# The US government is getting ready to pay for your next piece of equipment



## binki (Jul 16, 2006)

That is right. The President said the two sweetest words a small business owner can hear....."Economic Stimulus"

Essentially, the Federal Government will give you money, either before or after the fact, to purchase capital equipment. 

Look for the following


Unrestricted Tax Credits: This is a dollar for dollar reduction of your tax liability. Much better than a deduction because the government pays for the purchase of your equipment. The money that you would have paid in taxes now goes into your shop to earn more money. You can even spend more than your tax liability and get a refund on the overage.
Restricted Tax Credits: Like the former, this one is dollar for dollar but you cannot get a refund for going over your tax liability.
Accelerated Depreciation: Think Section 179. Look for bonus percents from 20% to 50%. This may come in two forms. A general form for everyone and 'Enterprise Zone' bonuses for highly impacted areas like The Peoples Republic of California.
Now, because the government is in a rush to do this, it is certain there will be two additional aspects to this bill. 

There will be a ton of pork in it as Congress slips in all kinds of extras
There will be unintended consequences, aka loopholes. This is where a good tax accountant comes in.
Good luck and watch the news for the passage and signing of your government relieve for small business package soon.


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## AustinJeff (May 12, 2007)

binki said:


> Essentially, the Federal Government will give you money, either before or after the fact, to purchase capital equipment.


And by "Federal Government" you mean our grandchildren, great-grandchildren, etc. It's not like the federal government has a surplus of money to hand out.

I haven't heard anyone mention corresponding budget cuts.


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## binki (Jul 16, 2006)

AustinJeff said:


> And by "Federal Government" you mean our grandchildren, great-grandchildren, etc. It's not like the federal government has a surplus of money to hand out.


No, I mean my money that I have been handing over year after year.


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## AustinJeff (May 12, 2007)

binki said:


> No, I mean my money that I have been handing over year after year.


I'm all for tax cuts, but if they are done without budget cuts, it's not really a cut, it's just deferred taxation.


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## Girlzndollz (Oct 3, 2007)

Fred, are you refering to the $800 check per person? That would be an excellent use of the money, perfect!


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## binki (Jul 16, 2006)

President Bush yesterday said he wants "direct and rapid" tax relief for individuals and *tax incentives for businesses "to make major investments in their enterprises this year." *


Bush calls for quick, temporary tax relief to spur economy - CNN.com http://online.wsj.com/article/SB120070893894602249.html?mod=googlenews_wsj


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## binki (Jul 16, 2006)

The first word in the news is now doubling of the section 179 accelerated depreciation to $250,000 for 2008.


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## Rodney (Nov 3, 2004)

binki said:


> That is right. The President said the two sweetest words a small business owner can hear....."Economic Stimulus"
> 
> Essentially, the Federal Government will give you money, either before or after the fact, to purchase capital equipment.
> 
> ...


I'm know you can't give me tax advice, but let me see if I can understand what you're saying.

There are currently unrestricted tax credits in place for buying new equipment? 

So if I bought a DTG this year (2008), I could take it off of my tax liability in 2008 (or 2007)?

If this is the case, I need to talk to my accountant lady  I'm all for reducing my tax liability.


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## binki (Jul 16, 2006)

Not quite Rodney. I am spelling out the options that the government has for business. They are not going to send checks to businesses. I do not hold out hope for tax credits, but you never know. This will be hastily put together and is destined to create advantageous loopholes for 2008.


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## prometheus (Oct 19, 2006)

I know it is good news, but I am such schlep at understanding these things.


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## Gunslinger (Aug 3, 2007)

LOL ... marry a tax pro ... I did, and survived two audits ...


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## binki (Jul 16, 2006)

Here is an update


People (phaseout starts at 75K for single and 150K for married)
Single gets $600
Married gets $1200
$300 per head on kids

Business
50% bonus writeoff on capital purchases (probably section 179 depreciation)

Other
Conforming loans in California raised to $725K which will qualify for lower rates, right now 1% lower, below 6% as of this week

Of course the news reports don't have the fine details. If the business deduction is a tax credit then jump on it. You will be taking money that you would already pay in taxes and shift them to equipment purchases. If it is a 50% bonus on accelerated depreciation, then unless you already are above the max of $125K + COLA then it is meaningless.


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## OriginX (Feb 21, 2007)

You have to have money to buy equipment first in order to expense it later.
I just don't have any money to buy anything right now. Hard times are already upon some of us. Maybe I can borrow money from my brother-in-law?


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## brentonchad (Aug 24, 2007)

binki said:


> Here is an update
> 
> People (phaseout starts at 75K for single and 150K for married)
> Single gets $600
> ...


I knew I had four kids for some reason!! I needed a second heat press!!

My wife keeps telling me it was a mutual decision but I still claim I was lured into it.


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## pizazzcrew (Dec 28, 2007)

binki said:


> No, I mean my money that I have been handing over year after year.


thats right bink! please keep us posted so we don't miss out


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## tim3560 (Jan 7, 2007)

brentonchad said:


> I knew I had four kids for some reason!! I needed a second heat press!!


LOL, hey good for you!


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## Girlzndollz (Oct 3, 2007)

binki said:


> No, I mean my money that I have been handing over year after year.


 
I don't know where else to verify this and just because I saw this on the news doesn't mean it's necessarily true (it's a wonder the level of trust in newstations anymore, isn't it?), but I heard this as we're borrowing $150B from the Chinese - and that some folks are worried people are going to turn around and buy Chinese products with, so this may not infact be so good for our economy as much as it will be good for another country. Blah. It's all too much for me to grasp. Anyway, the numbers are so large they are staggering. I guess I wonder if it might pay to be sure to buy American with this money? 

