Private Investigators In Virginia

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Tax Changes 2008

Posted by Bill on April 5, 2008

  Ann Fourt, excellent PIAVA member and CPA, outlines tax changes for 2008.

There have been a number of changes in the tax law for 2008 that business owners and private investigators  should be aware of. The following allowances or limits have changed beginning January 1, 2008:

The tangible property expense allowance (Section 179) dollar amount for assets purchased and placed in service during calendar year 2008 is increased to $250,000. This is an economic stimulus measure and dollar limit applies only to 2008 assets placed in service for business use. Section 179 is not applicable to automobiles or trucks and vans, but is available for most other tangible assets, such as furniture, computer equipment, cameras, microphones and surveillance gear, or other gear.

For calendar year 2008 only, there is a special first-year depreciation allowance totaling $10,960 for automobiles and $11,160 for trucks or vans purchased and placed in service in calendar year 2008.

The standard mileage allowance for business use of an automobile in 2008 increased to 50.5 cents from 48.5 cents in 2007. Be sure to keep contemporaneous records of your business and personal use mileage as your accountant will need to know the total mileage driven for each vehicle as well as the business mileage.

The self-employment earnings ceiling for Social Security tax is increased to $102,000 in 2008, breaking the $100,000 threshold for the first time. There remains no earnings ceiling on the Medicare tax.

Homeowners who lose a home to foreclosure in 2007, 2008 or 2009 may qualify for relief under the Mortgage Forgiveness Debt Relief Act of 2007. This Act allows taxpayers to exclude income from the discharge of indebtedness on their principal residence that would otherwise be taxable. Lenders report the fair market value of the house and the amount of debt forgiven to the borrower and the IRS on Form 1099-C. Debt reduced through mortgage restructuring as well as debt forgiven in connection with a foreclosure qualifies for this relief. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if a married taxpayer files a separate return). Form 982, which the IRS began accepting electronically on March 3, is used to claim the exclusion benefit. The rules are complicated, so consult your tax advisor for further information.

Bill Lowrance

President PIAVA

Information Insights Inc.

McLean, VA

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