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Announcements |
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Return of the shoe box?!?
The recently passed American Jobs Creation Act of 2004 includes a provision
that gives itemizing taxpayers a choice between deducting state income taxes
or state sales taxes. Unlike the pre-1986 rules, taxpayers cannot deduct
both income and sales taxes.
While the provision has greatest impact on the seven states (Florida,
Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming) that either
have no income tax or have only dividend and interest taxes, taxpayers in
other states may benefit. Specifically, clients that reside in a state with
relatively low income taxes and relatively high sales taxes (Illinois, for
instance, has state and local sales taxes that can go north of 8%), many
will benefit from writing off sales tax rather than income tax.If a
client plans any major purchases during the year (other than a car or boat,
the tax on which may be added to the flat rate issued by IRS in Pub. 600),
for instance, home renovations or furniture purchases. If so, then it may
make sense for them to pull out the dreaded shoebox and save all receipts
for the year. At the same time, if they are contemplating a renovation, but
are not do-it-yourselfers, then they should ask their contractor to break
out the sales tax on their bills.
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News |
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A client moved to Delaware this past year, due to a job promotion/transfer from Huntsville to Philadelphia
The client called Greg and said, "I know why you gave me that mouse pad now! I still haven't opened or found the box with my old tax records. But, the movers packed the mouse pad with my computer (which is set up and working). I have your phone number and web site address
right in front of me."
Education Incentives
The maximum Tuition and Fees Deduction is $4,000 for those with Adjusted
Gross Income (AGI) up to $65,000 and $2,000 for those with an AGI over
$65,000 but not over $80,000. These AGI amounts are doubled for married
persons filing jointly.
Distributions from Qualified Tuition Plans (QTPs) maintained by private
educational institutions are excludible up to the amount of qualified
educational expenses. This tax break had been limited to State-sponsored
QTPs.
Tax Credits
The Additional Child Tax Credit is now refundable up to 15 percent of the
amount by which earned income exceeds $10,750. The rate had been 10 percent.
Taxpayers with more than two qualifying children may be eligible for a
larger credit. Nontaxable combat pay counts as earned income when figuring
this credit.
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