Tax Tips Newsletter
Serving you since 1993
March 2007 - Vol 2, Issue 3
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Just a reminder that your individual income tax information needs to be in my office by March 15, 2007. Otherwise you may have to file an extension. In the last few years I have had to stick to that deadline due to the amount of work in the office by March 15th.

If you're thinking of buying a hybrid vehicle, you are probably counting on the tax credit to help defray the extra cost. The 2005 energy law provided a tax credit of up to $3,400 for the purchase of a hybrid or lean burn vehicle. Good news, right?

Well, there's a catch. The credit begins to phase out after the number of hybrid vehicles sold by a manufacturer reaches 60,000. You can take the full tax credit for any model until one full quarter after the 60,000 limit is reached. After that, the credit is cut to 50% for the next two quarters, then to 25% for two quarters, and finally no credit is allowed after the fifth quarter.

For example, Toyota reached the 60,000 limit in 2006. Their hybrid models purchased before October 1, 2006, qualify for full credit, but those purchased on or after that date and before April 1, 2007, qualify for 50% credit. From that date through September 30, 2007, the credit drops to 25%. After October 1, 2007, no credit is available.

So don't delay if you intend to buy a hybrid vehicle this year. Check the available credit for the models you're considering, and make your purchase earlier rather than later if you want to get the largest credit available.
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The IRS recently announced that all taxpayers will have until April 17, 2007, to file their 2006 tax returns and pay any balance due.

Since April 15 (the normal due date) is on a Sunday thisyear and since Monday, April 16, is a holiday in the District of Columbia, the filing due date has been moved by the IRS to Tuesday, April 17. This is the due date whether filing electronically or on paper.

In addition to income tax returns, the April 17, 2007, date will apply to:

* Requests for automatic six-month extensions giving you until October 15, 2007, to file your 2006 tax return.
* Tax year 2006 balance due payments.
* 2006 contributions to a Roth or traditional IRA.
* Individual estimated tax payments for the first quarter of 2007.
* Individual refund claims for tax year 2003 (under the three-year statute of limitations).

Even though the due date is extended by two days, it is still worthwhile for you to file early. You will avoid the last-minute rush and get any refund you may be due on its way to you sooner.

If you have questions or need assistance with any tax filing, please contact me.
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If you have not visited my website recently, please do. The tips that are on there are a fabulous resource of great tips and other information. The Tax Tip of the Week this week is about knowing the basics of basis. Generally speaking your basis starts with the price you paid for an asset, but it can be complicated by additional costs. Maybe you didn't buy the asset. Maybe you inherited it or it was gifted to you. This article will help you determine your basis.

The Business Tip of the Month is avoiding 3 mistakes if you are starting a business. If you are considering a new business venture, this article is for you.

The Financial Tip of the Month has to do with using a reverse mortgage for additional retirement income. Many seniors are cash poor but have lots of equity in their home. A reverse mortgage could be just the thing to help them out.

The Fraud Alert for this month deals with a new scam called the mortgage elimination scam.

Finally, it seems that my old email address is working again. You can switch back to that one (LINDA@LLHCPA.COM) , but keep my Yahoo address - just in case.

Sincerely,
Linda Heineman
Linda L. Heineman, CPA

phone: 626-577-0979