July 2004 Newsletter

HAPPY 4TH OF JULY!

 

What's New in Taxes

 

Donating an Automobile to Charity??? Important!

If you are thinking of donating a vehicle to charity please check on the LINK BELOW.

This is currently a HOT TOPIC with Congress and the IRS.

The IRS has just published the brochure for donors, PLEASE CLICK ON THIS LINK (Pub.4303: A Donor's Guide to Car Donations) AND READ IT:

 

IRS Won't Adjust Mileage Rate Midyear

High gas prices won't affect the standard mileage rates you're allowed to deduct for business, medical, moving, or charitable driving you do this year. The IRS says it does not intend to increase the rates to take the recent spike in gasoline prices into account. Higher gas prices will be factored into the IRS's calculations for determining the 2005 mileage rates.

 

Make Time for Tax-cutting This Summer

Summer's here, but that doesn't mean you should forget about taxes. Why not take a few steps to cut your 2004 tax bill?

* Summer travel. Are you planning a summer business trip? You may find that you and your spouse can travel for little more than you would have paid on your own. For example, if a double hotel room costs $200 and a single room costs $175, you can still deduct $175 as a business expense even if the two of you get the double. A similar strategy may be possible with rental cars and airfare (for example, two family discount tickets in place of one full-fare ticket).

* Home rental. If you are going to be out of town for a while, consider renting out your home while you're gone. The IRS allows you to receive up to 14 days of rental income per year completely tax-free. In fact, you don't even have to report the income on your return.

* Second home. Do you own a boat or recreational vehicle? As long as it has sleeping space, bathroom, and cooking facilities, you may be able to claim it as a second home and deduct the interest payments on your loan.

* Summer job. If you run a business, consider hiring your child for the summer. Your son or daughter can earn up to $4,850 tax-free in 2004, and you get a business deduction for the same amount. Even better, you can shift another $3,000 to your child, tax-free, as long as he or she uses the money to make a deductible IRA contribution.

Enjoy your summer — and save taxes! Please give us a call; we are here to help you with your tax planning.

 

New Business

 

Recordkeeping Required for Business Cell Phone Use

If you use a cell phone for business calls, you need to keep good records in order to take a tax deduction for your expenses. A recent Tax Court case ruled that the stringent recordkeeping requirements that apply to vehicles and computers used for business also apply to cell phones.

You need to keep records to substantiate the time, place, and business purpose of your cell phone calls, or your deduction may be disallowed.

 

Smart Business

 

How to Bring Your Children into the Family Business

Many entrepreneurs dream of bringing their children into the family business. But all too often the dream turns bad. The reality can be family turmoil, shattered employee morale, and a damaged company. Here are some ways to avoid the most common pitfalls:

* Before hiring your children, discuss your work with them often. If their eyes glaze over whenever you raise the subject, perhaps they should be allowed to pursue other interests.

* Encourage your children to finish their education first, and allow them to work outside the company for at least a couple of years. When you finally do hire them, they'll come with experience, discipline, and realistic expectations.

* Don't try to supervise family members yourself. Instead, have them work under capable non-family managers.

* Ensure that your children are supervised, evaluated, and compensated as though they were unrelated employees in comparable jobs. Demanding more or paying children less than their position calls for is likely to discourage them and incur their resentment. Demanding less or paying too much will make other employees resentful.

Remember, your objective is to keep the business in the family and ensure its continued success. Call if you would like help tailoring a plan to your business and family situation.

 

Chuckle of the Month

Overheard at the water cooler —
* As long as there are tests, there will be prayer in school.
* I wonder how much deeper the ocean would be without sponges.
* Despite the cost of living, have you noticed how it remains so popular?
* I feel like I'm diagonally parked in a parallel universe.
* I just got lost in thought. It was unfamiliar territory.
* A day without sunshine is like, well? Night!
* Seen it all, done it all, can't remember most of it.

* Why is it called Common Sense if it is so rare?

 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.