate will continue to apply through 2010. For taxpayers in higher tax brackets, the long-term capital gain rate is still 15%.

• First time home-buyer credit: If you have not owned a home in the last two years and purchased a home between April 8, 2008 and December 31, 2008, you may choose to take a new credit up to $7,500. This credit is essentially an interest free loan, which must be repaid evenly over 15 years, beginning in 2010.  If you purchased a home between January 1, 2009 and December 1, 2009, the tax credit is $8,000 and it does NOT have to be repaid.  Income limitations apply.

• Charitable Donations: This was new for 2007, but it’s worth repeating. All charitable donations MUST be supported by bank records (canceled checks) or receipts from the charity. Logs to track cash donations are no longer sufficient. For non-cash contributions (clothing, household goods, etc.), items must be in “good or better” condition in order to be deductible.

• IRA Contributions: The maximum IRA contribution is $5,000 ($6,000 if you are over 50). If you are interested in making a contribution, please ask how it will affect your tax situation and whether Traditional or Roth contributions would be more beneficial.

• Gifts: The annual gift exclusion for 2009 is $13,000. You may gift anyone up to $13,000 without tax consequence (to you or the recipient).

If you have any questions about how these or other tax law changes affect you, please contact us for a complimentary planning appointment.

Can I deduct charitable donations?
If you itemize deductions, you can deduct contributions to qualified charities. Not sure if you itemize? Usually, if you pay mortgage interest, have significant medical expenses, or have significant unreimbursed job expenses, you itemize.

What is deductible?
You can deduct contributions to a qualified charity. The charity will be able to tell you if they are qualified. In general, qualified organizations include: religious organizations, non-profit schools, hospitals, war veterans’ groups, Salvation Army, Red Cross, United Way, Goodwill, etc.

You may deduct contributions of cash as well as non-cash contributions such as stock, property, and other material items (clothing, furniture etc.). You may also deduct your out-of-pocket expenses including mileage (14 cents per mile).

You may not, however, deduct the value of your time or services. You also may not deduct contributions to groups that are run for profit, political groups (including candidates for public office), or chambers of commerce.

Can I deduct gifts to an individual?
No. However, you are able to give any individual $12,000 per year with no tax consequence. This means you are not able to deduct it, but they are not required to report it as income either. If you gift more than $12,000 per year to any one individual, you will be required to file a Gift Tax return.

Do I need to have reciepts?
Always keep track of all charitable donations (including the date, organization, and amount). If you give a donation of $250 or more, you will need a receipt from the organization. Most contributions over $5,000 require a written appraisal, so please see your tax professional if you are considering a donation of this size. Be sure to get a receipt for any amount of actual cash donated.

How do I know what my non-cash contributions are worth?
It is up to you to determine the fair market value of non-cash donations. One way to determine this is to go to a thrift store to get an idea what they will be able to sell your items for. Another way is to use software like ItsDeductible, which has thousands of prices built in. If you are contributing a motor vehicle, please consult with a tax professional.

Are there limitations?
There are limitations to the total deductible charitable contributions in one year. If you donate more than 20% of your annual income, please see your tax professional for tax planning. This usually only occurs if you are giving stock or other property. Also be aware that non-cash charitable contributions (clothing, etc) must be in good or better condition.

Please note:
This article is intended to provide general information. Please see your tax professional for information specific to your tax situation.

Seattle, WA – June 11, 2008 – Non-profit business program, Make Mine A Million $ Business has selected Jesica Abella of Abella Tax Services, Inc. as one of 5 business women awardees to win the Micro to Millions awards package at the Seattle event on June 11, 2008 at the Seattle Center Fisher Pavillion. The exciting event will feature female entrepreneurs from Seattle and other regions of the country who compete for business development packages that include $5,000 in financing, coaching, and membership in a nation-wide community of women business owners providing assistance to help their businesses grow to million-dollar enterprises. The event will also include educational and network opportunities in addition to keynote speeches by Washington State Governor Christine Gregoire and Renee Scholfield, Founder of Tongass Substance Screening.

Abella Tax Services focuses on providing continual bookkeeping, payroll, tax preparation, and planning services to small businesses.  Small business owners leave the stress and tedium of number crunching and deadlines to their friendly business advisors, and they regain peace of mind and time to pursue the activities they love.

More than one thousand women applied for the packages being awarded at this event. The Micro to Millions program is an offshoot of the Make Mine a Millon $ Business program, which began in 2005 to provide packages of support to women who had been in business for over two years and had reached $200,000 in annual revenue. The Micro to Millions program was created to provide the right help to women who had not yet achieved that level of growth, but were determined to reach the million-dollar mark.

