The stimulus checks are still coming out as planned and if you have not received yours yet click here:  http://goldstardirect.com/tax_tips.cfm?tid=10

While the free money is nice, there are a few new tax law changes specifically for the small business owner or self employed farmer that can save you thousands on your next tax return for 2008.  There are two big tax law changes you may want to know about before this year ends.

#1 - The section 179 expensing limit has increased from $128,000 to $250,000!  This means you can purchase equipment for your farm or business and deduct up to $250,000 all in one year!  For the majority of us this may not matter because most of us do not spend that much per year in our business.  Farmers may be the ones who can utilize this to the fullest because of the high costs of the large machinery they purchase. 

#2 - Bonus Depreciation.  This is an old law making a comeback.  Basically it states that taxpayers are allowed an additional first year writeoff of assets purchased for a business equal to 50% of the purchase price.  For example:  John Farmer purchases a new combine for his farm operation totalling $100,000.  John is automatically entitled to a depreciation deduction of $50,000 plus regular depreciation of $10,000 for a grand total deduction of $60,000! In 2007 his deduction would have been limited to only $10,000.  John also would have the option to deduct the entire cost of tractor in 2008 via use of the section 179 deduction described above in #1.  Keep in mind that this bonus depreciation is for BRAND NEW assets place in service after December 31, 2007.  Brand new means you must be the ORIGINAL user of the asset.  This bonus depreciation is not for used equpment or used vehicles.  This Bonus depreciation may be just the incentive you need to make that big purchase you have been putting off.

As may have guessed by now, each of the above mentioned changes were designed to spur spending in this depressed economy.  Only time will tell if it will help, but in the mean time we may as well use what the government is giving us.  If you have any questions regarding either of the above issues please feel free to give me a call at 517-437-4646.

Saul Giminez EA

President

Gold Star Taxes Inc.