Cash is King!

Any investor and/or entrepreneur needs to live by this mantra. Cash is and always will be king. In order to be a successful investors or business owner, you need to be comfortable with a company's statement of cash flows. The cash flow statement is the most important of the 3 main statements (income, balance sheet, and cash flows) of any set of financial statements.

Clients can request the free report, "What is this Statement of Cash Flows Anyway," by sending us an email at cpa@jaegerco.biz. The report is a plain English explanation of the statement of cash flows and why it is the key to success for investors and entrepreneurs.

College Savings = Tax Deduction

Connecticut Residents can now deduct contributions to approved Connecticut Tuition Savings Plans on their Connecticut tax returns.

New legislation permits personal income taxpayers to deduct contributions to the Connecticut tuition savings plan from adjusted gross income. Joint filers may deduct up to $10,000 annually, while individual filers may deduct up to $5,000. Unused deductions may be carried forward for five years.

We're still waiting on all of the details of this new deduction. Contact us if you'd like to know how it applies to you. We can also make sure that you are contributing to an approved plan.

IRS Targets Connecticut

"Study finds AMT will have a disproportionate impact on residents of different states"

Duh.

The last discrimination allowed in America is our tax code. The Alternative Minimum Tax (AMT) discriminates against residents of high tax states like Connecticut. If you live in Connecticut and your family makes $60,000 or more a year, you are subject to the Alternative Minimum Tax because your elected representatives think that you are rich.

$60,000 per year is equal to a husband and wife both making about $15 an hour. The problem with the AMT (one of many) isn't the income but it's the deductions. You can't deduct the state and local (property) taxes for the AMT. In Connecticut, your state and local taxes are usually your second largest deduction (after mortgage interest). It could only make sense to government bureaucrats that people living in high tax states should pay more in Federal taxes.

There are some planning tips that you can use right now to avoid the AMT. Our clients can receive these tips by calling or emailing us. It could save you a few thousand dollars each year.

Tax Credits and Savings for Energy Conservation

A client is thinking about installing new windows. She asked about available tax deductions. There is a tax credit available for energy conservation. The credit is a reduction in federal income taxes up to $500 but only $200 for windows. So she can reduce her taxes by $200. Since it's a credit, it gets deducted right off her bottom line due. It would be like getting a $1500 itemized deduction.

Since she lives in Connecticut, she is also eligible for 0% sales tax on the windows. Connecticut has a sales tax holiday on windows and other energy conservation products until June 2007. This is like getting a 6% discount on the cost of the windows.

Most the tax credit and the sales tax holiday require that the windows be Energy Star rated. Most window manufacturers label their products as Energy Rated or not. A good vendor should be able to tell you if the windows are Energy Rated.