Recently, one of our clients got a nasty surprise from the Commonwealth of Massachusetts. A representative from the Worker’s Compensation Board walked into our client’s one-person company and demanded to see his Worker’s Compensation policy. He did not have one. He was shut down until he paid a fine and took care of the Workers Compensation situation.
Usually, this would not be unusual. Companies are supposed to have Worker’s Compensation Insurance and the punishment for not having it is harsh. There is an important exception. The owner of a business can elect out of the insurance.
Our client was the only employee of his incorporated business and he was aware that he did not need to have Workers Comp for himself. He didn’t realize that, legally, he had to make a positive election to not have the insurance. This is where he got in trouble.
My advice is to call your insurance agent to make sure you avoid this situation, and to verify that you have done everything right.
Sunday, June 21, 2009
Sunday, June 14, 2009
Electric Cars
Electric Cars
This is what the IRS says about Plug-In Electric Vehicles
“Plug-in Electric Drive Vehicle Credit (Section 1141): The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.”
“Plug-In Electric Vehicle Credit (Section 1142): The new law also creates a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable.”
Plug in vehicles have been around for over 15 years and new ones are coming to market soon. The Chevy Volt is one and both Mitsubishi and Chrysler have electric vehicles on the drawing board. You need to make sure any electric vehicle you purchase qualifies for the credit. You also need to determine if the driving range of the car suits your needs. They generally travel less than 50 miles on a single charge although one claims to go 150 to 200 miles.
The new law sets a limit that once the manufacturer sells 200,000 vehicles, they will quickly lose the tax credit. Something a few people noticed is that when the Toyota Prius came out it cost $24,000 and you got a $3,000 tax credit. There was a waiting list and people jockeyed to move up on the list. Toyota quickly sold a lot of hybrid cars and eventually the cars no longer qualified for the credit. Magically the cost of the car dropped to $21,000 and they were available to drive off the lot. Last year they were even offering special deals on the Prius. So expect the same thing to happen with the new plug in cars.
By the way, there is nothing wrong with this. The goal of the credit was to give the financial viability of the hybrids a push. That goal was met and now they are a fixture on the highway.
The IRS has not provided guidance on how the plug in credits will work. Expect the information to be out in the fall.
Here is a link to an IRS article that talks about all the new credits.
http://www.irs.gov/newsroom/article/0,,id=206871,00.html
This is what the IRS says about Plug-In Electric Vehicles
“Plug-in Electric Drive Vehicle Credit (Section 1141): The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.”
“Plug-In Electric Vehicle Credit (Section 1142): The new law also creates a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable.”
Plug in vehicles have been around for over 15 years and new ones are coming to market soon. The Chevy Volt is one and both Mitsubishi and Chrysler have electric vehicles on the drawing board. You need to make sure any electric vehicle you purchase qualifies for the credit. You also need to determine if the driving range of the car suits your needs. They generally travel less than 50 miles on a single charge although one claims to go 150 to 200 miles.
The new law sets a limit that once the manufacturer sells 200,000 vehicles, they will quickly lose the tax credit. Something a few people noticed is that when the Toyota Prius came out it cost $24,000 and you got a $3,000 tax credit. There was a waiting list and people jockeyed to move up on the list. Toyota quickly sold a lot of hybrid cars and eventually the cars no longer qualified for the credit. Magically the cost of the car dropped to $21,000 and they were available to drive off the lot. Last year they were even offering special deals on the Prius. So expect the same thing to happen with the new plug in cars.
By the way, there is nothing wrong with this. The goal of the credit was to give the financial viability of the hybrids a push. That goal was met and now they are a fixture on the highway.
The IRS has not provided guidance on how the plug in credits will work. Expect the information to be out in the fall.
Here is a link to an IRS article that talks about all the new credits.
http://www.irs.gov/newsroom/article/0,,id=206871,00.html
Friday, June 12, 2009
Wind Energy Credits
Energy Credits - Continued
Wind Energy Credits
Energy from the wind has been around for centuries. Ships used to sail the ocean using the wind. It has been used to pump water in Holland where it helped keep the cities dry behind the dikes. Recently the wind has been captured to generate electricity.
