Super Tax Incentives
- posted by KLR
Wow – if you like incentives, tis the season. Cash for clunkers; First time homebuyers; Bonus depreciation; Energy credits. One of these is sure to get you stimulated.
Remember in my last post (Constantly Changing Tax Laws) I talked about how tax policy is often used as a means to social policy…..and I promised to cover super incentives next time. Well, the supers are here!!
We all know it’s nice to get a tax deduction for mortgage interest (subject to limits of course) or it’s nice to get a learning credit for spending on higher ed, but these probably aren’t big enough by themselves to make or break your decision to buy a house or go to college. Why? Because they are governmental tokens of affection and not a lot more than that. And, they are chump change compared to a super incentive like the homebuyer credit. Think about this: If you’re a first time homebuyer and closing before November 30, 2009, you can get a credit of $8,000 directly on your tax return -- and this credit is refundable, which means a check from the US Treasury. Still seems small? Did you know that an $8,000 tax credit is equivalent to a $40,000 deduction for most taxpayers? And, it gets better.
In the cash for clunkers program, you don’t even need to wait for a tax return. You don’t even need to file a thing. A payment of $4,500 can go directly to the auto dealer – no waiting. Now, $8,000 for the homebuyer sounded pretty good but when your buying a house, $8,000 doesn’t go far (it’s probably only 4-5% of the purchase price). A clunker rebate is closer to 25% of a car’s price tag. Who wouldn’t want that? Match that up with a few dealer incentives and the cars are flying off the lot.
How about going green? The federal government will give you a 30% tax credit towards the cost of adding alternative energy sources to your home – things like solar, wind, and geothermal. The best part -- there’s no limit to this credit. So, if you spent $50,000 on a wind turbine, you get a tax credit of $15,000 which can be used just like a tax payment on your personal return. It’s like someone is sending a payment to the IRS for you!
But we can’t leave out the business owner. Here is the granddaddy of all incentives -- bonus depreciation. It doesn’t sound fancy, but what it does is allow businesses who buy brand new furniture, fixtures, and equipment to deduct half the cost in the year of purchase. Under normal circumstances, a business is required to deduct these purchases over 7 years. Still doesn’t sound like much? How about this: MegaStore buys $10 million dollars of new store shelving in 2009. They get to bonus depreciate $5 million in 2009 alone – this saves MegaStore $2,000,000 in federal taxes! Under the normal rules, Mega would have saved $500,000. That’s an incentive of $1.5 million dollars. Wouldn’t you think it was super if someone lowered your tax bill by $1.5 million? It’s so good; the States don’t even allow it.
Now the hard part – someone has to pay for these jumbo credits and deductions. To see how that’s done, tune in next time when we’ll talk about disincentives.
Remember in my last post (Constantly Changing Tax Laws) I talked about how tax policy is often used as a means to social policy…..and I promised to cover super incentives next time. Well, the supers are here!!
We all know it’s nice to get a tax deduction for mortgage interest (subject to limits of course) or it’s nice to get a learning credit for spending on higher ed, but these probably aren’t big enough by themselves to make or break your decision to buy a house or go to college. Why? Because they are governmental tokens of affection and not a lot more than that. And, they are chump change compared to a super incentive like the homebuyer credit. Think about this: If you’re a first time homebuyer and closing before November 30, 2009, you can get a credit of $8,000 directly on your tax return -- and this credit is refundable, which means a check from the US Treasury. Still seems small? Did you know that an $8,000 tax credit is equivalent to a $40,000 deduction for most taxpayers? And, it gets better.
In the cash for clunkers program, you don’t even need to wait for a tax return. You don’t even need to file a thing. A payment of $4,500 can go directly to the auto dealer – no waiting. Now, $8,000 for the homebuyer sounded pretty good but when your buying a house, $8,000 doesn’t go far (it’s probably only 4-5% of the purchase price). A clunker rebate is closer to 25% of a car’s price tag. Who wouldn’t want that? Match that up with a few dealer incentives and the cars are flying off the lot.
How about going green? The federal government will give you a 30% tax credit towards the cost of adding alternative energy sources to your home – things like solar, wind, and geothermal. The best part -- there’s no limit to this credit. So, if you spent $50,000 on a wind turbine, you get a tax credit of $15,000 which can be used just like a tax payment on your personal return. It’s like someone is sending a payment to the IRS for you!
