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Useful Links: FindAGoodCPA.com - Not a healthcare professional? Find a CPA or EA who understands the tax issues specific to you. Nanny Taxes - Find out what's involved with complying with the Nanny Tax Rules IRS Web Site - for
tax forms, publications, and general tax information.
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MONTHLY TAX NEWSLETTERJune 2009LIGHT TURNS GREEN ON TAX CREDIT FOR ENERGY EFFICIENT HOME IMPROVEMENTS Four years ago, Congress passed the Energy Tax Incentives Act of 2005. A provision of that Act established a $500 tax credit for energy efficient improvements made to your primary residence.
The pre-2008 rules allowed you to claim a tax credit equal to 10% of the money spent on the installation of certain energy efficient improvements to your principal residence including insulation and exterior windows, doors, and skylights. You could also take a tax credit for "qualified energy property" including up to $50 spent on circulating fans, $150 on furnaces or hot water boilers, and $300 on heat pumps, water heaters, and central air conditioning.
The credit only applied for purchases made during 2006 and 2007, and was limited to a lifetime max of $500 per dwelling, with no more than $200 of the credit to be taken for replacement windows. While other tax breaks included in the Energy Tax Incentives Act of 2005 were subsequently extended, this tax credit expired as originally planned on December 31, 2007.
Renewed and Improved:
The American Recovery and Reinvestment Act of 2009 reinstated and improved this tax credit for two years beginning on January 1, 2009 as follows:
Renewed and Improved Credit for Home Energy Efficient Purchases
Two-Year Replacement Window
The new rules give you through December 31, 2010 to purchase energy efficient improvements for your home and qualify for this tax break. The maximum credit is now equal to 30% of the first $5,000 spent on high-efficiency heat pumps, air conditioners, and water heaters, or energy-efficient windows, doors, insulation materials, and certain roofs. Starting in 2009, you can also claim the credit for certain types of asphalt roofs and stoves that burn biomass fuel.
Looking for more good news? Even if you claimed the $500 tax credit a few years back for energy efficient improvements made to your home, you can still claim the full $1,500 tax credit for 2009 and 2010 as long as you make $5,000 worth of qualified energy efficient expenditures during that two year period.
Please note that the new rules did increase the standards for an energy efficient purchase to qualify for this tax credit. Expect the IRS to issue guidance for manufacturers to certify that their products meet these new standards.
According to our friends at the IRS in IR-2009-44, "IRS guidance issued before the enactment of ARRA will be modified in the near future to reflect the new energy efficiency standards. In the meantime, homeowners may continue to rely on manufacturers’ certifications that were provided under the old guidance and on Energy Star labels for exterior windows and skylights in determining whether property purchased before June 1, 2009, qualifies for the credit. Manufacturers should not continue to provide certifications for property that fails to meet the new standards."
Renewable Options
Thinking about adding solar, wind, or geothermal capabilities to your home? If so, you should be aware that the 2009 Tax Act also improved the tax credit for purchases of solar electric property, solar water heating property, wind energy property and geothermal heat pump property. Under the prior rules, the tax credit you could claim for most of these items was capped at $2,000 per dwelling.
As of January 1, 2009, these limits no longer apply. Through 2016, you can take a tax credit equal to 30% of your expenditures for qualified solar, wind, or geothermal property. Plus, you can claim the credit even if you add this energy producing property to a home that is not your primary residence. According to IRS Notice 2009-41, "a qualifying dwelling unit is a dwelling unit that is located in the United States and is used as a residence by the taxpayer."
The Light Turned Green
What does green mean to you? Being environmentally friendly? Stashing some Ben Franklins in your piggy bank? Or setting the wheels in motion?
Whatever your definition of green, the clock is ticking for you to benefit from the current tax credit available to individuals who make qualified energy efficient improvements to their home. IRS ISSUES SEVEN FACTS ABOUT THE NEW SALES TAX DEDUCTION FOR VEHICLE PURCHASES According to our friends at the IRS: Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009. Here are seven things you should know about this new deduction:
Consumers who are considering buying a new car may find that this tax incentive means there may have never been a better time to buy. (Editor's note: Thanks but no thanks. I'm sticking with my '98 Jeep Cherokee.) $44K FOR COMPLIANCE WITH NEW ELECTRONIC HEALTH RECORDS MANDATE Take a look at the 2010 federal budget, and you'll see that the proposed deficit for the year ended September 30, 2010 is $1.171 trillion on a federal budget of just under $4 trillion. Even so, the federal government is willing to pay you $44k to implement Electronic Health Records (EHR) within your practice. Included in the narrative section of the 2010 federal budget called Jumpstarting the Economy and Investing for the Future, President Obama states, "The current, paper-based medical records system that relies on patients’ memory and reporting of their medical history is prone to error, time-consuming, costly, and wasteful. With rigorous privacy standards in place to protect sensitive medical record, we will embark on an effort to computerize all Americans’ health records in five years. This effort will help prevent medical errors, and improve health care quality, and is a necessary step in starting to modernize the American health care system and reduce health care costs." The American Recovery and Reinvestment Act of 2009 earmarked $19 billion to provide an incentive for healthcare professionals to implement an EHR system. Based on these rules, you could receive a subsidy from the federal government of up to $44k for "meaningful use" of a certified EHR technology, as follows:
Please note that there is a reduced subsidy for professionals who implement EHR in 2013 or 2014. Wait until 2015 or later, and you won't be eligible for any subsidy. Actually, starting in 2015, there will be a penalty equal to 1% of your Medicare and Medicaid reimbursements for failure to implement EHR. The penalty will increase by 1% per year over the following two years - to 2% in 2016 and 3% in 2017. The Secretary then has the authority to continue decreasing your Medicare and Medicaid reimbursements by 1% per year for each of the next two years if less than 75% of the medical community has implemented EHR. Each year that you don't implement EHR, therefore, could cost you as much as 5% of your Medicare and Medicaid receipts starting in 2019. How do you qualify for this subsidy? For starters, you need to demonstrate meaningful use "through means specified by the Secretary which may include an attestation, the submission of claims with appropriate coding, a survey response, or other means specified by the Secretary." You must also use electronic prescribing in connection with your patient care. The rules also require that your EHR is "connected in a manner that provides, in accordance with law and standards applicable to the exchange of information, for the electronic exchange of health information to improve the quality of health care, such as promoting care coordination." The final requirement is that you meet the standard for reporting on measures using EHR, and "submit information for such period, in a form and manner specified by the Secretary, on such clinical quality measures and such other measures as selected by the Secretary." Assuming you comply with these provisions, expect to receive your subsidy payments directly from the federal government in a manner similar to how you receive your Medicare payments. And the $44k that you get from the federal government might very well cover the bulk of the costs associated with the purchase, installation, and implementation of an EHR system for your practice. TAX AND FINANCIAL PLANNING CALENDAR FOR JUNE, 2009
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