Greetings,

It's been awhile since I sent out some tax tips. To make up for it, I'll make the next few e-newsletters a bit longer and include several tips instead of just one. The tips I am sending today have to do with some of the changes in the 2 new tax bills that were signed.

This year really proved to be a challenge. Not just for me, but most of the CPAs that I know. Thanks to all of you for your patience. Once tax season ended we still had quite a few extensions and it took every bit of available time to get all the returns filed on time.

We are making some changes to insure that 2005 goes smoother. One of the changes we are making is offering an online tax organizer. If you would be interested in filling your organizer in online, please let me know.

Our office will be closed on Thanksgiving Day, November 25th and Friday, November 26th. We will be back in the office on Monday, November 29th.

Here are the tax tips:

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Will the new law affect your tax planning?

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At the end of September, Congress passed the Working Families Tax Relief Act of 2004. The legislation extends through 2010 the following four tax breaks that were scheduled to revert to prior levels after 2004:

* the $1,000 per child tax credit.

* the expanded 10% tax bracket.

* the expanded 15% tax bracket for married couples to double that of singles.

* the increased standard deduction for couples to twice that for singles.

The law also extends the higher alternative minimum tax exemption ($40,250 for singles, $58,000 for couples)through 2005. Businesses will also get some tax relief in the extension of several business tax credits that had recently expired.

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President Bush signs major business tax bill

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On October 22, 2004, President Bush signed the American Jobs Creation Act of 2004. The law repeals the system of export tax breaks that brought retaliatory tariffs on U.S. goods by the World Trade Organization.

The law replaces the former export tax system with a new deduction for U.S. manufacturers. Other provisions in the law extend the $100,000 first-year expensing election for the purchase of business equipment through 2007, limit the first-year expensing for sport utility vehicles used in business to $25,000, liberalize the S corporation rules, and shorten the depreciation period for certain leasehold improvements and restaurant property.

Individuals will be allowed to deduct state and local sales tax on their federal tax returns in lieu of state and local income tax. The amount of the deduction a taxpayer can take for giving a vehicle to charity is changed from "fair market value" to the amount the vehicle actually sells for at auction.

Your year-end tax planning should look at both 2004 and 2005 and have as its goal achieving the lowest overall tax liability. As you consider the moves you should make before year-end to cut your taxes, be sure to factor in these latest tax changes. For details and assistance with planning that fits your individual situation, give us a call.

Until next time,

Linda