Tax credits for home energy efficiency

http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

IRS summer time tax tip for 2010

Are you opening a new business this summer? The IRS has many resources available for individuals that are opening a new business. Here are six tax tips the IRS wants new business owners to know.

1. First, you must decide what type of business entity you are going to establish. The type of business entity will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.

2. The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.

3. An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.

4. Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.

5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.

6. Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

IRS Publication 583, Starting a Business and Keeping Records, provides basic federal tax information for people who are starting a business. This publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). Visit the Business section of IRS.gov for resources to assist entrepreneurs with starting and operating a new business.

Save money with Quickbooks

A few ways every home owner can save money.

If you’re a homeowner, there are many ways you can cut costs and still live comfortably. The following tips will help lead you to financial success.

* First, set a budget. Figure out exactly how much you spend on the upkeep of your home. Compare each month’s expenses with the previous month’s to get a better idea of how much to budget for each necessity. Then, see what costs you can cut. Once you set a budget, stick to it.

* Save energy. You might be losing a substantial amount of energy dollars during the winter and summer because of air leaks. By caulking, sealing and weather-stripping all cracks and openings, you can save 10 percent or more on your energy bill.

Also, look into replacing older appliances with newer, more energy-efficient alternatives. Your light bulbs can make a difference, too. Fluorescent bulbs are four times more energy efficient than incandescent bulbs.

* Refinance. Shop around to see if you can replace your existing home loan with one that has a lower interest rate. You can easily save hundreds of dollars each month by refinancing your home.

* Purchase a home warranty. Most homeowners don’t account for possible repairs in their annual budget. There is a 68 percent likelihood of a home system or appliance failure in a given year. The average replacement cost of one of these systems or appliances is $1,085. A home warranty is your best defense against unexpected and costly repairs to your home’s appliances and mechanical systems.

Some financial tips in the summer months.

Update and organize your financial records
Can you think of a better way to spend a beautiful summer day then staying inside and organizing your financial documents? Ok, you can probably think of hundreds of activities you would rather do, but it is important to make sure your financial records are in order. This will allow you to review your information and prepare for the rest of the year. In addition, this activity can either be chipped-away at or taken care of all at once. Thus, if there is one, blistering hot day in July or August, you might decide to devote it to document organization and tax planning.

Hire a young family member during summer break
If you have a child, or know someone who has the summer off, you could consider hiring him or her to work for your business (if you have one). This can help you lower profits by writing off additional payroll expenses, and can provide quality working experience to a child or family friend.

Donate unneeded winter clothing
Now that it is hot outside, you probably do not have any need for a closet full or long pants, coats, thermal underwear, etc. So why not donate them to charity? Just make sure you get a receipt for the donation so that you can the donation amount in your charitable contributions.

Take a business trip
If you have to travel for a business reason this summer, then you can deduct your airfare, hotel expenses, meals, etc. Although the trip must be for a qualifying business purpose, there are still many professional conferences offered in spots like Las Vegas, Hawaii, or the Caribbean.

Send your child or dependent to camp
If you have a child or qualifying dependent that has the summer off from school, and you do not have a business to hire them at, then you can always send them to a day camp. You can then write off the expenses under the child and dependent care credit. However, you can only use the credit for day camps, not over night camps.

Get checked up
Health is always important – especially when there is a potential tax deduction to consider. Thus, take some time this summer to make your family’s medical, dental and eye doctor appointments for the balance of the year. You will then maximize your family’s medical expenses – and, hence, medical deduction – for the year.

Purchase an energy-efficient air conditioner
It takes a lot of energy to cool a house on a 110-degree day in August. If you upgrade to an energy-efficient air conditioner, you can save on the overall cost of cooling your home, and take additional tax credits on qualifying purchases.

Meet with your accountant
Accountants are usually quite a bit slower in the summer months. This is a great time for you to meet with your accountant or financial planner to review your total tax situation, and plan your strategy for the rest of the year. That way there will be no surprises this tax season when you get ready to file.

Trade in for a hybrid
This tip may be a bit more expensive than most of our readers were hoping for, but if you buy a qualifying hybrid this summer, you can claim an alternative motor vehicle credit and save on gas. And with gas prices getting dangerously close to $5 a gallon, this purchase can correlate to huge tax savings by lowering the amount you pay in federal excise tax on gas.

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