Home Energy Tax Credits

You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits.

The Nonbusiness Energy Property Credit is aimed at homeowners installing energy efficient improvements such as insulation, new windows and furnaces. The credit is more limited than in the past years, but can still provide substantial tax savings.

• The 2011 credit rate is 10 percent of the cost of qualified energy efficiency improvements. Energy efficiency improvements include adding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count.

• The credit can also be claimed for the cost of residential energy property, including labor costs for installation. Residential energy property includes certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel.

• The credit has a lifetime limit of $500, of which only $200 may be used for windows. If the total of nonbusiness energy property credits taken in prior years since 2005 is more than $500, the credit may not be claimed in 2011.

• Qualifying improvements must be for your principal residence located in the United States before January 1, 2012.

Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment.

• The credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.

• No cap exists on the amount of credit available except for fuel cell property.

• Generally, labor costs are included when figuring this credit.
Not all energy-efficient improvements qualify for these tax credits, so homeowners should check the manufacturer’s tax credit certification statement before they purchase. Homeowners can normally rely on this certification statement which can usually be found on the manufacturer’s website or with the product packaging.

California Businesses Warned of Scam

California businesses have been receiving payment notices from the "California Labor Compliance Bureau" - which is NOT an actual California agency. The correspondence looks offical, but it's a scam. Read here for the full details.

Business Expenses - What Can I Deduct?

I get this question all the time. The IRS doesn't provide a list of 'allowable deductions' for businesses. To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

As you are reviewing your business expenses for 2011, ask yourself these two questions:

1. Would other business in my industry also have this type of expense?
2. Is this expense necessary for my business to operate?

If you can answer 'yes' to both questions, then it's probably a valid business deduction.

Tax accountant video

Here is a humerous video of what it's like to be a tax accounant.

An Idiot's Guide to the Greek Debt Crisis

I wanted to share this as it's a good summary of the current Greek debt crisis.

http://news.yahoo.com/idiot-guide-greek-debt-crisis-163212268.html

Flat tax? Is it the right time?

The United State income tax code does more than just collect taxes to run our government. It is also there to incentivize certain behavior. The tax code provides specific tax benefits related to research, owning a home or energy efficient home improvements - just to name a few. If we move to a ‘flat tax,’ as proposed by some of the presidential hopefuls – there will be segments of our economy that will really suffer. If we lose the mortgage interest deduction, that will further cripple the real estate industry (think more people out of work and a drop in home prices). Cutting back on the research tax credit may cause that work to be shifted overseas or a loss of innovation in our country. The loss of charitable deductions would hurt non-profits and the individuals that they serve.

We currently have a very delicate economy facing numerous ‘head winds.’ While simplification of the tax code or a flat tax might sound good, I would rather see our leaders look to change the tax code during a period of prosperity. Going to a flat tax at this point, would just further hinder our economic recovery.

Could Greece's troubles wreck the American economy?

http://news.yahoo.com/blogs/lookout/could-greece-troubles-wreck-american-economy-200122503.html

Reporting capital gains for 2011 is going to be more complicated

You will now have to use two forms to report capital gains for 2011:  Form 8949 and Schedule D.  Basis reporting rules went into effect for securities bought after 2010 and sold in 2011 and later.  All sales will be listed on the 8949, and the totals will be carried to Schedule D.  Separate 8949s must be filed for sales where the basis is reported by the broker, for sales where the tax basis isn't reported and for any disposition where no 1099-B is received reporting the gross proceeds.