madbeancounter1
Well-known member
Attended our first tax update of the season yesterday up in joplin mo. Will try to get some of the new info out. We are going to another one next week and again on 12/5.
Big topic for discussion is the Manufacturing deduction which farmers and ranchers are eligible to take as long as they pay w-2 wages or they lease employees from a temp agency that pays w-2 wages.
small item for future planning is a credit available for 2006 and 2007. over the two year period you can obtain a non-refundable tax credit of up to $500 things like insulated windows, certain types of steel roofs, new entry doors, etc, qualify. The credit is to be 10% of the cost of whatever you install. new windows can only make up 20% of the credit (i have to double check that %). If you get all $500 of the credit in 06 you can't get any in 07, but you can take part in 06 and the rest in 07. And if you make all the improvements in 06 but don't need all the credit to reduce your tax bill in 06 you don't have to report it all in 06, you can save some of the expense to report in 07 and take the credit then. But the credit goes away after 07.
For those who don't know the difference between refundable and non-refundable credits an example of a refundable would be the earned income credit. If you qualify for the earned income credit your refund (if you are entitled to one) could potentially be greater than the amount you paid in through withholding. With a non-refundable credit lets say I have a tax liability of $1200. I have paid in $1000 through withholding and I am entitled to $300 of this energy savings credit. Because it is a non-refundable credit and i have already paid in $1000 and only owe $200 my $300 credit is going to be reduced to $200 and i will neither owe nor will i get a refund. Now smart money will hold some of those expenses back to be used the following year if they can't all be used in 06.
hope I explained that well enough that you are all thoroughly confused.
Big topic for discussion is the Manufacturing deduction which farmers and ranchers are eligible to take as long as they pay w-2 wages or they lease employees from a temp agency that pays w-2 wages.
small item for future planning is a credit available for 2006 and 2007. over the two year period you can obtain a non-refundable tax credit of up to $500 things like insulated windows, certain types of steel roofs, new entry doors, etc, qualify. The credit is to be 10% of the cost of whatever you install. new windows can only make up 20% of the credit (i have to double check that %). If you get all $500 of the credit in 06 you can't get any in 07, but you can take part in 06 and the rest in 07. And if you make all the improvements in 06 but don't need all the credit to reduce your tax bill in 06 you don't have to report it all in 06, you can save some of the expense to report in 07 and take the credit then. But the credit goes away after 07.
For those who don't know the difference between refundable and non-refundable credits an example of a refundable would be the earned income credit. If you qualify for the earned income credit your refund (if you are entitled to one) could potentially be greater than the amount you paid in through withholding. With a non-refundable credit lets say I have a tax liability of $1200. I have paid in $1000 through withholding and I am entitled to $300 of this energy savings credit. Because it is a non-refundable credit and i have already paid in $1000 and only owe $200 my $300 credit is going to be reduced to $200 and i will neither owe nor will i get a refund. Now smart money will hold some of those expenses back to be used the following year if they can't all be used in 06.
hope I explained that well enough that you are all thoroughly confused.
