Hold onto your wallets, and tighten up your money management controls!

Here is a brief summary of tax law changes for 2010.

By Patti S. Spencer of Spencer Law Firm

The New Year brings many tax changes. Many tax breaks are phased out. The changes below are the current state of the law. It is always possible for Congress to act to extend or replace disappearing provisions.

The House passed a bill that extended many of these provisions, but the Senate was unable to schedule a vote on it. The Senate has been tied in knots over the health care bill.

Roth IRA conversions

Starting in 2010 the income cap for converting a traditional IRA to a Roth IRA is eliminated. Now anyone can do a Roth conversion. If the conversion is done in 2010, taxpayers can spread the income tax attributable to it over two years: 2011 and 2012. Note that while the income cap is removed for purposes of qualifying for the conversion of a traditional IRA to a Roth IRA, there remains an income cap on regular contributions to a Roth IRA. The income phase-out begins at $167,000 for joint filers.

New vehicle sales tax

Individuals will no longer be able to take an itemized deduction or increase the standard deduction for the sales tax on the purchase of a new motor vehicle. Vehicles had to be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.

Sales tax

The choice to deduct state sales tax payments instead of deducting state and local income taxes is gone. This provision was very important for taxpayers in such states as Florida, where there is no income tax.  THIS IS REALLY UNFAIR TO LOW TAX STATES.

End to phaseouts

In 2010 there will be no phaseout of itemized deductions and personal exemptions for higher-income taxpayers. This will greatly benefit high earners.

Teachers’ deduction

The $250 deduction for teachers who buy classroom supplies with their own money is eliminated.

Tuition and fees

The $4,000 deduction for college tuition and fees expires after 2009. This deduction was permitted “above the line,” meaning it could be taken even if the taxpayers didn’t itemize.

Contribution from IRAs

IRA owners older than 70½ who make contributions from their IRAs directly to charity will no longer be able to exclude these withdrawals from income.

Property tax deduction

Non-itemizers will no longer be able to deduct up to $1000 in property taxes paid. This provision had been a help to homeowners who had no mortgage so that there was no interest deduction to help make itemization worthwhile.

AMT exemptions

The Alterative Minimum Tax exemption levels fall back to $45,000 for married filing jointly and $33,750 for singles and heads of household. (In 2009 the exemption was $70,950 for married filing jointly and 46,700 for singles and heads of household.) Some commentators say that as many as 1 in 5 taxpayers will be subject to the AMT in 2010.

Unemployment benefits

The first $2,400 of unemployment benefits will no longer be tax-free.

Energy credit reduced

The 30 percent tax credit for the cost of energy-saving home improvements is reduced to 19 percent and is capped at $500.

Section 179 expensing

The maximum amount of equipment that can be expensed (instead of depreciated) is reduced to $135,000 from $250,000. Businesses can no longer claim 50 precent bonus depreciation on assets placed in service in 2010.

Tax on dividends

For taxpayers in brackets higher than 15 percent, qualified dividends are taxed at a maximum rate of 15 percent through Dec. 31, 2010. For taxpayers in the 10 percent and 15 percent brackets, qualified dividends are taxed at 0 percent through Dec. 31, 2010. The provisions sunset at the end of the year, and dividend taxation reverts to former 2002 rates.

Mileage reimbursement

The mileage rates in 2010 are 50 cents for business, 16½ cents for medical and 14 cents for charitable purposes.

Home buyers credit

If you used the home buyers credit in 2008, you must start paying it back in 2010. The qualification period for first-time home buyers to purchase a home and qualify for the credit continues through May 1.

Retirement accounts

Remember you have until April 15 to contribute to a traditional or a Roth IRA. If you have Keogh or SEP and you get a filing extension for your 2009 return until Oct. 5, you have until that date to make contributions.

No estate tax

The federal estate tax is repealed for individuals who die in 2010.

Wild cards

If the Senate and House eventually hammer out a health care bill that becomes law, there are various provisions in the current legislation on how to pay for it. The House bill includes a 5.4 percent surtax on high earners and would curtail flexible spending accounts. The Senate bill includes a 40 percent surtax on high-end employer-sponsored health plans that provide health coverage valued at more than $8,500 for individuals and $23,000 for families (they call them “Cadillac plans”) and increases the Medicare payroll tax. Hold on to your wallet.

Article Source: http://articles.lancasteronline.com/local/4/247022

Write your congressional representatives and urge them to support the FairTax Act http://www.FairTax.org and leave a comment here that you took action!

What Leads To Business Success???

Watch and Find Out!

