Disclaimer of Liability
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
| Serving the Central Pennsylvania area since 1981 |
| Robert A. Romako, CPA |
| WHERE DO WE STAND ON THE STIMULUS BILL? |
As reported in last month’s newsletter, I will follow the progress of the tax provisions of President Obama’s economic
stimulus bill as it makes its way through Congress. Just last week the Senate added 2 interesting amendments to the
version it passed.
The first would add a one-time 10% tax credit for those purchasing a principal residence. The credit would be worth up
to $15,000 (i.e., the home would need to cost at least $150,000 to receive the full credit). The home buyer could elect to
claim half the credit in the year of purchase, and half in the following tax year. The credit would apply to homes
purchased within one year of the Bill’s enactment, and can be claimed by any home purchaser- not just first-time buyers.
It appears this provision has a very good chance of being included in the final compromise bill. Individuals considering a
home purchase in the very near future may want to time their settlement to occur after the Bill’s passage to possibly be
in a position to take advantage of this credit. Parents may want to encourage their adult children to consider a home
purchase, and perhaps consider gifts or loans to help their children to purchase a house.
The second provision is intended to help the auto industry. Individuals who purchase a vehicle between November
12, 2008 and by December 31, 2009 could claim an above-the-line deduction for interest on the auto loan, plus sales
taxes paid on the purchase. This means that an individual does not have to itemize deductions in order to claim the tax
benefit. Under the Senate’s amendment, there would be a cap of $49,500 on the amount of debt that would qualify for
the interest deduction. Similarly, the amount of taxes qualifying for the deduction would be limited to the first $49,500 of
vehicle cost. The amount of taxes (but not interest) that could be deducted phases out for a single taxpayer having
between $125,000 and $135,000 of adjusted gross income, or between $250,000 and $260,000 for joint filers. Since this
provision has an established start date, there seemingly is no need to wait to purchase a vehicle in order to receive the
benefits. But, readers should note that the bill is still in the compromise stage and that the ultimate version of
this provision is uncertain. Therefore, it may be better to wait until the bill’s passage to make that car purchase.
stimulus bill as it makes its way through Congress. Just last week the Senate added 2 interesting amendments to the
version it passed.
The first would add a one-time 10% tax credit for those purchasing a principal residence. The credit would be worth up
to $15,000 (i.e., the home would need to cost at least $150,000 to receive the full credit). The home buyer could elect to
claim half the credit in the year of purchase, and half in the following tax year. The credit would apply to homes
purchased within one year of the Bill’s enactment, and can be claimed by any home purchaser- not just first-time buyers.
It appears this provision has a very good chance of being included in the final compromise bill. Individuals considering a
home purchase in the very near future may want to time their settlement to occur after the Bill’s passage to possibly be
in a position to take advantage of this credit. Parents may want to encourage their adult children to consider a home
purchase, and perhaps consider gifts or loans to help their children to purchase a house.
The second provision is intended to help the auto industry. Individuals who purchase a vehicle between November
12, 2008 and by December 31, 2009 could claim an above-the-line deduction for interest on the auto loan, plus sales
taxes paid on the purchase. This means that an individual does not have to itemize deductions in order to claim the tax
benefit. Under the Senate’s amendment, there would be a cap of $49,500 on the amount of debt that would qualify for
the interest deduction. Similarly, the amount of taxes qualifying for the deduction would be limited to the first $49,500 of
vehicle cost. The amount of taxes (but not interest) that could be deducted phases out for a single taxpayer having
between $125,000 and $135,000 of adjusted gross income, or between $250,000 and $260,000 for joint filers. Since this
provision has an established start date, there seemingly is no need to wait to purchase a vehicle in order to receive the
benefits. But, readers should note that the bill is still in the compromise stage and that the ultimate version of
this provision is uncertain. Therefore, it may be better to wait until the bill’s passage to make that car purchase.
FEBRUARY 2009
| Robert A. Romako, CPA Phone:717.774.3047 |