6/16/08

Gov. Rick Perry signed House Bill 4765 into law today.  The new law takes effect on January 1, 2010. It increases the amount of small business revenue exempted from the Texas Franchise Tax from $300,000 to $1 million.  However, this new provision is temporary (2 years only), and without further legislative action, the exemption amount will revert back to $300,000 at the end of 2011. The bill also indexes the tax "discount" based on revenue level to inflation on an every-other-year basis. This tax is also known as the "margin tax" and is a business income tax based on a company's revenue (not net income).

May 11, 2009
You may have noticed that your employer is withholding less tax from your paycheck starting Spring 2009.  This is method chosen to get the new "Make Work Pay" Credit into workers' hands withhout having to wait until they file their 2009 and 2010 tax returns.  However, in some circumstances taxpayers will have to repay the reduced withholding when they file their returns.  See our new Obama "Make Work Pay" Credit page for an explanation.

May 11, 2009
There is a new deduction for sales taxes paid on new vehicles purchased between 2/17/09 and 12/31/09.  Unlike the general sales tax deduction which has been available to itemizers who chose to claim it instead of the state income tax deduction since 2004, this new 2009 deduction is available to most taxpayers including those who take the state income tax deduction or take the standard deduction.  Another difference is that the new credit is limited to purchases of new vehicles only, is capped at a vehicle purchase price of $49,500, and begins to phase out for singles earning more than $125,000 and joint filers making more than $250,000.

1/17/09
President Bush's Mortgage Forgiveness Debt Relief Act of 2007 which helped homeowners who renegotiated their mortgages or were foreclosed upon in 2007-2009 has been extended through 2012. Usually, debt forgiveness of all types (mortgages, credit cards, etc.) is counted as taxable income.  However, due to the subprime mortgage crisis, this change (which applies only to mortgage debt on the taxpayer's primary residence) excludes such debt forgiveness from taxable income. The exclusion only applies to debt forgiveness due to a decline in the home's value or the borrower's financial condition. The new provisions may not apply to non-recourse debt. The exclusion is limited to $2 million.

12/4/08
If you missed your 2007 Economic Stimulus Payment due to ineligibility or failing to file a return, you still have a chance to claim your money.  The original stimulus payment was based on your 2007 return information.  If you didn't get one, you may be eligible for the 2008 Recovery Rebate Credit.  It's basically the same thing but eligibility and amount are based on your 2008 return information.  But there's no double-dipping.  Any 2008 Recovery Rebate Credit is reduced by the amount received as a 2007 Economic Stimulus Payment. So if you got the full amount already, no credit for you. Sorry!

Many people find the Stimulus Payment and Recovery Rebate Credit very confusing. So we've added another page to our website to help explain how they are related to each other.  Please visit our Rebates & Stimulus Payments page.

Please note that any stimulus (rebate) that you received in 2007 is not taxable for Federal tax purposes.  Each state will make its own determination in regard to taxability on state returns (if any). 

10/3/08
Congress has passed new tax laws greatly liberalizing the rules for deducting losses related to Hurricane Ike.  The rule which limited casualty loss deductions to those that exceeded 10% of income has been waived for Hurricane Ike victims. Now, tax relief for disaster-related losses is available for losses over $100.  Another very significant change is that Hurricane Ike losses can be deducted by non-itemizers by adding the loss to their standard deduction.  Go to our separate Hurricane Ike page on this website for more information regarding deducting disaster-related losses.

10/3/08
Hooray!  The Sales Tax deduction has been extended through 2009.  This tax break is especially popular here in Texas since we have no state personal income tax and instead rely on high sales taxes to fund our state government.

10/3/08

Up until now, many homeowners have been unable to take advantage of the itemized deduction for property taxes paid on their home because their total itemized deductions were less than their standard deduction, usually due to either not having a mortgage or a relatively small amount of mortgage interest.

This new deduction gives taxpayers in this situation some relief--but only for the 2008 and 2009 tax years.  The standard deduction for homeowners is increased by the amount of property tax paid, up to $500 for Singles or $1,000 for joint returns.

10/3/08

This popular deduction is available to taxpayers regardless of whether they take the standard deduction or itemize.  However, it does phase-out for taxpayers with higher incomes.

10/3/08

The tax break allowing teachers who pay for their own classroom supplies to deduct up to $250 a year regardless of whether they take the standard deduction or itemize, will now expire at the end of 2009.

8/1/08

This new credit included in the Housing Assistance Tax Act of 2008 sounds great but while it is still a good deal, it's not quite as great as it sounds.  Qualifying first-time homebuyers who make their purchase between April 9, 2008 and July 1, 2009 can take a credit of 10% of the purchase price up to $3,750 for Single taxpayers or $7,500 for married couples filing joint returns.  The credit begins to phase out for those with incomes over $75k/$150k for Singles/Joint return filers. Taxpayers become ineligible for the credit if they dispose of the house or it ceases to be their primary residence before the end of the credit year.

Eligible taxpayers who purchase their new home in 2009 (before the 7/1/09 deadline) may claim the credit on their 2008 return in order to get the money sooner.

Unlike other tax credits, this one must be repaid in equal payments over 15 years starting two years after date of purchase.  This is known as credit recapture and works by increasing your tax liability during each of the 15 repayment years.  The good news is that this "loan" is interest free.

HOWEVER, if you sell the home before the 15 year period ends, the unpaid remainder is due and payable immediately!

7/1/08
In response to the soaring price of gasoline, the IRS has announced a large increase in Standard Mileage Rates for business, medical and moving mileage deductions effective July 1.  The standard rate for miles driven for charitable purposes remains unchanged as the IRS does not have authority to change it (that is up to Congress).

Mileage Rate Changes

For comparison, 2007 standard mileage rates were 48.5 cents for business and 20 cents for Medical and move-related mileage.

5/12/08

John Beck, owner of Beck McCarthy and Associates in The Woodlands, Texas passed away on Friday, May 2, 2008.  Mr. Beck was well known in the Houston area as a tax accountant specializing in preparing tax returns for car salesmen and other automobile dealership employees. He is survived by his wife Debra McCarthy-Beck and his children Tanya Kane, John, Kalen and Tyler Beck.

01/14/08

The IRS has tightened the requirements for deducting your charitable contributions beginning with Tax Year 2007.  Under the new rules, you cannot deduct a cash contribution of any amount unless you keep either a bank record (cancelled check, bank statement showing charity or church's name, date, and amount of gift), credit card statement, or payroll deduction records.  "Reliable written records" kept by the taxpayer are no longer acceptable.

1/8/08

Private Mortgage Insurance in new mortgages (including re-financings) signed in 2007-2010 may be taken as an itemized deduction by most taxpayers with an Adjusted Gross Income of less than $100,000.  The mortgage may be on either your principal residence or a second home, but the mortgage proceeds must have been used to buy, build, or improve the home.  Home Equity loans where proceeds were used for other purposes don't qualify.