NEW TAX LAW CHANGES FOR 2009   20 QUESTIONS TO ASK YOUR INSURANCE AGENT Does my insurance company provide services to policyholders which I am not taking advantage of? What is your plan for my policy renewal? Will our insurance company review our loss control policies and conduct an on-site inspection to make recommendations about how we can help control accidents? What is your biggest concern with our insurance program? Are my property insurance limits of coverage adequate? Are there coinsurance penalties in my policies? Have you review them to make sure they will not take effect in the event of a loss? How are my computers and important data recovered? Do I have coverage for renovations or additions made recently? Do I have coverage for increased costs of reconstruction to meet current ordinances and new building codes?  Do I have adequate coverage for employee theft? Are there any limitations on the legal defense cost coverage in my liability policies? Do I have adequate coverage for employee harassment of customers? Have you reviewed our liability insurance, looking for exclusions that we should be concerned about? Do I have coverage for business liabilities when my employees drive their personal vehicles? Is my uninsured and underinsured motorist coverages adequate? As I missing any discounts on my workers compensation policy? Have you reviewed my workers compensation audits for error in employee classification? Have you reviewed my workers compensations experience modification for errors? What services can I request from my workers compensation insurer that will help me control losses? Do I have adequate coverage for an employee alleging discrimination or harassment?     2 NEW MICHIGAN ENERGY CREDITS BEGINING IN 2009 Energy Home Improvements or Appliances and Electric Surcharge Credits Begining 2009. Eligible taxpayers may claim two new credits on Michigan income tax returns for tax years 2009, 2010 and 2011. Home Improvements/Appliances: A Refundable Credit   Credit is limited to home improvements or appliances purchased for use in the home of a taxpayer whole principal residence exemption for property taxes is allowed.  This credit is not available to renters or for purchases made for a second home. Adjusted gross income equal to or less than $37,500 for single/married filing seperate & $75,000 for joint filers. Credit is equal to 10% of purchase price and installation of the qualified home improvement or energy efficient appliance up to $75 for a single/married filing seperate return & $150 on a joint return for purchases from each of the following categories: Insulation, Furnace, Water Heaters, Windows, and Refrierators, clothes washers & dishwashers. Credit only applies to purchases made after December 31, 2008 and before January 1, 2012.  Equipment must meet or exceed EPA Energy Star criteria.  You must keep proof of equipment cost and efficiencey qualifications such as a copy of sales receipt and Energy Star rating information.  Treasury may request receipts for claiming this credit. Example: A single taxpayer with gross income of $36,000 who purchased and installed an appliance or home improvement from each category listed above in the same tax year in entitled to a maximum credit of $375. ENERGY COST RECOVERY SURCHARGE CREDIT: A NON REFUNDABLE CREDIT Credit is based on an itemized surcharge (maximum $3 per month) that may appear on residential electric bills as "cost recovery" charges. This credit is available to both home owners and renters who have paid electric bills for the tax year they are claiming the credit. Those who qualify for the credit must have a gross income equal to or less than $65,000 for single/married filing seperate and $130,000 for joint filers.  Maximum nonrefundable credit allowed is $9 per meter for 2009, $7.20 per meter for 2010 and 2011.  This nonrefundable credit is equal to 25% of the annual surcharge for 2009, and 20% of the annual surcharge for 2010 and 2011.   FEDERAL ENERGY CREDIT The measure increases the amount of the tax credit available to individuals for energy efficiency improvements to their homes (i.e., installing efficient electric heat pumps, central air conditioners, water heaters, wood stoves, insulation, windows, and exterior doors).  The credit which was 10% of the cost of installed improvements under prior law, is now 30% for 2009 and 2010.  The maximum credit is $1,500, the cap on the credit available to individuals for the cost of insalling solar water hearing, geothermal heat pump systems, and small wind property for years 2009 to 2016.  Individuals can now claim 30% of the total cost of installing those systems.  The credit remains available without a cap for solar electric systems.  Only qualified fuel cell property continues to have a cap. TAX CREDITS FOR HOME IMPOROVEMENTS INCLUDE: Windows & Doors - Exterior Windows and Skylights, Storm Windows, Exterior Doors and Storm Doors Roofing - Metal Roofs and Asphalt Roofs Insulation HVAC - Central A/C, Air Source Heat Pumps, Natural Gas or Propane Furnace, Gas, Propane or Oil Hot Water Boiler, and Advanced Main Air Circulating Fan. Water Heaters - Gas, Oil, Propane Water Heaters, and Electric Heat Pump Water Heater. Biomass Stove Geo - Thermal Heat Pump Solar Energy Systems - Solar Water Heating and Photovoltaic Systems Small Wind Energy Systems - Residentail Small Wind Turbines Fuel Cells - Residential Fuel Cell and Micro Turbine System. These improvements must be "placed in service" from January 1, 2009 through December 31, 2010.  They must also be for the taxpayer's principal residence EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rental qualify).  $1,500 is the maximum total amount that can be claimed for all products in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind energy systems which are not subject to this cap, and are in effect through 2016.  