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SUMMIT ACCOUNTING GROUP HAS MOVED! Effective December 17, 2008 our new address is 464 Midland Road in Janesville. Below is a map for your convenience.
Lawmakers Reach Tax Rebate Deal
Washington, D.C. (Jan. 25, 2008)
By WebCPA staff
Congressional leaders have struck a $150 million deal on an economic stimulus plan that would give most taxpayers rebate checks of $600 to $1,200.
House Speaker Nancy Pelosi, D-Calif., and Minority Leader John Boehner, R-Ohio, announced the agreement with Treasury Secretary Henry Paulson. Every individual who earns a paycheck would be entitled to a rebate, even low-income earners who are exempt from paying federal income taxes.
Individuals who pay income taxes would receive up to $600 in the mail. Those who earn at least $3,000 but don't pay taxes would get $300. Working couples would receive $1,200. Families with children would be entitled to receive an extra $300 per child. Pelosi dropped a demand for extending unemployment benefits and increasing food stamps in order to include low-income earners who don't owe taxes.
"I think this is a remarkable package because it is about putting money in the hands of America's middle class," said Pelosi during a news conference. "It's timely, it's targeted, and it was done in record time in a bipartisan way."
The rebates would gradually phase out for individuals whose incomes exceed $75,000 and joint filers making more than $150,000, but there would be partial rebates for individuals who earn up to $87,000 and couples who make up to $174,000. The rebates would cost about $100 billion. The plan would also boost the size of mortgages that could be financed by Fannie Mae or Freddie Mac.
Businesses would get a package of tax breaks worth about $50 billion. A temporary change in the Tax Code will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008.
Boehner acknowledged that lawmakers had heard requests for additional provisions in the package. "We had members from both sides of the aisle who want endless things in the package," he said.
About 117 million Americans will receive a check in the mail, including over 35 million who would not have gotten a simple tax rebate. "This is the fastest way to get this into the hands of the American people," said Pelosi.
Tom Ochsenschlager, vice president of taxation at the American Institute of CPAs, sees a parallel with the 2001 tax rebates. "We have a little bit of a test tube there in how well they will work," he said. He noted that the Congressional Budget Office determined that in 2001 about a third of the rebates were spent within three months, another third within six months, and the other third was either invested or spent after six months. Even if invested, the rebates would benefit the economy, he contended. "The government recognizes there's a problem here, and if that doesn't work they'll probably do something more," said Ochsenschlager.
He pointed out that the majority of taxpayers would actually see their rate reduced on the 2008 return so they won't have to pay taxes on the rebate amount. In 2008 the tax rate would be cut from 10 percent to 0 percent on the first $6,000 of taxable income for individual taxpayers and the first $12,000 of taxable income for couples.
Reporting Cash Receipts
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Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, must be filed by anyone who receives $10,000 in cash in one transaction, or in two or more related transactions. Cash is defined as U.S. and foreign currency, money orders, traveler's checks, bank drafts, or cashier's checks of $10,000 or less. The due date for Form 8300 is within 15 days of the transaction.
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Tax Increase Prevention and Reconciliation Act of 2005
President Bush signed the Tax Increase Prevention and Reconciliatin Act of 2005 into law on May 17, 2006.
S-Corp Audits
S-Corporations are getting more audit scrutiny. About 5,000 will face line-by-line exams starting in October 2005. The IRS plans to use the results of these detailed compliance examinations to recalibrate its outdated audit selection formulas for S companies. Agents will watch out for cases where businesses pay little or no salary to owners in an attempt to minimize their employment tax liabilities.
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