It’s hard to believe that it’s already the second half of 2009. If you are like many of my clients, it probably feels like you just mailed your 2008 tax return

But while it may be summer, we’re already on the backside of 2009. That means you’re running out of time to make changes to your (or your company’s) financial situation to see a benefit on this year’s return. If you haven’t gotten your act together yet, this is a great time to start. Just like seeing the dentist, consider this your mid-year checkup.

Here’s how to get your taxes in order:

Get organized!
I was speaking with a client recently and I realized that, while this seems like the easiest step (after all, it doesn’t take lots of specialized knowledge to organize your records and your tax approach), this is actually the hardest part for so many people.

Many folks don’t know where to start. A great place is with your deductions. Are you keeping receipts and a running list of all of your charitable deductions? Are you self-employed, and do you use your car for business purposes? Then you need to keep a detailed mileage log. (You should also be keeping receipts and records of deductible business expenses, so you’re not left scratching your head next year — not to mention paying more in taxes.)

Be aware of new tax credits
There are a number of new tax credits this year. You’ve probably heard of the Making Work Pay tax credit of $400 for individuals and $800 for couples. Your employer should have adjusted withholding so you’re getting a bit more from each paycheck, but check to see if that’s the case.

And if your employer decreased your withholding but you’re not eligible for this credit — because you make too much money, for instance — you need to remember that your tax liability will be greater next spring. If you’re self-employed and eligible for the credit, adjust your estimated payments accordingly.

Time is running out for other credits as well. Thinking about buying a car or becoming a first-time homebuyer? Or if you own your home, are you planning any making energy-efficiency improvements to it? If you want to see a tax benefit next year for any of these undertakings, you need to move quickly.

Look at your investments
Chances are good that you don’t need to be told to look at your investments. Most people have had one eye on them for a while. Since your balance is probably down in the last year, should you start putting more money into your 401(k) to get back on pace with your retirement goals? The maximum employee contribution rose to $16,500 for 2009, from $15,500 last year.

With the changes in the markets in the last year, some people are taking another look at their estate plans, and how taxes come into play. Even if it takes a tough economy to force you into action, it’s always good to have an updated estate plan.

Remember, the goal should not be getting back a big refund next spring. While that’s nice and something to look forward to, it’s smarter to reduce your withholding and put that money in the bank right now. Especially given the markets’ recently improved performance, you can make that money work for you rather than for the IRS.

The American Recovery and Reinvestment Act (ARRA) of 2009 provides a uniform credit of 30% of the costs of qualifying improvements up to $1,500. Examples include adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. It also raises the limit on the amount that can be claimed on improvements placed in service during 2009 and 2010 to $1,500.

The IRS provides a list of energy-related tax benefits in the ARRA in its Fact Sheet 2009-10.

For married couples, the tax exemption applies separately to each spouse. This means that if both you and your spouse claim unemployment benefits this year, you can exclude the first $2,400 of your unemployment benefits and your spouse can exclude the first $2,400 of his or her unemployment benefits received in 2009.

For unemployment benefits received beyond the first $2,400, which are subject to tax, unemployed workers can opt to have income tax withheld from those benefit payments. For further details about filling out a Form W-4V – Voluntary Withholding Request, read our article on unemployment.

• Be Stingy about giving out your personal information to others unless you have a reason to trust them, regardless of where you are.
• Check your financial information regularly, and look for what should be there and what shouldn’t.
• Ask periodically for a copy of your credit report.
• Maintain careful records of your banking and financial accounts.

Source: U.S. Dept of Justice, Criminal Division, Fraud

This summer is a great time for you to think about what stage of the business life cycle you’re in, and if your tax strategy is aligned with your current needs.

The recession has pushed many people to consider starting their own businesses in the last several months. For small businesses that predate the recession, it’s forced most of them to tighten their belts and be smarter about their financial strategy. Finally, no doubt many small business owners have taken their lumps during the economic downturn and are considering an exit strategy.

Whatever stage of the business life cycle you’re in, there’s a good chance you could benefit by revisiting your tax strategy. The recession has reminded many of us that there’s no substitute for a reasoned approach to financial planning, and taxes – which are one of the biggest expenses for most small businesses – are a crucial part of that process.

If you’re about to start a business…

…look ahead when choosing a legal structure

Some soon-to-be small business owners have a decent grasp of whether they structure their business as an S-corporation, an LLC or LLP, a sole proprietorship or another entity. But what we often see is that many owners set up a legal structure that suits them now – but may not suit them down the road after adding partners, employees, board members or considering an exit strategy. Make sure the entity you choose is a fit not only for where you are now, but also for where you envision yourself in several years.

…examine your options for hiring contractors vs. employees

This is one of the most-asked tax questions for people starting a business. Many business owners want to classify their help as contractors, which allows them to avoid paying taxes and dealing with payroll headaches. But, particularly with virtual offices so commonplace in today’s work environment, it can be tricky to determine which title fits. The IRS will make a determination for you through Form SS-8, but it can take six months to get an answer. It’s best to speak with a tax expert.

…set up a payroll tax plan

If you determine that you have employees, and not contractors, this is an incredibly important step. Payroll can be a difficult and painful process if you don’t have a strong plan in place to simplify things. It’s best to get this established right away.

If you’re running a small business…

…think about future major purchases

Should you lease or buy equipment? While this decision generally involves a host of non-tax-related issues, you should think about the tax consequences of these types of decisions. And what about depreciation? You may be tempted to fully expense a piece of equipment in the year of purchase through Section 179 – but then again, it may make more sense to claim the depreciation if you can’t take advantage of the deduction. Without question, it’s a lot easier to study these things before the pressure is on due to an emergency equipment purchase.

