Chuck Newton

IRS Issues 2010 Tax Rates

Because it matters greatly to solo practitioners, you need to know that the IRS has issued the new tax rates and calculations for 2010.  Most remain unchanged, but by law the dollar amount for various tax provisions are adjusted for inflation.

You can find a copy of the new provisions by CLICKING HERE.  But, here are the basic changes:

• The value of each personal and dependency exemption available to most taxpayers is unchanged from 2009 at $3,650.

• The new standard deduction for heads of household will be $8,400, up from $8,350.

• The standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and married individuals filing separately.

• Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing a joint return the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.

Cut Your Law Practice Tax Bill Before Year End - Buy Stuff

I guess I should start off by saying that I am not a tax expert, and do not intend to provide you individual tax advice.

This said, private practice attorneys must employ some simple tax strategies to remain as competitive as possible.  One of the best ways to do this, before the end of this year anyway, is to buy the equipment you want or need for your practice and employee it before the end of the year.

In short, the government wants to get you to buy things, on credit or otherwise, and to have it in use before the end of the year.  There are many things that even a Third Wave practice can use that you might be buying next year, but for which there is a better tax treatment now, such as a new car, computer or tech.

Add this to the fact that because of the present economy you can negotiate down car prices and receive low or no interest, and you have to consider biting the bullet now rather than later.

If your law practice has less than $810,000 in depreciate property (and who among us does not), Section 179 of the tax code now lets you deduct up to $250,000, which is up from $125,000 last year, on purchases of new equipment. As stated, although this first criteria might not matter to you unless you are Big Law, what is important is that you can take bonus depreciation equal to 50% of the equipment’s value, all before regular depreciation kicks in. The big requirement that could cost is that you must start using start using the new stuff before end of the year.  So, if you get yourself a new car, or laptop, or cell phone for Christmas, you need to use it for work between Christmas and New Years.

Additionally, if you are thinking about a new automobile, make it a hybrid and you get a tax credit.  (The only problem is that the Fed has limited the number or amount of credits for car companies, and so all of the tax credits available for buying a Toyota Prius are all used up).

Joad Cressbeckler For President And Obama Is A Snob

I dedicate this video to Rick Georges.  No reason why except that if he likes McCain he should love Joad Cressbeckler.  I guess I'll dedicate the second video to me, because Rick should not get all of the blame.

Do You Baidu?

I once got an email from a lawyer in China that liked what I said on my blog and wanted to employ some of what I stated in China.  But, I only got one email from a country of billions.  The reason must be that my blog does not rank very high on Baidu.Com.  It is the search site competing with outsiders like Google in China.  Experts say that the site is winning out because its founders understand the cultural differences. That knowledge informs innovations large and small, such as Baidu's bowing to local preference in popping up a new browser window when users click on search results. It can also produce features, such as its MP3 search for digital music downloads, that infuriate the entertainment industry.

I Sue Jerks For The Money You Deserve!

I think I am a pretty laid back guy.  With the exception of my beagle who believes I am abusive because I will not give her my lunch, I only have myself to please at my office.  Well, my wife as well, but she has just learned to ignore me most of the time.  I am guilty of puns and bad jokes, but as long as they are not racy or racist, they might be annoying but not abusive.

Beware: Your Tax Preparer May Start Selling Others Your Tax Return Information!

According to a new CNNMoney.Com article tax preparers may start selling your personal tax information to 3rd parties.  Tax returns and your personal financial information has always been sacrosanct.  However, now due to a proposed change to the IRS privacy regulation of tax payers, tax preparers from H&R Block to the big accounting firms, may be discovering a new source of revenues from the sale of your personal information.  The rule change could require the tax preparer to obtain your permission, but realistically who would agree to such a thing.  With this in mind, one can just imagine that the objective would be to get you to unknowingly sign off on sale of this information when you are being presented with the mounds of paperwork and endless mathmatically figures, which usually takes place moments before these returns have to be filed or mailed.  No matter who the tax preparer obtains your signature, when you give consent, "you're basically signing a blank check," said Chris Hoofnagle, senior counsel for the Electronic Privacy Information Center. This is because the proposed regulations do not restrict how the third parties may use your information.

Have A Home Office? Beware Of The Tax Man.

Jeff Schnepper is a lawyer who has argued in front of the United States Supreme Court, he has appeared on numerous national and local TV shows, he is a former professor of taxation, accounting & finance, and he is the author of many books including "How To Pay Zero Taxes" , "TurboTax Deluxe" and "The New Bankruptcy Law".  He recently posted a great article on MSN's MoneyCentral website related to tax benefits and pitfalls related to having and maintain a home office. 

First, Jeff Schnepper states that 19 million people work from home, that this potentially provides these Third Wavers some nice tax benefits, but properly taking these deductions can be tricky.

Among the benefits and pitfalls identified in the article, you need to get a letter from your employer or law firm, if you are not self-employed, stating that working from home is a convenience of the firm and a condition of your employment.  The home office cannot be simply for your benefit.

Also, Mr. Schnepper advises that you can only deduct your home office from your taxes if it is your principal place of business and your business generates revenue.  However, he warns that under recent rulings you can only meet this criteria if you have no other fixed place of business.

Further, property, such as computers, must be exclusively used for business in order to exercise these deductions.

This article is highly recommended.