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June 2006 Newsletter continued |
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EDITOR'S NOTE: Should you have questions with respect to the information contained in this newsletter or need help with your personal or business financial, tax and accounting activities, please call. |
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E-Mail Halliday@hallidaycpa.com |
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This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. No party assumes liability for any loss or damage resulting from reliance or use of this material. |
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incomers applies for tax years 2008-2010.
Current year code section 179 (the amount of business asset purchases that can be expensed in one year rather than depreciated) expensing will remain in place. The scheduled decline to $25,000 is now postponed until 2010. |
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IRS audits for sole proprietors on rise |
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IRS is examining more sole proprietors. In fiscal year 2005, the IRS audited 3.68% of Schedule C filers with gross receipts of less than $25,000 for a total of 118,000 exams. That is up significantly from 2004. For sole proprietors who gross receipts are $100,000 or more, one out of every 27 filers was audited, almost double the audit rate for 2004. |
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Dependent tax strategy |
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Since there is no more support test for claiming a dependency exemption for a child, a sibling can claim a brother or sister if the parents do not. This can pay off if a college graduate returns to live at home and has a job. If the parents make too much to take a full exemption for a younger child living at home, the older child can claim the younger one as a dependent and can qualify for the child tax credit and earned income credit. |