But we can’t leave out the business owner. Here is the granddaddy of all incentives -- bonus depreciation. It doesn’t sound fancy, but what it does is allow businesses who buy brand new furniture, fixtures, and equipment to deduct half the cost in the year of purchase. Under normal circumstances, a business is required to deduct these purchases over 7 years. Still doesn’t sound like much? How about this: MegaStore buys $10 million dollars of new store shelving in 2009. They get to bonus depreciate $5 million in 2009 alone – this saves MegaStore $2,000,000 in federal taxes! Under the normal rules, Mega would have saved $500,000. That’s an incentive of $1.5 million dollars. Wouldn’t you think it was super if someone lowered your tax bill by $1.5 million? It’s so good; the States don’t even allow it.
Now the hard part – someone has to pay for these jumbo credits and deductions. To see how that’s done, tune in next time when we’ll talk about disincentives.
By. Norman LeBlanc, CPA
Tax Services Group
Labels: Government Tax Credit, Green, IRS, KLR, LeBlanc
Going Green and Saving Green
- posted by KLR
In today’s world, we are inundated with information about the environment and “going green”. For some people, this issue is more pressing than for others, but in 2009, almost everyone is looking for ways to “go green”, whether it’s in small ways or major life changes. For businesses, these efforts usually have to be weighed against their costs. There are many green initiatives that can be undertaken easily that will save money quickly and make a real impact, though they may require changing habits. But even those that may cost a little more up-front, and may at first glance appear to be too much for a small business, may still be worth it.
Many major companies are making big changes that lower their environmental impact. They are aware that customers have gotten savvier about green watching. They can’t just make superficial efforts as a marketing ploy anymore, and they’re taking serious steps that have a real effect. This is generally not due to a sudden conscience about the environment, but because going green often saves green – as in, money. While these major corporations, such as HP, Google, DuPont and Wal-Mart, may have more money at stake, small businesses and individuals can also get in the green game. True green initiatives, whether they’re done for public relations, to save money, concern for the environment, or all three, are something all businesses need to think about.
At KLR, we have formed a Green Committee to help develop ways to be more green. Some steps were easy and happened quickly: we were already recycling, but we made more vibrant signage and educated staff about what could be recycled and where, which has had a huge impact on the volume of recyclables. While we are “paperless”, we still manage to use a lot of paper, much of which has confidential information, so it can’t simply go in the blue bin; we made sure that our shredding company upholds our confidentiality standards while also recycling the paper once shredded. Our technology company, Envision, engages in e-cycling computer and other technology waste.
Other steps are taking a little longer to truly realize their potential. We have been “paperless” for years, but we’re trying to continually decrease the amount of paper we use, which involves changing habits. All of our tax clients have the option of receiving returns on a CD now instead of paper copies – over the next tax season, we hope more clients will take advantage of the opportunity to help us save paper. We have also explored measures such as motion-sensor lighting in less-used rooms, and more efficient ways to use water. We know that this is an on-going process, and continue to try to find new ways to uphold our green mission: “The KLR team is committed to environmental responsibility in our offices, community and homes. We strive to be environmentally-conscious citizens by using appropriate energy, resources and materials. We will develop environmental practices and educate our team members in order to ensure that our behavior and actions have a positive impact on our environment. We will make our commitment to the environment a fundamental part of KLR’s culture.”
Everyone, from manufacturing businesses, to doctors’ offices, to social service agencies, to individuals, can find ways to go green and save green. There are many ways to start, and once you begin, new ideas to ensure that your bottom line improves, both financially and environmentally, will continually develop. Here are just a few ideas:
• Energy efficient lighting, including motion sensors – start with less-used rooms such as kitchens and bathrooms
• Really go “paperless” – less printing involves changing habits. Dual, high-quality monitors help, as does making the commitment at the top.
• If you aren’t recycling, start! If you already are, make it easier – place bins in strategic locations (in the mail room for paper, in the kitchen for bottles/cans) and make sure they are well-labeled.
• Recycle e-waste! Computers, monitors and other electronics are toxic as well as take up a lot of landfill space. KLR’s technology company, Envision, will help you recycle electronic waste – contact them at info@envisionsuccess.net.
• Use environmentally friendly supplies, such as recycled paper, green cleaning products, or bio-degradable disposable lunch-room supplies.
• Use less disposable materials! If there are paper cups and mugs next to the coffee, the paper cups will probably be used first; remove them, and people will use mugs. Air-dryers in restrooms avoid disposable towels as well as improve sanitation.
• Be more efficient. Finding efficiencies, whether in the manufacturing process, in shipping and delivery, though using digital client records and electronic time-cards, buying in bulk, or simply using more energy-efficient appliances saves money and the environment.
• Source locally whenever possible – closer suppliers reduces the energy used in transportation, often the biggest environmental offender, and supporting the local economy helps us all.
