ࡱ> AC@ -bjbjVV*B<<%=====QQQQ4$QE('N=== ==`,)a5Q 0E.&=E : Janell A. Israel & Associates 1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817 July 2011 Tax Newsletter What's new in taxes: IRS Increases Mileage Rates The IRS has increased the standard mileage rates to be used for computing the deductible costs of operating a vehicle for business or for driving for medical or moving reasons. The new rates will apply to driving from July 1, 2011, through December 31, 2011. The revised rates are 55.5 cents per mile for business driving and 23.5 cents for medical and moving driving. The rate for charitable driving is fixed by law and remains at 14 cents per mile. According to the IRS, mileage rates were raised for the second half of 2011 due to the recent increases in the price of fuel. The rates for the first half of 2011 (January 1 through June 30, 2011) are unchanged: 51 cents per mile for business driving and 19 cents per mile for driving for medical or moving reasons. Be aware that you have the option of calculating the actual costs of using a vehicle for business, medical, or moving reasons instead of using standard mileage rates. Tax Tips For Your Vacation Home Planning to rent out your vacation getaway? When it comes to taking advantage of the tax benefits, timing is an important factor. Here are two points to remember. * The fourteen-day-or-ten-percent test. The IRS applies this test to determine if you use your vacation home as a personal residence. If you stay in the home more than 14 days or 10% of the total days it's rented in a calendar year (whichever is greater), the general rule is that you're using it as your home. Why does it matter? Because treating a vacation home as your personal residence affects your rental deductions. You'd include all the rent you receive as income on your tax return. But related expenses are generally limited to the amount of that income, meaning you can't offset other income with a loss. Note that time spent in your vacation home by family members and certain others can count as personal use. * The less-than-fifteen exception. Rent out your vacation home for less than 15 days during the taxable year, and the income is yours, tax-free. You don't even have to report it on your return. Just be aware that any expenses related to the rental are nondeductible. If you itemize, you can still deduct qualified mortgage interest and real estate taxes on your vacation home. Other tax rules, such as passive activity and capital gains reporting, can also impact the decision to rent out your vacation home. Give us a call before you put up that "For Rent" sign. We'll be happy to review your options under the tax rules. Look Into The Benefits Of a Solo 401(k) For Self-Employed Individuals Have you heard about solo 401(k) plans? The traditional type of 401(k) retirement plan is now available for self-employed individuals. And it lets you save more than other types of plans. In the past, 401(k) plans were typically offered by larger corporations. Employees could make pre-tax contributions by payroll deduction. The company would then usually match a percentage of those contributions. Investments grew tax-free until withdrawn at retirement. One advantage of a 401(k) plan is the relatively large amount you can contribute each year - $16,500 in 2011 with an extra $5,500 catch-up if youre 50 years old or older. Now you can establish the same type of plan if youre self-employed or run an "owner only" business. Thats a business with just you and possibly your spouse, but no employees. You can save more with a solo 401(k) than with the traditional SEP, SIMPLE, or Keogh plans. Thats because you are able to make two types of tax-deductible contributions. First you make the usual employer contribution as owner of the