It’s Tax Time!
By: Charles L. Telk Jr., CPA, Senior Tax Advisor | email
As another year draws to an end, now is a good time to assess your income tax situation with an eye towards tax savings strategies that will reduce your 2007 tax bill. Several items of interest include the following:
1. Recent legislation has expanded the Jobs Tax Credit. If your business hires a new employee between the age of 18 and 40, and this new employee lives in a designated county, you may be able to claim up to a $2,400 Federal tax credit. 30 of Iowa's 99 counties qualify. There are date-sensitive forms that must be filed with the Iowa Workforce Development.
2. Consider making a charitable contribution directly out of your IRA. This is referred to as a qualified charitable distribution, and five requirements must be met. It must be distributed from your IRA or Roth IRA (not a SEP or Simple IRA), you must be at least 70 and one half years old, it must be distributed directly by the IRA trustee to an eligible public charity, it must meet the “normal” requirements for a 100% deductible charitable donation, and it must be a distribution that would otherwise be taxable.
The advantage to this type of deduction is that the IRA withdrawal is not added to your Adjusted Gross Income (AGI). This can be important because items of income and deduction are affected by your level of AGI such as the taxability of social security benefits and the phase out of itemized deductions.
3. There are many different types of 1099 forms. If your business issues checks to vendors, and others - (and what business doesn't), you may have a 1099 filing requirement. There are severe IRS penalties for failing to file a 1099 when one should have been filed. Now would be a good time to review your W-9 file to make sure you have a W-9 on hand for any non-employee that you have issued a check to. The information presented on a W-9 is used to prepare the various 1099 forms. I would be glad to assist you in keeping current with the rules as they relate to the filing of 1099's.
Have you taken advantage of all the available tax deductions and credits available to you and or your business for 2007? Now would be a good time to engage in some creative tax planning to take tax reducing action prior to December 31, 2007. Please contact me to discuss your options. I look forward to working with you regarding your income taxes next year. As always, thank you for the opportunity to be of service!