Economic Stimlus Act

May 2008

Dear Lopez, Chaff, & Wiesman Associates Client:

The Economic Stimulus Act of 2008 which is providing the tax rebates to millions of Americans also provides some very important tax benefits for business.

The law provides a significant tax incentive for businesses to make capital investments by adding a special 50 percent depreciation allowance for qualifying purchases. This special “bonus depreciation” allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2008. It allows taxpayers to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.

Additionally, new increased limits that businesses can expense under the Economic Stimulus Act of 2008 sets a limit of $250,000 that a business can expense during 2008. This is up from the limit previously set for 2008 of $128,000.

As these changes can substantially affect your business taxes and should be a central part of any tax planning for 2008 I invite you to call my office for an appointment. I look forward to meeting with you.

Sincerely,

Lopez, Chaff & Wiesman Associates

More on the Stimulus Package

The “Stimulus Package” designed to stimulate the economy is a rebate for 2008.  Your 2007 Federal Income Tax Return will determine how much of an advanced rebate on 2008 you will receive in 2008.  Advanced rebates are scheduled to begin in early May, 2008.

            The only way to receive a stimulus payment in 2008 is to file a 2007 tax return.

            Filing your 2007 Individual Federal Income Tax Return is all you need to do to apply for the advanced rebate.  You do not need to file any other document.  In 2009 when we prepare your 2008 Individual Federal Income Tax Return the 2008 rebate will again be figured and if you are entitled to more you will receive credit for the additional rebate on your 2008 tax return.  If you received too much in an advanced rebate you will not be required to pay it back when you file your 2008 tax return.

            If you receive Social Security, certain veterans’ benefits or certain Railroad benefits or have wages, salaries, tips or self-employment of at least $3,000 you may be entitled to receive some rebate even though you have no federal income tax liability.  In order to qualify for the rebate you will have to file a tax return reporting your Social Security, certain veteran’s benefits, certain Railroad benefits or wages, salaries, tips or self-employment.  The IRS is very specific about how this should be accomplished.  If you have already filed your income tax return and should report any of these amounts you may need to file an amended return in some situations to receive a larger stimulus payment.

            Our office is current on the latest information IRS is offering on the “Stimulus Package”.  We are ready to assist you with your 2007 tax filings insuring you will receive your advanced rebate timely.  If you have a friend or a relative that also needs assistance, please allow us to assist them in filing their returns in order that they are a part of the economic recovery afforded by the “stimulus package.”

Information provided by the National Society of Tax Professionals