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TAXING TIMES

Newsletter Volume 11 (October 2004)

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Hi all:

I know – another newsletter? Believe it or not there is new information just since last week.

Item 1 In the last newsletter, I told you about the upcoming signing of the bill allowing us to deduct sales taxes paid. (It still has not been signed but we have been assured it will be.)

•  I would like to give you some particulars about the rule. Even if you live in a state with an income tax you may choose to deduct your sales taxes. You can only deduct one or the other though.

•  If you can't find all your receipts what I suggest you do is review your

check register, bank statements, credit card statements etc. Add up all your sales taxable transactions. Remember to include services that you paid tax on such as landscaping & handyman work. Take that total & divide by 1.xxx (with xxx equal to your tax rate - i.e. Edmonds = .089). That will be how much you paid in sales tax. Remember though, using your receipts would be better as you will find there are different rates in close by areas & for different products. If in Seattle you buy a dinner fork you will pay 8.8% but if you buy dinner in a restaurant you will pay 9.3%. OY! You may even be out of state & pay a very different rate.

VERY IMPORTANT – don't bring me in a bag of receipts!!!!! Please add them up before you come in.

Item 2) For the teachers out there – the educator deduction which we had for the last two years has been extended retroactively for 2004 & 2005. That is a $250 ‘adjustment' to income for classroom expenses incurred by educators. Please save receipts for this one.

Item 3 For those of you who are planning to deduct the donation of a car to a charity next year take note. If you donate a car worth more than $500 and the charity sells the car (as almost all of them do), your deduction is limited to the amount of the car's selling price, NOT the fair market value. You are also required to have a "contemporaneous" written acknowledgment from the charity showing all the pertinent details.

Item 4) Speaking of cars… I am selling one. I am including the information here if you are interested in a very nice ride! The car is in great shape & the only reason I am selling it is I am tired of driving an automatic. I actually enjoy shifting gears (yeah I know – I'm a Luddite). The car is a 1992 Mercedes 300SL. It is a 2 seater convertible, white with blue leather, a good stereo including a 12 disc CD changer, new tires, both the hard & (power) soft top. For a 12 year old car it has fairly low miles - 86,000. I have kept it in very nice condition with yearly detailing & keeping up on the mechanical.

I am asking $24,000 for the car (everything is negotiable – make me an offer). But wait – there's more (I always wanted to use that). A free tax return for the buyer!!.

If your company wants to buy a car, remember the bonus 50% depreciation I wrote about in the last newsletter. If you buy it before the end of the year that means an automatic $12,000 deduction!

 

 

 

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