New for 2004 Tax Returns
Your Professional Tax Preparer, Rudyard Vance, EA, MBA, is on the job 24/7, 365, and starting my 27th year in business. I am passionate about what I do and my goal is to prepare “The best darn tax return possible.”
Lightly stated, the tax laws have been made more complicated over the past few years. Many revisions to the tax code have taken place with laws being inserted, rescinded, and reinstated to the extent that it is difficult to keep up with all the changes. Many items can be calculated in more than one place on your tax return changing the liability on your tax return greatly. So knowing the complete picture of the Tax Code is important in determining the use of tax income and tax deductions when preparing your tax return.
So my role is very clear as your Tax Professional. I review your year-end tax documentation, analyze your tax situation, and ask questions to clarify your tax income and deductions. Then I place your tax items in the most optimum places to minimize your tax liability and make “The best darn tax return possible.”
One big new tax deduction for this year that came from the American Jobs Creation Act of 2004 is the Sales Tax Deduction. Taxpayers who itemize deductions have a choice of claming either sales tax or state income tax paid. Sales tax paid on cars and boats can be included.
I am a Like-kind Exchange specialist and one new law closes a loophole in this section of the law. The law states that if a taxpayer sells their principal residence within five years of acquiring it through a like-kind exchange the $250,000 exclusion is not allowed.
The Educators Deduction has been restored for the tax years of 2004 and 2005 and it is an above the line deduction.
The Child Tax Credit refund percentage was raised from 10% to 15% for 2004, which may mean a larger refund if you qualify.
These are just a few of the tax law changes. I am your tax and financial professional and that means we need to talk before December 31, 2004 by phone or during a free 30 minute consultation in my office to discuss your year end tax planning.
Let’s not forget that I am here for all of your financial needs. I can help you save money because I can give you advice using your whole financial picture. If you need to save money, I can set up a savings plan. If you need to roll over your retirement plan, I can do it for no cost. If you need to set up an IRA or SEP, I can do it for no cost. If you need to refinance or secure a home loan, I can do it quickly with less hassle and low cost. My company Vance Economic Services is your one stop, first one to call Financial Service Center.
So let me help you and let me help your friends and workmates. I love referrals. Call today for your free year end consultation. Office (415) 387-7417 – Toll Free (866) 411-1040 – Cell (415) 279-8735
1031 Tax Deferred Exchange
If you have investment real estate property there is one tax law that you should be familiar with and that is the 1031 Tax Deferred Exchange. It is one of the best ways to reduce capital gains taxes in a sale of investment property and in some cases you can eliminate the tax altogether. With such a big tax loophole on the books you can bet that the IRS has many stumbling blocks and barriers on the winding road to completing a 1031 tax free exchange. Let’s touch on a few that you should know.
First, it is an exchange. You must sell a property and buy a property and in general, any kind of real estate property is viewed as of like kind. This means that you can sell a single family rental home and purchase a multi unit apartment building, or even sell an apartment building and purchase unimproved land.
Secondly, there are time constraints. You must identify the property to be purchased within 45 days from the date of the close of the property sold. This identification notice must be in writing and signed by you and delivered in the hands of your exchange intermediary before the end of the 45 days. After that has been done, you now have 180 days to close on the property to be purchased. But there is a trap here. The law states that the purchased property must close no later than the earlier of 180 days after the close of the sold property or before the due date of the income tax return for the tax year in which the purchased property was transferred. This means that if you sold your property on April 1 you would have only 14 days to close on your purchased property if you don’t extend your tax return.
Thirdly, it is crucial to know the fair market value and the basis of all property and items (even cash) in the transaction. The slightest movement of an item can make it taxable. Take for instance you made $10,000 in repairs on the property you sold. If you pay for the repairs with funds from your bank account or credit card you possibility could write off the entire cost of the repairs and save tax dollars. But if you elect to pay off the repairs with funds from escrow then $10,000 becomes a taxable event and subject to capital gains taxation.
I have touched on only a few of the many items you need to know when completing a 1031 Exchange and this is why it is not something to go into without first discussing it with a professional. VES is here to help you. Before you start call us. We can help you every step of the way. VES can assist you in exchange structuring and consultation, and we support Realtors so they don’t have to be tax professionals to complete a successful 1031 Exchange.
If you have questions on 1031 Tax Deferred Exchanges, e-mail us at Rudyard@VanceES.com. Our professionals will be glad to serve you.
BUSINESS WIRE
That business auto or truck has seen better days and now you must replace it. Well, one large tax tip is to sell it. Don't trade it in. The tax code has limits on deductions of business autos and trucks, which usually puts the tax basis well above the market value. If you sell the auto, the difference between the high tax basis and the lower sale price is a taxable loss. If you trade the truck in on a new one you do not receive the loss. You keep the basis.
Vance Economic Services is here to help individuals and businesses save money on taxes and also increase wealth.
For service, e-mail us at Rudyard@VanceES.com.
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