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TAXING TIMES

Newsletter Volume 13 (September 2005)

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Hi Everyone,

This is my first email newsletter of 2005. I will send these out periodically when there is tax news that I feel is necessary to pass on. You can check out previous newsletters on my website http://www.mytaxgenius.com/nwsltr/nwsltr.html . If you do not want to receive these, please by all means write back to me and ask that I remove your address from the list. If this is coming to you through your employer's email system & you would like me to change addresses for you, please let me know. Also, feel free to pass this on to anyone you think may find the information useful.

Planning on buying a car soon?

The first issue I would like to address is the new Energy Act signed on August 8. Prior to Jan 1, 2006 the ‘old' law is still in effect for the various types of alternative fuel vehicles purchased. As of 1/1/06 the new law takes over. If you are planning on buying the most popular type of alternative fuel auto, the hybrid car (and with THESE gas prices – oy!) you might want to do some planning.

This year the purchase of any of these cars qualifies you for a maximum $2000 deduction. Starting next year on Jan 1 (and no telling how long it will last – you'll see why shortly) you may earn a $3400 credit (credits are a dollar for dollar reduction in taxes – a deduction lowers your taxable income & proportionally your taxes – credits are better!). However the credit calculation is a bit weird (and silly).

It is broken up into two parts: a fuel economy credit (FEC) & a conservation credit (CC). The FEC is calculated based on a comparison of the auto's fuel economy of the 2002 model year for city driving. This credit ranges from $400 for a 25% boost in mpg over 2002 to $2400 for a 250% jump in mpg (who thinks up these things??? & what if the model was not around in 2002? I don't know). The CC is calculated based on the lifetime fuel savings of a vehicle. It ranges from $250 for a savings (over its lifetime) of 1,200 gallons of gas to $1,000 credit for saving at least 3,000. (WOW! I guess nobody had the guts to call THIS one tax simplification!) These credits are for vehicles less than 8,500 lbs (GVW). There is an even more complicated credit calculation for heavier vehicles, but I won't go into that now as my head is spinning already. Because of this ‘little' wrench, if you are planning on buying one of the more popular hybrids (Previa, Insight, Civic) you might want to get going soon. The reason for this is from what I have heard; there are waiting lists for the cars. The 60,000 cap may be reached VERY quickly. Of course, you could all do what I did, buy a Vespa scooter! It is fun, zippy & gets about 65 mpg. It is also very easy to park! There are also credits available for some other alternative fuel vehicles, like natural gas, LPG & fuel cells. Nothing about the up and coming bio-diesel autos, though.

Just to throw a monkey wrench into your planning, here is the answer to the comment above about how long the credit will last. This credit is only good for the first 60,000 cars that are sold by each manufacturer. Well, that is not completely accurate. (Are you ready for more nonsense?) In the quarter the company hits the 60,000 cap, the full credit is available. For the next two quarters, the credit drops to 50% of what it would have been if so many other people were not so environmentally conscience. For the next two quarters, it drops to 25% & then it goes away completely.

Because of this ‘little' wrench, if you are planning on buying one of the more popular hybrids (Previa, Insight, Civic) you might want to get going soon. The reason for this is from what I have heard; there are waiting lists for the cars. The 60,000 cap may be reached VERY quickly. Of course, you could all do what I did, buy a Vespa scooter! It is fun, zippy & gets about 65 mpg. It is also very easy to park!

There are also credits available for some other alternative fuel vehicles, like natural gas, LPG & fuel cells. Nothing about the up and coming bio-diesel autos, though.

Calendar Girls?

The HOT Women of Edmonds

The other topic I would like to mention has almost nothing to do with taxes. It is a new calendar on the market. This one is for 2006 & is called “The Hot Women of Edmonds ” . This is a group of Edmonds business owners (including Ms. July – my wife, Nancy who looks VERY hot standing next to her stove), who are selling the calendars to support a very worthy cause: Trinity Place is a YWCA transitional housing complex for homeless women & their children. It is a 24 unit apartment building bought by Rick & Anne Steves of Europe Through The Back Door & refurbished by them. They are incredibly generous for doing this! The money raised through the calendar sales will go 100% to Trinity Place . They are for sale at various Edmonds businesses (including mine) for $10 (including sales tax). EVERY PENNY (except sales tax – thanks for nothing Department of Revenue) goes to the charity. The dozen women featured paid out of pocket for the printing costs (Minute Man Press in Lynnwood donated their time for all their work, but the paper costs were too high to absorb, so all the models kicked in to pay that cost). Susan Marsidi donated her services to photograph the calendar. I would like to thank both Minute Man Press & Susan for their generosity!

Trinity Place is a YWCA transitional housing complex for homeless women & their children. It is a 24 unit apartment building bought by Rick & Anne Steves of Europe Through The Back Door & refurbished by them. They are incredibly generous for doing this! The money raised through the calendar sales will go 100% to Trinity Place . They are for sale at various Edmonds businesses (including mine) for $10 (including sales tax). EVERY PENNY (except sales tax – thanks for nothing Department of Revenue) goes to the charity. The dozen women featured paid out of pocket for the printing costs (Minute Man Press in Lynnwood donated their time for all their work, but the paper costs were too high to absorb, so all the models kicked in to pay that cost). Susan Marsidi donated her services to photograph the calendar. I would like to thank both Minute Man Press & Susan for their generosity!

If you would like to buy one of these great calendars, please contact me. Nancy 's dad has already bought 40 of them! He said he “popped his vest buttons with pride” after seeing the finished product!

Extension Deadline Nears

For those of you still on extension, I need to hear from you soon! I will be gone for the first ten days of October, so we really don't have a whole heck of a lot of time left!

Please call or write me if you have questions about any of these issues or anything else tax-wise.

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