You might be familiar with the Cape Wind project in Nantucket Sound and the battle that has been raging for years over whether or not it should be built. From a purely economic and energy perspective, it will help the Massachusetts economy and move us toward energy independence.
A few years ago I was traveling in the west and was awed by a wind farm that just appeared in the desert. There had to be a hundred or more windmills that did not desecrate the desert as far as I am concerned.
A tax credit is now available for small wind turbines that are used for a residence. Thus, you can install a wind turbine and get a credit for 30% of the cost of the unit. It can provide electricity for your house and could generate electricity that you might be able to sell to the electric company. The most common problem with wind turbines is having a site that gets enough consistent wind to justify the unit. A 30% credit is useless if you are limited in how much you can use the turbine.
Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.
Here are some links for you:
This link could help you understand wind energy for your home. Remember this is an industry group so all the downsides to wind energy may not be presented.
http://www.awea.org/faq/rsdntqa.html
Here is a site that could help you understand purchasing a wind system as well as other energy alternatives.
http://www.homepower.com/home/
Here is a link to a government website where you can search for grants.
http://www.grants.gov/
Wind Energy Credits
Energy from the wind has been around for centuries. Ships used to sail the ocean using the wind. It has been used to pump water in Holland where it helped keep the cities dry behind the dikes. Recently the wind has been captured to generate electricity.
You might be familiar with the Cape Wind project in Nantucket Sound and the battle that has been raging for years over whether or not it should be built. From a purely economic and energy perspective, it will help the Massachusetts economy and move us toward energy independence.
A few years ago I was traveling in the west and was awed by a wind farm that just appeared in the desert. There had to be a hundred or more windmills that did not desecrate the desert as far as I am concerned.
A tax credit is now available for small wind turbines that are used for a residence. Thus, you can install a wind turbine and get a credit for 30% of the cost of the unit. It can provide electricity for your house and could generate electricity that you might be able to sell to the electric company. The most common problem with wind turbines is having a site that gets enough consistent wind to justify the unit. A 30% credit is useless if you are limited in how much you can use the turbine.
Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.
Here are some links for you:
This link could help you understand wind energy for your home. Remember this is an industry group so all the downsides to wind energy may not be presented.
http://www.awea.org/faq/rsdntqa.html
Here is a site that could help you understand purchasing a wind system as well as other energy alternatives.
http://www.homepower.com/home/
Here is a link to a government website where you can search for grants.
http://www.grants.gov/
Thursday, May 28, 2009
Substantial Energy Credits — Continued
Geothermal credits
Quote from the IRS…
“Residential energy efficient property credit. Beginning in 2009, there is no limitation on the credit amount for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs…”
Geothermal energy systems are based on the earth being a constant temperature once you get about 10 feet below the surface of the ground. If you can capture that heat, and run it through a heat exchanger, you can heat your home for essentially the cost of running a fan. You also can cool your home in summer with the same system and get hot water as a bonus. Couple it with a solar energy system to generate the electricity and you can substantially reduce your carbon footprint. It works best with a forced hot air heating system.
All in all this is not a bad deal.
Last year I talked with a company that installs residential geothermal energy systems. Part of my conversation with them was a question about tax credits and the response was “there aren’t any”. That changed in February when the stimulus package was signed. Now you can get 30% of the installation cost of a geothermal energy system back in the form of a federal tax credit. And there is no limit how much your credit can be. Just remember you still pay for 70% of the cost of the system.
Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.
Here are some links that explain more:
This one is from the Union of concerned Scientists:
http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-geothermal-energy-works.html
This is from Wikipedia:
http://en.wikipedia.org/wiki/Geothermal_heating
Here is a link to a government website where you can search for grants.
http://www.grants.gov/
There are plenty of additional links on Google or any other search engine.
Quote from the IRS…
“Residential energy efficient property credit. Beginning in 2009, there is no limitation on the credit amount for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs…”
Geothermal energy systems are based on the earth being a constant temperature once you get about 10 feet below the surface of the ground. If you can capture that heat, and run it through a heat exchanger, you can heat your home for essentially the cost of running a fan. You also can cool your home in summer with the same system and get hot water as a bonus. Couple it with a solar energy system to generate the electricity and you can substantially reduce your carbon footprint. It works best with a forced hot air heating system.
All in all this is not a bad deal.