Any thoughts on that? Any good to trying to focus on good American machinery that can be purchased over foreign made?

I'm not political, it's too overwhelming and complicated for me to really understand the entire scope, but I do love my country....


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## binki (Jul 16, 2006)

I don't worry about things I cannot control, only those that I can. 

As far as foreign debt, that's easy, the USA could just tell them all to take a hike and confiscate all foreign assets in the US. Not that it will happen, but when push comes to shove it may.


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## binki (Jul 16, 2006)

As predicted, this will get bigger...


> Democrats in the U.S. Senate say they will move to *add $150 billion* to the White House economic stimulus package


 emphasis added


The Canadian Press: Senate Democrats plan add-ons to $150-billion U.S. economic stimulus package


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## zymerguyer (Feb 15, 2007)

Yeah, this is a great idea for us business owners and others, but only for now. It's kinda like putting a band-aid over a cut off limb. In the long run, though, we're all gonna suffer because the only thing this is doing is delaying the inevitable recession and making sure that it's gonna be worse later. They're not getting this money from anywhere; they're just printing it out of thin air, which is just deficit spending. The dollar will collapse, it's just a matter of when.


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## binki (Jul 16, 2006)

oh, definitely the sub prime mortgage fiasco caused all of this. it doesnt matter how long the fall is delayed, it will happen. those that couldnt afford those loans then, cant afford them now, and wont be able to afford them down the road.


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## binki (Jul 16, 2006)

Looks like a done deal....

washingtonpost.com


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## Girlzndollz (Oct 3, 2007)

Yes, you are right, Fred. I just watched a news video online.


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## monkeylantern (Oct 16, 2005)

This is economic idiocy designed to act as a cover for top 1% tax cuts.

60% of this money will go straight into savings, a figure mentioned by the White House itself. The "stimulus" part is total economic fantasy and in effect bribery.

We are re-arranging deck-chairs on the Titanic.


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## prometheus (Oct 19, 2006)

I don't know who is going to put it into savings, as most people I hear talk, are going to buy a big screen tv or such with it. Even if they have credit debt up the butt.


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## Girlzndollz (Oct 3, 2007)

I just hope they remember to buy American made so US companies get it.

I'm giving it back to Uncle Sam, he's paying my school property tax this year, but sadly, not even half of it..... boo hoo.


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## tim3560 (Jan 7, 2007)

Not so much "free" money after all. If I'm reading this correctly, it looks like an advance on the money that we would be getting from our returns next year. The details on tax rebates - MSN Money


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## prometheus (Oct 19, 2006)

tim3560 said:


> Not so much "free" money after all. If I'm reading this correctly, it looks like an advance on the money that we would be getting from our returns next year. The details on tax rebates - MSN Money


Great Tim, rain on the parade.


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## Girlzndollz (Oct 3, 2007)

_The best things in life are free, never money_...

I'd rather borrow if from myself than anyone else.


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## MotoskinGraphix (Apr 28, 2006)

An utterly stupid proposal of handing every tax payer a check. A stimulus package in the sense that every tax payer that makes over $75,000 a year gets nothing but pays for the whole shebang without representation. Who comes up with this illogical way to stimulate what isnt broken but correcting itself from a six year boom. Leave the markets alone and they will correct themselves. How do you give money away you dont have? I like business incentives but free money is never free.


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## zymerguyer (Feb 15, 2007)

Well said, It doesn't make sense!


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## tim3560 (Jan 7, 2007)

prometheus said:


> Great Tim, rain on the parade.


Sorry Robert, just something I live for.


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## binki (Jul 16, 2006)

tim3560 said:


> Not so much "free" money after all. If I'm reading this correctly, it looks like an advance on the money that we would be getting from our returns next year. The details on tax rebates - MSN Money


As far as I can tell this report is completely wrong. I will check with my CPA when I go to do my taxes next month. 

Now for some good news, The legislation is signed!

Bush signs stimulus bill; rebate checks expected in May - CNN.com

Time to buy equipment as soon a I figure out what is new here...


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## MotoskinGraphix (Apr 28, 2006)

Silly legislation and wrong for the economy.


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## tim3560 (Jan 7, 2007)

In this article, it mentions paying back again.

http://finance.yahoo.com/taxes/article/104417/Tax-Rebate-Winners-and-Losers

"The 2008 tax forms should have a line for the new credit. When calculating taxes next year, taxpayers will have to subtract what they got as a rebate check the previous summer."


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## prometheus (Oct 19, 2006)

This part gets me:

_"One thing taxpayers won't have to worry about is giving back any excess if their 2008 taxes show that the advance this year was actually more than they should have received.

"If it turns out that credit on your 2008 return is greater, you get to take that additional amount," says Luscombe. "If it's lesser than what you got in 2007, you don't have to refund that back to government." The law says the IRS can't recover the extra payment by reducing your 2008 refund or adding to your 2008 tax bill."_

So does this statement mean that if I was going to get some money back in 2008, that they will deduct the advance from what I am supposed to get, but if I owed money or it was less than what I get, then I'm off free?

I don't mind paying for the advance later, but I do mind handing out welfare under disguise.


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## tim3560 (Jan 7, 2007)

I think only the government really knows and understands its own terms. At first I thought that we would just record the rebate as 2008 income, but if the rebate will have its own line on next years tax forms, then it will be counted separately. Robert, I think your understanding is the same as mine.


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