To keep up in 2009, companies need to make “going green” a part of the plan. Forming a Green Committee may generate ideas you’d never think of otherwise that will work for your business. But however it’s done, it’s easy to start finding ways to go green, and save green.
By Shauna Duffy
Not-For-Profit Group
Many major companies are making big changes that lower their environmental impact. They are aware that customers have gotten savvier about green watching. They can’t just make superficial efforts as a marketing ploy anymore, and they’re taking serious steps that have a real effect. This is generally not due to a sudden conscience about the environment, but because going green often saves green – as in, money. While these major corporations, such as HP, Google, DuPont and Wal-Mart, may have more money at stake, small businesses and individuals can also get in the green game. True green initiatives, whether they’re done for public relations, to save money, concern for the environment, or all three, are something all businesses need to think about.
At KLR, we have formed a Green Committee to help develop ways to be more green. Some steps were easy and happened quickly: we were already recycling, but we made more vibrant signage and educated staff about what could be recycled and where, which has had a huge impact on the volume of recyclables. While we are “paperless”, we still manage to use a lot of paper, much of which has confidential information, so it can’t simply go in the blue bin; we made sure that our shredding company upholds our confidentiality standards while also recycling the paper once shredded. Our technology company, Envision, engages in e-cycling computer and other technology waste.
Other steps are taking a little longer to truly realize their potential. We have been “paperless” for years, but we’re trying to continually decrease the amount of paper we use, which involves changing habits. All of our tax clients have the option of receiving returns on a CD now instead of paper copies – over the next tax season, we hope more clients will take advantage of the opportunity to help us save paper. We have also explored measures such as motion-sensor lighting in less-used rooms, and more efficient ways to use water. We know that this is an on-going process, and continue to try to find new ways to uphold our green mission: “The KLR team is committed to environmental responsibility in our offices, community and homes. We strive to be environmentally-conscious citizens by using appropriate energy, resources and materials. We will develop environmental practices and educate our team members in order to ensure that our behavior and actions have a positive impact on our environment. We will make our commitment to the environment a fundamental part of KLR’s culture.”
Everyone, from manufacturing businesses, to doctors’ offices, to social service agencies, to individuals, can find ways to go green and save green. There are many ways to start, and once you begin, new ideas to ensure that your bottom line improves, both financially and environmentally, will continually develop. Here are just a few ideas:
• Energy efficient lighting, including motion sensors – start with less-used rooms such as kitchens and bathrooms
• Really go “paperless” – less printing involves changing habits. Dual, high-quality monitors help, as does making the commitment at the top.
• If you aren’t recycling, start! If you already are, make it easier – place bins in strategic locations (in the mail room for paper, in the kitchen for bottles/cans) and make sure they are well-labeled.
• Recycle e-waste! Computers, monitors and other electronics are toxic as well as take up a lot of landfill space. KLR’s technology company, Envision, will help you recycle electronic waste – contact them at info@envisionsuccess.net.
• Use environmentally friendly supplies, such as recycled paper, green cleaning products, or bio-degradable disposable lunch-room supplies.
• Use less disposable materials! If there are paper cups and mugs next to the coffee, the paper cups will probably be used first; remove them, and people will use mugs. Air-dryers in restrooms avoid disposable towels as well as improve sanitation.
• Be more efficient. Finding efficiencies, whether in the manufacturing process, in shipping and delivery, though using digital client records and electronic time-cards, buying in bulk, or simply using more energy-efficient appliances saves money and the environment.
• Source locally whenever possible – closer suppliers reduces the energy used in transportation, often the biggest environmental offender, and supporting the local economy helps us all.
To keep up in 2009, companies need to make “going green” a part of the plan. Forming a Green Committee may generate ideas you’d never think of otherwise that will work for your business. But however it’s done, it’s easy to start finding ways to go green, and save green.
By Shauna Duffy
Not-For-Profit Group
Labels: Envision Techology, Green, KLR, Not For Profit Group
About this Blog
KLR is one of New England's premier accounting and business consulting firms. With 160 team members and offices in Providence, Boston, Waltham and Newport, KLR provides a wide range of services to both individuals and businesses.
Recent Posts
- Credit Card Fees on Contributions
- Find Fraud: Know Where You Should Be Looking
- The Endless Economic Cycle
- I Want To Sell My Company But No One's Buying
- Can you identify who’s going to steal from your co...
- Last-Minute Moves to Save 2009 Taxes
- Cut Costs by Increasing Your Efficiency
- Detecting Fraud
- Hidden Savings Within Your Building
- Simple Taxes