Last year I talked with a company that installs residential geothermal energy systems. Part of my conversation with them was a question about tax credits and the response was “there aren’t any”. That changed in February when the stimulus package was signed. Now you can get 30% of the installation cost of a geothermal energy system back in the form of a federal tax credit. And there is no limit how much your credit can be. Just remember you still pay for 70% of the cost of the system.
Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.
Here are some links that explain more:
This one is from the Union of concerned Scientists:
http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-geothermal-energy-works.html
This is from Wikipedia:
http://en.wikipedia.org/wiki/Geothermal_heating
Here is a link to a government website where you can search for grants.
http://www.grants.gov/
There are plenty of additional links on Google or any other search engine.
Sunday, May 17, 2009
New Solar Energy Credits
The new stimulus law has expanded the credit available for alternative energy improvements. This incorporates solar, wind, and geothermal investments. The credit is 30% of your cost for the systems. The tax credit can cover any home used as a residence by the taxpayer, but it does not have to be your principal residence. So your vacation home can qualify.
This blog will cover the solar credit which includes the generation of electricity, heating water, and some resources for information on solar power.
As I mentioned, the credit is 30% of the cost of the solar system. The system must be installed by December 31, 2016, so you have plenty of time to put the system in place. You can use it for generating electricity or hot water.
In addition many states offer a credit for energy improvements including solar power. Here is a link to a database that details these credits: http://www.dsireusa.org/
Try Wikipedia for some general information on solar power. Here is that link: http://en.wikipedia.org/wiki/Solar_power
The American Solar Energy Society is an industry association which provides information on solar energy. It has 12,000 members from solar professionals to grass root enthusiasts. They are located at http://www.ases.org/
You can Google “Solar Power” and get about 30,000,000 hits. That should keep you busy for the weekend.
This blog will cover the solar credit which includes the generation of electricity, heating water, and some resources for information on solar power.
As I mentioned, the credit is 30% of the cost of the solar system. The system must be installed by December 31, 2016, so you have plenty of time to put the system in place. You can use it for generating electricity or hot water.
In addition many states offer a credit for energy improvements including solar power. Here is a link to a database that details these credits: http://www.dsireusa.org/
Try Wikipedia for some general information on solar power. Here is that link: http://en.wikipedia.org/wiki/Solar_power
The American Solar Energy Society is an industry association which provides information on solar energy. It has 12,000 members from solar professionals to grass root enthusiasts. They are located at http://www.ases.org/
You can Google “Solar Power” and get about 30,000,000 hits. That should keep you busy for the weekend.
Thursday, May 7, 2009
Residential Energy Credits
Now you see them, now you don’t. Wait!! Now you see them again.
Those elusive homeowner energy credits are back. They were available until the end of 2007 and then disappeared in 2008 only to return with the various stimulus packages in 2009.
The energy credit is fairly simple: You get a credit on your federal income taxes of 30% of the cost of qualified energy products you install in your home in 2009 and 2010. Qualified products include new windows and insulation, as well as energy efficient heating and air conditioning systems. The items installed must meet new higher standards of energy efficiency. The credit applies to the cost of the product but not to the cost of labor for of the installation.
The maximum total credit you can claim is $1500 (or 30% of $5000). The credit can be used only once, so you cannot claim $1500 in 2009 and then again in 2010. You file form 5695 with your 2009 or 2010 tax return. This is not a refundable credit, which means that if you owe $1000 in income taxes and qualify for a $1500 credit, you will not get a check for $500 from the IRS. It also cannot be applied to other taxes such as the self-employment tax.
The IRS has not provided a whole lot of guidance on this credit yet. Based on various sources, the credit applies only to home improvements and not the construction of a new home. Other details may change as the year progresses.
A final note: The manufacturer must give you certification that the property satisfies the standards set in the new law. Be sure to keep the certifications as well as the receipts for the cost of your products.
Monday, May 4, 2009
Energy TAx Credits
This blog is the start of a series on the energy tax credits enacted in February 2009. I will be discussing the residential energy credits for insulation and new windows, a new credit for geothermal heating and cooling, solar credits, and even home sized wind turbines. I will also discuss electric car credits.
Ah the wonders of the internet!! This was posted from San Francisco
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