Each imporvement must have a Manufacturer Certification Statement which should be saved as well as any receipts.  A Manufacturer's Certification is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit.  The IRS encourages manufacturer to provide these Certifications on their website to faciliate identification or qualified products. Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.  If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaic's, solar heaters, small wind energy systems and fuel cell, but NOT the credit for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.   2009 PELL GRANT INCREASE The February 2009 economic stimulus bill included a Pell Grant increase, job training and retaining funding, and an expanded tax credit for higher education expenses.  Highlights of the legislation are: Pell Grant Increase - Maximum Pell Grant for the 2009 - 2010 school year is $5,350 (begining July 1, 2009); for 2010 - 2011 school year the maximum grant is $5,550 (begining July 1, 2010).  There is also a Pell Grant program increase that will cover an addition 800,000 students.  Total number of Pell Grant available by 2010: about 7 million. Work-Study Increase - Federal Work-Study program gets an additional $200 million, enough to pay for approximately 130,000 new work study jobs averaging $1,500 per job per year. College Savings Plan-New Eligible Expense - Purchasing a computer for college now qualifies as an expense for the tax exempt 529 College Savings Plan. Job Training/Retraining - $4 billion for adult job training and dislocated worker job training, intended to help laid-off workers find new employement in similar or new industries.  Funding includes money to help colleges offer career training programs (including community college courses), particularly in high-demand industries.  Additional funding set aside for Trade Adjustment Assistance program benefits for at least 160,000 new workers who get laid off sometime in the next two years due to off-shoring or increased foreign imports. American Opportunity Tax Credit (effective January 2010) - $2,500 tax credit for postsecondary education tuition, fees, and eligible related expenses.  You get a dollar for dollar tax credit for the first $2,000 and 25 cents on the dollar for the next $2,000.  Textbooks and course materials will be included in eligible related expenses.  Single filers with an Adjusted Gross Income (AGI) up to $80,000 and joint filers with an AGI up to $160,000 can claim the full tax credit.  (Single filers with an AGI between $80,000 and $90,000 and joint filers with an AGI between $160,000 and $180,000 may get a partial credit.)  This credit is tax-refundable even for people who earn too little to pay taxes; low-income students and families will be able to claim up to 40% of the tax credit in the form of a tax refund.  This new feature will allow apporximately 4 million additional students to benefit from the program.  NOTE: This credit does NOT apply to your 2008 taxes.  It replaces the existing Hope tax credit next year, for the 2009 tax season.   EXTENSION OF FIRST-TIME HOME BUYERS CREDIT The first-time homebuyers credit was scheduled to expire after November 30, 2009.  The new law provides a new expiration date of April 30, 2010.  If a taxpayer enters into a binding contract before May 1, 2010, to close on a purchase of a principal residence before July , 2010, the credit will be treated as not expiring until July 1, 2010.   GOOD NEWS FOR NON FIRST-TIME HOME BUYERS Effective for purchases after November 6, 2009, the credit is no longer restricted to first-time homebuyers.  Individuals who the new law refers to as "long-time residents of the same principal residence" may be eligible for a modified credit even though they are not technically first-time homebuyers.  The new lay treats as a first-time homebuyer an individual who has owned and used the same residence as his or her principal residence for any five-consecutive year period ending with the date on which the new residence is purchased.  Non-first-time homebuyers will benefit from the credit but at a reduced amount.  Their maximum credit will be $6,500 rather than $8,000 ($3,250 for married taxpayers filing seperately rather than $4,000).  No credit is allowed if the purchase price of the principal exceeds $800,000.  Additionally, the taxpayer (or his or her spouse) must be at least 18 as of the date of purchase to be eligible.  All tax-payers must attach a copy of their settlement agreement to their return.   DEDUCTIONS FOR JOB SEARCH EXPENSES You can deduct the costs of looking for a new job in the same trade or business as an itemized deduction, subject to the 2% floor of AGI,  Even if you have not gotten a new job, you can still deduct these expenses: Newspapers & business publications that you buy for their employement ads. Fees you pay to career consultants, recruiters, employment agencies, and resume writers. Resume preperation costs such as typing, printing, envelopes, and postage. Miscellaneous transportation costs such as taxi fares or parking costs for job interviews. Telephone calls made in connection with your job search. Out-of-Town travel expenses including transportation, hotels, and 50% of the cost of all meals. Legal and accounting fees for tax advice about employement contracts.   RETIREMENT ACCOUNT WITHDRAWALS Withdrawals are subject to a 10% penalty if you receive the distribution before age 59 1/2.  Loophole: Early distributions from an IRA for medical insurance premiums of unemployed individials , or to pay for qualified higher education expenses, or for first-time home buyer expenses are not subject to the 10% early withdrawal penalty.