business. Then you can make an additional salary deferral as an employee. As a result, you could potentially shelter up to $49,000 of your 2011 self-employment earnings from tax. If youre eligible for the over-50 catch-up, that rises to $54,500. The solo 401(k) plans are flexible and relatively simple to administer. If you think this plan might be right for you, please contact our office. We can tell you more about it and help show you how much you could save. What's New in Finances Watch Out For E-mail and Phone Scams The IRS is warning taxpayers not to respond to e-mails and phone calls they may receive which claim to come from the IRS or another federal agency. Such contacts are likely to be scams whose purpose is to obtain personal and financial information from taxpayers, which are then used by the scammers to commit identity theft. Typically, the scam e-mail or call states that the IRS needs certain information to process a tax return or refund. The e-mail contains links or attachments to what appears to be the IRS website or an IRS form. Though they appear genuine, these phonies are designed to get from taxpayers the information scammers need to steal identities. The links can even download malicious software onto the taxpayer's computer if clicked. The software is often designed to search out and send to the scammer personal and financial information contained on the taxpayer's computer -information that the scammer uses to commit identity theft. The IRS reminds taxpayers that it does not send unsolicited e-mails asking for sensitive personal and financial information. If you receive one of these e-mails, do NOT respond to it. Consider the time value of money in making financial decisions Suppose you're selling a piece of property worth $400,000. You're offered $210,000 down and lump sums of $100,000 at the end of year one and year two. Should you take the offer? Most people know that $1,000 now is worth more than $1,000 a year from now. Here's why. In a year, a dollar will buy less than it would today due to inflation. Over time, the risk increases that some of the money owed you will not be paid. And finally, funds on hand could be invested and earning more money. Present value analysis attempts to quantify these variables. It discounts the value of future funds by estimating inflation rates, risks of loss, and rates of return from alternative investments. Assume you could earn 2% by investing in a $100,000 CD. Disregarding compounding, in a year your investment would be worth $102,000. Conversely, if you postponed receipt of $100,000 for a year and inflation eroded the principal by 3%, you'd receive the equivalent of $97,000 in today's dollars. (Note that with 3% erosion, even the $102,000 CD proceeds would be worth only $98,940 in today's dollars.) In the opening example, your proposed "investment" (a two-year $200,000 note receivable) would be far riskier than a CD. To compensate, you might decide not to accept anything less than an 8% return. A present value table indicates that at 8%, the discount factors for one and two years are .926 and .857, respectively. $100,000 times .926 is $92,600; $100,000 times .857 is $85,700. Thus, in today's dollars, the buyer is offering $388,300 ($210,000 down payment plus $92,600 plus $85,700). Since your property is worth $400,000, you would be selling for $11,700 less than full value. A similar analysis can be applied to any transaction involving future payments. For help with the calculations, contact us. Take a Break Who Pays Taxes? A recent congressional study revealed that 51% of U.S. households owed no federal income tax for 2009. About 30% of households received a "refund" check, due to refundable tax credits, such as the earned income credit, home buyer's credit, and the "making work pay" credit. An important point: Most of those who paid no federal income tax did pay social security and Medicare payroll taxes. ******************************************************************************************************************************** All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad & Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business, or financial strategy concerns, contact our office. Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted & Christensen, Janell Israel & Associates and NPC are separate and unrelated companies. This message and any attachments contain information which may be confidential and/or privileged and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please send an e-mail reply or a postcard to 1585 Kapiolani Blvd., Suite 1604,Honolulu, Hawaii 96814. Please visit  HYPERLINK "http://www.janellisrael.com/" www.janellisrael.com for up-to-date financial information &  HYPERLINK "http://www.postoplanning.com/" www.postoplanning.com for information regarding long term care insurance. jkoεΜeG):h^q56>*B*CJ"OJPJQJ\]aJ"nHphtH:h^qh^q5;B*CJ-OJPJQJ\aJ-nHphtH4h^q5;B*CJ-OJPJQJ\aJ-nHphtH7h^qh^q5B*CJOJPJQJ\aJnHphtH1h^q5B*CJOJPJQJ\aJnHphtH1h^qh^qB*CJOJPJQJaJnHphtH(h^qh^qCJOJPJQJaJnHtH7h^qh^q5B*CJ-OJPJQJ\aJ-nHphtH k  d e f g - . egd c dgd^q $da$gd^qc d g q t z Srsuz߷z߷i_>@h^qhQ56>*B*CJ"OJPJQJ\]aJ"nHphtHhE:SOJQJ^J h^qhE:SCJOJQJ^JaJ h^qh?KCJOJQJ^JaJ h^qh cCJOJQJ^JaJh^qCJOJQJ^JaJh ch cOJQJ^Jh cOJQJ^J:h^q56>*B*CJ"OJPJQJ\]aJ"nHphtH@h^qh c56>*B*CJ"OJPJQJ\]aJ"nHphtHef|}stu{|67gd}q& dgd^qgdQgd cz{|mOBh ch cOJQJ^J:h^qh c5;B*CJ-OJPJQJ\aJ-nHphtH:h^qh}q&5;B*CJ-OJPJQJ\aJ-nHphtHhQOJQJ^J h^qhQCJOJQJ^JaJh^qCJOJQJ^JaJhQhQOJQJ^J@h^qhQ56>*B*CJ"OJPJQJ\]aJ"nHphtH:h^q56>*B*CJ"OJPJQJ\]aJ"nHphtHZ[]$$ߴzYL;z h^qh zCJOJQJ^JaJh zh zOJQJ^J@h^qh z56>*B*CJ"OJPJQJ\]aJ"nHphtHh zOJQJ^J h^qh cCJOJQJ^JaJ h^qh}q&CJOJQJ^JaJh^qCJOJQJ^JaJh}q&h}q&OJQJ^J:h^q56>*B*CJ"OJPJQJ\]aJ"nHphtH@h^qh}q&56>*B*CJ"OJPJQJ\]aJ"nHphtH,-[\]PQK L !!)$*$$$$$$$gd zgd}q&$$$$$$%%T&U&V&W&&(),--gd^qgd|fgd z dgd^q$$$$$$$$$$S&T&W&&&غ،~m\C.(h^qh^qCJOJPJQJaJnHtH1h^qh^qB*CJOJPJQJaJnHphtH h^qh.CJOJQJ^JaJ h^qh zCJOJQJ^JaJh^qCJOJQJ^JaJh zh zOJQJ^J@h^qh z56>*B*CJ"OJPJQJ\]aJ"nHphtH:h^q56>*B*CJ"OJPJQJ\]aJ"nHphtHh zOJQJ^J:h^qh z5;B*CJ-OJPJQJ\aJ-nHphtH&(()),,,,,,,,$-%-P-Q-f-g----泚泚ѐhskOJQJ^J0h^qh^q>*B*CJOJPJQJnHphtH:jh^qh^qB*CJOJPJQJUaJnHphtH(h^qh^qCJOJPJQJaJnHtH1h^qh^qB*CJOJPJQJaJnHphtH(/ =!"#$% j 666666666vvvvvvvvv666666>6666666666666666666666666666666666666666666666666hH6666666666666666666666666666666666666666666666666666666666666666662 0@P`p2( 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p8XV~ OJPJQJ_HmH nHsH tHB`B JW0cke dCJ_HaJmH sH tH $A`$ ؞k=W[SOBiB 0nfh*phPK![Content_Types].xmlj0Eжr(΢Iw},-j4 wP-t#bΙ{UTU^hd}㨫)*1P' ^W0)T9<l#$yi};~@(Hu* Dנz/0ǰ $ X3aZ,D0j~3߶b~i>3\`?/[G\!-Rk.sԻ..a濭?PK!֧6 _rels/.relsj0 }Q%v/C/}(h"O = C?hv=Ʌ%[xp{۵_Pѣ<1H0ORBdJE4b$q_6LR7`0̞O,En7Lib/SeеPK!kytheme/theme/themeManager.xml M @}w7c(EbˮCAǠҟ7՛K Y, e.|,H,lxɴIsQ}#Ր ֵ+!,^$j=GW)E+& 8PK!mQtheme/theme/theme1.xmlYMoE#F{oc'vGuرhF[x=ޝzvg53NjHHzZ $ʯI)*E_N&IA!>Ǽ3xN>UWL0Č߫߿z}rx{h9T8T/χ?xY'~3S~O_|w)ӈHt=a+d NG1-RlƁ1RJwT蠯M1K"o he˓ێ½PL-|%EhY7'qP.\L=dqķ3Iofi.ñBRb-JP_pG ݢiKtdӌhFio7;7Q2ȾD>a/Q>XW ˔M_uHq)h +:Viw4rBqϫ"r!2laCbU|!8^8>ܠ,AбVt׎~ls14_=,ɬožTV G"ѦbH'.4x޵w-ϷE|F;v`b3"G 'e\fHO '$i_wp >*8i&LY%\,xҕ= r6f 3Tʅ):ªZKLs&C Mܛ0 [˫p@ע`j۽7 YHxHicT5Ar@HZAZC}i' RQ\m,zo,gQu{Y\,Nר/=L _.̇Y7C6-fSh62"5NHT[X65̫4X%Yֳ2fkhi~tCKF#b +w1m|4`!:U!p5a:~{4mmio ήc8mDJpSǹ橠V1?#Si?3E'pS2W`qB]( 08w nA[s)k8= Aa?R dڒɾcUӽ˲d)#Queb}C!&i0>4S7{z F} 4sKvUKoȳh~1jYUVH5U8Vk;֜L9ŰD ?*|FL "A3>g]dm2iVֵ褽mg % Bz$&- e$-$$$$%P%f%%XX8@0(  B S  ?%%k%\ "-Ym*)bru }q&(-).JW0339?zEE:SaWpyb c|f"l^qx8)|dv|?KQ"qsm4]Cz1GskF5`o. zWb%%@%H@UnknownG*Ax Times New Roman5Symbol3. *Cx Arial?= *Cx Courier New7. 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