Described as a cross between “The Apprentice” and “American Idol,” the Make Mine a Million $ Business competition provides twenty women whose businesses have hit $200,000 in annual revenue the opportunity to present their business in a 3 minute “elevator pitch” to a panel of business experts and a live audience. Ten Make Mine a Million $ Business winners will be chosen by the audience and judges who collaborate on the selection process.

Launched in 2005 by Count Me In for Women’s Economic Independence and founding partner OPEN from American Express®, the Make Mine a Million $ Business program was created to help post-start up, women-owned businesses grow to one million dollars in annual revenue. Since the inception, the program has hosted 12 competitions in cities around the country and grown into a nationwide movement. For the Los Angeles event, 1,222 applications were submitted in hopes of securing being awarded a package.

“We are excited to launch our first Make Mine a Million $ Business in Seattle,” said Nell Merlino, founder and president of Count Me In. “The number of applicants mirrors the growth of our entrepreneurs’ businesses and their desire to take them to the million dollar level.”

The Make Mine a Million $ Business program has garnered support from organizations who are all joining hands in order to make an impact in women’s lives and strengthening the US economy. The impressive list of blue-chip national sponsors include OPEN from American Express, Cisco, FedEx, QVC, Jet Blue, Marriot, and Dell. Sponsors provide an array of products and services that serve as invaluable tools for growth.

For more information about how women can grow their businesses please visit www.makemineamillion.org.

About Count Me In
Count Me In for Women’s Economic Independence is the leading national not-for-profit provider of on-line business loans and resources for women to grow their micro businesses into $million enterprises.  Find us at www.countmein.org or call 212-245-1245.

We’ve moved!  Come see us in our new office in the Creative Workspace building at 168th and 48th Ave W in Lynnwood.  Our office is open by appointment, and we typically have day, evening, and weekend appointments available.  The new address is 16825 48th Ave W #230, Lynnwood 98037.

We are also happy to hold consultations and bookkeeping meetings at your location if that is easier for you.  We travel throughout King and Snohomish counties.

Give us a call any time, (425) 743-9250, for tax preparation and planning, bookkeeping help including consulting, training, catchup and/or ongoing work, or all of the above.

Kiddie Tax: If you have kids with investment income, this one’s for you.  If a child has investment income greater than $1,800, some of their income is taxable at their parent’s tax rate.  The definition of ‘child’ for this tax was formerly ‘under 14’.  Now it applies to kids under the age of 19 and kids under the age of 24 that are full time students at least 5 months of the year.

Charitable Donations: This was new for 2007, but it’s worth repeating.  All charitable donations MUST be supported by bank records (cancelled checks) or receipts from the charity.  Logs to track cash donations are no longer sufficient.  For non-cash contributions (clothing, household goods, etc.), items must be in “good or better” condition in order to be deductible.

IRA Contributions: In 2008, the maximum IRA contribution has risen to $5,000.  If you are interested in making a contribution, please ask how it will affect your tax situation and whether Traditional or Roth contributions would be more beneficial.

If you have any questions about how these or other tax law changes affect you, please contact us for a complimentary planning appointment.

If you need someone who knows taxes inside and out, you have come to the right place. We look forward to helping you with your tax-time headaches.

Are your taxes finished for 2008? If so, it’s never too early to start planning for 2009. Please call (425) 743-9250 today for a free consultation, including review of your 2007 and 2008 tax returns.

Cash gifts: As a general rule, deductions for charitable donations must be substantiated by canceled checks or receipts from the charity. However, in the past, a log or other written record sufficed when cancelled checks or receipts were not readily available. So, for example, if you dropped a $20 bill in the Sunday collection plate or in a Christmas kettle outside of a department store, you could still claim a deduction as long as you kept a record of the donation. The new law eliminates this option starting in 2007. All charitable donations must be supported by bank records or receipts from the charities.  (Effective January 1, 2007)

Donations from IRA funds: The Pension Protection Act creates a new tax break for charity-minded individuals age 70 ½ or older. Distributions of up to $100,000 from an individual retirement account are tax-free if paid over to a charity. However, this new break is temporary; it applies only to distributions made in 2006 and 2007.

Credits for energy-efficient home improvements and the purchase of hybrid vehicles were new for 2006 and continue through 2007.

If you have any questions about how these or other tax law changes affect you, please contact us.