Leave a comment and share what led to

YOUR business success.

Many people set new goals for the New Year…losing weight…stopping smoking…cleaning out closets…but what about your financial goals?

If you set your financial goals, business and personal, and get to work figuring out how to reach those goals, you can improve your financial condition.

Make your goals realistic but make them a bit of a stretch too…after all the point is you need to be able to plan on how you are going to reach the goal. Don’t just pull a number out of thin air and then getting discouraged because there is no way you are going to make it.

One way to start your plan is to work backwards, starting with what you want to achieve.

Wealth can be measured by your net worth, so that is the place to start. Figure out what your personal net worth is right now by adding up the value of all of the assets you own and subtracting everything you owe (mortgage, car loan, credit card debt, etc.) Then set a goal of increasing your net worth by some percentage. Work out what you will pay on the amounts you owe without adding any additional liabilities like paying for things you can’t afford with credit cards, and then add a goal for some cash savings that will increase your net worth. That’s two more goals, spend less and save more.

Actions to increase your net worth:

1 – Pay down the principal on your liabilities like the mortgage or car loans

2 – Pay down credit card debt and stop using the cards unless you can pay off the balance in full when you get the monthly statement.

3 – Find ways to cut expenses – we all spend on items that are optional, right?

4 – Put a portion of every paycheck into cash savings toward an emergency fund (set a goal for the amount you want to reach in that fund)

5 – Once your emergency fund is built up, start putting some cash into investments that will grow (don’t overlook the benefits of a retirement savings plan account which can also reduce your income tax liability)

Next step: How much more personal income will you need to achieve that increase in net worth and pay all of the bills you will incur during the year? That number is the basis for setting the goal for an increase in your personal income. If you are earning $60,000 a year now, and you will need to earn $70,000 to make the net worth goal, then figure out what you have to do to make that happen.

The actions you take will differ based on whether you are a business owner or an employee, of course.

If you work for someone else, then the assets you have to sell to increase your income are skills and time. You can increase your skills and make yourself more valuable to your current company and ask to take on more responsibility for more pay. Or, you can get a second job or start your own money-making entrepreneurial activity that you can work on in your spare time.

Don’t overlook cutting back on discretionary expenses. You can save money on restaurant meals when you dine out by buying gift certificates for your own use for a fraction of their worth at http://tinyurl.com/restaurant-gift-certs-4-less and they make great gifts for giving to others.

As a business owner, your increased personal income demand is placed on your business. That means working out a plan to generate more sales and cut expenses wherever possible to pay you a salary increase and cover the increase of the cost of doing business in the coming year.

So, working backwards in the equation, how much of an increase in sales do you need to make that goal? How can you use your cash flow more effectively to generate more cash? Where can you cut expenses without harming the income production and profits of your business?

Becoming financially fit is not all that different from becoming physically fit. You start where you are and train yourself to use discipline and your brain power to perform better and make small, consistent improvements every day. Before you know it, you’re on your way to achieving your financial goals for the new year and better money management habits become second nature.

Money Saving Tips:

Save money on restaurant meals;  buy gift certificates for a fraction of their worth

Lose the fax phone line: Send and receive secure faxes by email and never miss another fax

Buy ink and toner at deep discounts and opt-in to receive the additional coupons by email to save an additional 10 – 15%

Buy shipping supplies at good prices and get cool FREE stuff for yourself or gift giving

Automatically protect your computer files for pennies a day

Do you have other great money saving ideas? Leave a comment and share them with our readers.

As the U.S. and global economy continues to struggle and credit gets tighter, steady cash flow becomes more and more important to the survival of a business. One source that has been around for decades is accounts receivable factoring; also referred to as invoice factoring. This tool has become an important small business money management strategy.

Invoice factoring is not just for manufacturers. Many types of business owners, including Dentists, Chiropractors, and other healthcare providers have turned to this method to insure a steady stream of cash into their businesses.

Kent Harlan, owner of Ozarks Capital Funding has been a reliable resource for factoring for healthcare professionals for a long time, and has even written a book about it that makes this tool easy to understand.You can read his blog article Factoring For Medical Providers and check out his book to learn:

- How factoring can be better than bank loans

- The easy application process

- How fees are determined – you’ll be surprised

- The other services factoring companies provide that will save you money

- How your company can take advantage of the infusion of working capital from factoring

- How factoring companies communicate with your customers

- How to find out if you qualify before you apply

- Why utilizing a factoring broker is advantageous to you

If you are in the Dental industry, you should also visit Kent’s website focused on Dentists at www.dentalpracticecash.com