…reduce tax burden through profit and loss forecasting

While profit and loss forecasting is used to make purchasing and HR decisions, it should also be utilized as a crucial tool to reduce tax burden. Gaining a better understanding of future expected tax liability – and determining how various courses of action impact your taxes – is an essential element of tax strategy. If you’re not looking ahead with this in mind right now, you should meet with a tax professional to make this part of your company’s forecasting process.

If you’re thinking about exiting your business

…figure out your retirement plan

This piece of advice holds true both for the business owner, and for the company’s retirement policies, as there could be significant tax benefits available for employers who set up retirement plans for their employees. And as for your own plan, you may be able to move money out of your business on a tax-deferred basis by contributing to your own plan, but this can be confusing territory if you’re trying to figure it out alone.

It’s true: April 15th, 2010 seems like a long time from now. But whether you’re just starting a business, you’re thinking about getting out, or somewhere in between, the summer is a great time to think about optimizing your tax strategy. You’ll be glad you did.

Working for H&R Block Tax & Business Services, I talk to a lot of Coloradans about their taxes. Some are clients, but many others are friends and acquintances who prepare their own taxes. One of the most common concerns I hear from people who prepare their own taxes is that they may have missed something – a little-known deduction or credit – that would have saved them money. It’s funny how quickly the relief of finally filing your taxes turns into a nagging concern that you may have paid Uncle Sam too much.

When I get those kind of questions, I always recommend that they meet with one of our tax advisors for a Professional Review. Our experts will make sure your taxes were done correctly – regardless of who prepared them for you. The review is only $39, and our experts find errors on nearly 80 percent of returns we review.

So if you are having filer’s remorse, and want to make sure you claimed all the credits and deductions you are eligible for, give us a call. I’m pretty sure you’ll sleep better if you do.

Now that President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into law there is intense speculation on if the stimulus package will lift the economy out of recession. While most of the media attention on the ARRA has centered on infrastructure spending and tax breaks for individuals, you’ve probably seen less information on what the package includes for small businesses.

Small businesses account for 97 percent of all new U.S. jobs, according to the American Small Business League, which pushed for strengthened federal contracting programs for small companies to be part of the bill’s final language. As vital job-creating engines for our economy, small businesses should be aware of several provisions in the ARRA. But it’s crucial to also note that small businesses need to be proactive to benefit from these incentives: The benefits won’t come to you automatically, so it’s a good idea to meet with a knowledgeable tax professional or research the provisions on your own to determine what’s in the stimulus package for your business.

Here are some of the key provisions of the ARRA that affect small businesses:

1. Using current losses to offset profits

Businesses with gross receipts of less than $15 million may be eligible to use current losses to offset profits made during the previous five years (this extended the two-year carry-back law previously in place). Taxpayers may carry a 2008 net operating loss back for three, four or five years. For some businesses struggling through the current downturn, using these losses to offset previous gains could result in substantial tax refunds.

2. Accelerated depreciation rules

Businesses that buy certain equipment may be eligible to speed up the depreciation through this year. Last year, Congress temporarily put in place a depreciation provision that would allow businesses to write off 50 percent of the cost of the depreciable property. The stimulus package extends this benefit through 2009. For companies looking to upgrade equipment, these rules may give them a good reason to do so during 2009.

3. Expensing vs. depreciating

Similar to the depreciation rules, in 2008 Congress temporarily amended Section 179 of the tax code, permitting small businesses to expense up to $250,000 in certain capital expenditures immediately rather than depreciating them over time. Again, for companies looking to make investments in new machinery, equipment, furniture, etc., a smart approach to taxes could deliver major short-term benefits.

4. Making the right hires

The ARRA includes tax credits for businesses that hire employees from one of nine specific groups, such as unemployed veterans or disconnected youth. Small companies are eligible for a tax credit equal to 40 percent of the first $6,000 of wages paid to a qualifying employee. The rules for who constitutes a qualifying employee can be complex.

5. Changes to SBA loans

Loans from the Small Business Administration aren’t relevant for many small businesses, but others should be aware of loosened lending restrictions for SBA-backed loans. The most significant changes are fee reductions in 7(a) loan programs (for start-up and working capital) and 504 loan programs (for real estate and asset-backed loans). The ARRA also calls for increased guarantees for some 7(a) loans, as well as $30 million devoted to a microloan program focusing on businesses with fewer than 10 employees and loans of less than $35,000.

There are also some tax breaks targeted at individuals that would apply to many small business owners, of course – such as the “Making Work Pay” refundable tax credit of up to $400 for working individuals (or $800 for working families). Self-employed individuals should consider whether adjusting their quarterly estimated tax payment would be beneficial. Finally, there may also be tax breaks available for the purchase of a new car or home, and in paying for college tuition.

The ARRA presents opportunities for small businesses to save money through a smarter approach to taxes. But once again, these benefits will not come to you automatically – you have to be proactive about claiming them. If you’re uncertain about your eligibility, a knowledgeable tax professional can help you.

We evaluate clients’ personal goals and help them clearly understand the tax consequences of a wide range of financial options. We also help clients make informed tax decisions about investing for retirement, handling an inheritance, evaluating the benefits of a living trust, or dealing with other special tax situations. And we are local to Denver, with 11 offices conveniently located across the Mile High city.

You can learn more about us by visiting our Web site. Thanks for stopping by, and come back soon. We’ll be posting a lot of helpful information that could save you thousands of dollars (and more than a few tax-related headaches).