Thompson & McCarty, P.C. CPA

President Bush signed a stimulus package into last week and most of the attention has been on the tax rebates for individuals. However, the bill also contains several provisions that should benefit small and midsized companies.

The bill gives companies a 50 percent bonus deduction on new equipment and increases the limit on expensing capital expenditures to $250,000, double the regular $125,000.

The Section 179 expensing and Bonus depreciation provisions of the bill will help small businesses in terms of providing them with cash flow to expand their businesses.

What Do The Presidential Candidates Have In Mind On Taxation

Regardless of who we elect for President there is no question that the President elect will have a significant impact on taxes. The tax cuts that President Bush signed into law will lapse in 2011. That includes the income tax rate reductions (we are all paying less tax than we were), estate tax relief (my personal pet peeve of a bad tax – it's double taxation at its worst) and the lower rate on long term capital gains and dividends (a provision that encourages investment and wealth accumulation). I think that we need to make these permanent but the issue is what the candidates think.

Tax rebates are now the law of the land. They come as a welcome boost for some and create a sore spot for others. It seems that Congress wanted to include those on Social Security and Disbled Veterans in the rebate program but they didn't take into account the administration of the rebates. In short, people that have had no reason to file for years will now need to file a tax return in order to receive the rebate check they are entitled. Be sure and tell your grandmother that she will need to file this year if she wants the rebate. I have included the entire story from WebCPA below and here is a link to the story on their web site CLICK HERE

A client's web browser was set up such that it did not have a navigation bar available in Internet Explorer (IE), the web browser. The navigation bar is the bar where you type the address of the web site you wish to visit. Many people just use search engines and seldom type an actual web address, known as a URL.

I am shocked that anyone thinks this is a good idea. Don't misunderstand me, I love using Google to search for various and broad subject matter. But, to set my browser up so the only way I can surf the web is to type a keyword at Google's website [when I know the address] is a tremendous waste of time. For example, if I want to go to Google's site I type in google.com and almost instantly I'm there. This is a bad example because the tool that took away the navigation bar (I'm certain it is a setting that can be changed) was Google Tool Bar. To give you a good example my web site is tmicpa.com. The way this client's browser was set up we had to search through Google then scroll through the results to get to my website... instead of just typing in tmicpa.com.

Well it is 2008 and time to update the standard mileage rates again. Gas keeps going up and so does the standard mileage rates. The 2008 rates are:

• 50.5 cents for business miles prior to 07/01/08 and 58.5 cents a mile after 6/30/08.
• 19 cents for medical and moving miles before 07/01/08 and 27 cents a mile after 06/30/08
• 14 cents for miles driven for charitable purposes

You should keep a mileage log if you want to deduct mileage and if you do a good job keeping up with your miles the deduction can be substantial.

Here are some factoids about the taxes we pay.

• In 2005 the federal government took $2.4 trillion out of the pocket of the American people. That is about the same size as the entire 1959 U.S economy in 1959 in inflation adjusted terms.
• According to the Tax Foundation, three fifths of taxpayers believe their taxes are too high. About 2% think they are too low (WHAT!?)
• 80% of taxpayers believe that the tax system is too complex. 3% actually thinks the tax system is fine the way it is. More than 2 out of 3 say they would give up major tax deductions (mortgage interet, taxes) for lower tax rates. (This is a tax spend politicians dream come true. He'll just cut the dedcuction and then say we can't afford the rate cut)
• In 2005 mortgage interet dedcutions account for tax saving of $62 billion with 72% of that going to those with incomes under $200,000.
• The child credit saved taxpayers $46 billion almost all of it claimed by the middle class (That's because this was targeted to the middle class).

Well I am a little late getting this information posted but better late than never. The following rates are the standard mileage rates for 2007.

• 48.5 cents for business mileage
• .20 cents for medical and moving mileage
• .14 cent for charitable miles.

In case you need the official release of code reference you can fin it here.

I have spent a great deal of time writing two reports titled "How To Choose A Tax Preparer" and "How To Choose A CPA". I have never published either of these reports in whole but pieces of these documents have been published in various parts of our site and in a few ads that we have run over the years. I will publish these and make them available to my web visitors and email subscribers some day. However, I ran across a site that says most of the things that I think are important to you in selecting a trusted tax advisor. It is published by a CPA named Kerry M.

There are two hot tax topics that are new for the 2006 filing season (that is right now). One biggie is the telephone excise tax refund which can only be claimed on your 2006 return. This is actually a refund of excise taxes that were charged on our phone bills on long distance telephone calls after February 28th, 2003. The IRS lost the right to charge this tax in Court then lost 5 different Federal Appeals before they gave up and quit charging us the tax on long distance phone services. The refund applies to individuals, businesses, and tax exempt organizations. The refund applies to any phone, including cell phones, and bundled services. There are different rules for each group so how you apply for it will vary.

The decision that all business owners will eventually face is how to handle their accounting needs. Good accounting is an essential piece of real business management. Accounting is the collection and or capture of financial transactions and the subsequent presentation of that data in the form of an income statement, balance sheet, and statement of cash flows. The very basis for measuring the effectiveness of an entities transactions is present on the statements listed above. Therefore, it is impossible to manage a business without an effective accounting model. There are two basic choices for creating an accounting system. One can outsource the accounting function or it can be set up as in house business activity. This article will cover the advantages and disadvantages of both methods in the hope of assisting business owners with making a decision on what is best for their companies.