The Tax Goddess Blog

Handling stress in these times,...

Good Morning all!

Oh, you don't think it's a good morning?  Are you stressed out today? 

A few things that may help you get a great outlook on your day:

1) Eat a healthy breakfast, and for that matter, eat more healthy all around (This can be a deduction if your Doctor tells you to do it!)
2) Listen to your favorite happy song in the morning.  (Don't forget to deduct your XM radio if you are a salesman traveling all over the place!)
3) Think good thoughts (Gosh darn I look beautiful this morning! :) (Beauty can be a deduction if you are in the right industry!)
4) Organize your day when you get to work.  That way more stress won't creep in!  If you can get your top 3 things to accomplish done that day, you should be good to go! (This is just good for everyone, but if you need help, a professional organizer would be a deduction as well!)

Just a few pointers that I personally do when I wake up in a grumpy mood!  I hope they help!

Shauna, your Tax Goddess!
I can make getting in a better mood a deduction!  I love my work!  :)

What can you do to keep your business afloat?

So, everyone is trying to figure out ways to handle the down-turn in the economy.

I figured perhaps I should, as a consultant to many of my business clients, publish a list of the ideas that I have seen for keeping your business afloat in these times.

1)  Are you overstaffed?  Many people, when times are good, fail to look at their human capital expenses.  They are paying huge medical premiums, paying their staff at salary raises that were put into place in boom times, and are failing to look at the business' real need for the staff person themselves.  Be careful that you only have on staff those people that you need!

2)  Owner's, what are you doing?  Are you doing the work in the business, or have you stepped back and let your managers run the business. What about some of the actual technical work?  Have you thought about your own time and if your time would be a good contribution to the output of your company?

3)  What about your banking and financing?  Many businesses have thought about calling the banks and credit card companies to see if they can get better payment terms, or rates.  But have you thought about calling your vendors?  Can you switch from a Due on Receipt to a term of 15 or 30 days out?

I will post some more ideas in my next blog post, but thinking about it this way - As Dan Kennedy says - when times get tough, think tougher - have you sat down and figured out the possibilities?  What would happen if you had to fire your secretary today?  Who would handle her job? And when you figure out the answer to that, is that answer better than the way you are currently running?

Thoughts to get you going in the morning,

Shauna~  Your Tax Goddess.

What is the debt forgiveness act?

OK - I've been asked too many times on this, so I wanted to get you all the information on the debt forgiveness act according to the IRS:

Here are the basics from the IRS website and what it means for you:

Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007

allows taxpayers to exclude income [ MEANING - YOU DON'T HAVE TO PAY TAX ON THE DEBT RELIEF]

from the discharge of debt (Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief) [MEANING ON DEBT THAT TIES TO ANY KIND OF RESTRUCTURING OR FORECLOSURE]

on their principal residence.

This provision applies to debt forgiven in 2007, 2008 or 2009.

Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).

The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.  [MEANING YOUR HOMES VALUE OR YOUR FINANCIAL LIFE NEED TO HAVE BEEN HURT]

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NOTE:  FORECLOSURES ARE TREATED AS A SALE OF THE PROPERTY -

MEANING:  If you have debt cancellation, and that decreases your basis in the property (ask your CPA) and then you have a gain of more than the $250/$500k limits allowed for non-taxation (title §121) you WILL pay tax on the property - BE CAREFUL!!!

also note: NO, YOU CANNOT DEDUCT A LOSS TAKEN ON YOUR HOME - don't we all wish!
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There are a lot of tough things happening in the economy right now, but you need to make sure that you aren't going to get caught in a trap.

As far as the information is provided, this new debt relief act DOES NOT apply to investments or rental properties,..  solely to your primary home.

Keeping you on top the tax world!

Always,

Your Tax Goddess.
PS - I just got a video camera - so I will try and do more youtube videos relating to these subjects and post them to our Blog!

And down the spiral we go,.. $300,000,000,000 package passed

Well, and so begins the bail out. 

Here are some fabulous links to a Mortgage Guru that I trust and have a deep respect for his opinions:

http://www.azmortgageguru.com/30000000000000-rescue-package-passed/
http://www.azmortgageguru.com/indymac-goes-down/
http://www.azmortgageguru.com/am-i-crazy-or-are-we-headed-for-a-catastrophic-financial-meltdown/

The scary part is - we've seen this coming for MONTHS!  (the last article link was written in Feb 08) and only now do we see any action?

Just wanted to link my readers to even more detail,..  I am flat out amazed that this bill passed this morning, and no one put up a fuss (big surprise, no one knew,....)

Technology in Banking!

The technology that the banks have always amazes me.  I'm not sure why I don't just expect banks to be cutting edge (considering the $ they make off everyone!) but it is just amazing.

Today I learned 2 things:

1)  There are check scanners - a little $1200 machine that most banks will give you for free to sit on your desk so that you can scan your checks and hit"send" and you have made a deposit!  saves us all on the $100 tank of gas!

2)  I just opened an account online.  No Signature pages, no faxes, no fees, no monthly minimums!  The banks want to see us even less everyday.  Smart move on their part, less people to pay.

I always recommend looking into the bank you are banking with.  What kind of services can they offer you as a small business?  Or a large business?  Are they offering check deposit scanners?  what about Sweep accounts?

On a side note, if your banker is some random teller every time you go in: STOP THAT!  Get a banker!  You need to have a personal relationship with that person!

Anyway,

Amazing Banks!  Thank goodness good ones are out there!

BTW - if you need a banker, don't hesitate to contact The Tax Goddess, I know tons of them!  Good ones too!

Arizona Credit for Contributions to §529 Plans

Arizona is allowing a credit of up to $750 / person for any contributions to a §529 plan (savings plan for college education!)

Gotta love Arizona!

That means Arizona now has credits ($ for $ the money goes where you want it to go) for the following:

$ given to public schools
$ given to private schools
$ given to any charity that helps the working poor
$ contributed for a §529 plan for education!

GO ARIZONA!

LLC Ownership for a Rental Property - Refinancing

Freddie Mac just announced a new standard that could hurt many investors in real estate. 

If a piece of property has been held by an LLC within the last 6 months, they are not allowing refinancing!  Fannie Mae is expected to follow suit.

This follows, of course, the severe drop in property values around the country and many lenders being forced out of business for loans no longer back by the real estate value that they were provided on.

Your options:

1)  Any property that you intend to refinance - take it out of your LLC 7 months in advance, and get good umbrella coverage.

2)  Go with a Lender that allows LLC refinancing (and perhaps pay a higher price!)

3)  Use a trust.  Have the Trust own the property and an LLC owning the beneficial share in the trust (however, trusts do not have a lot of case law showing that they will protect the asset they are holding, so be sure to discuss this scenario with your Tax CPA and your Lawyer!)

Just trying to keep you on top of the world's happenings!

Your Tax Goddess,

Shauna~