By: Charles Blair, DDS; John McGill, MBA, CPA, JD
I read about a new way to save for college expenses called Upromise.com. But I am concerned because they want my credit card number. How does this work?
Upromise.com offers a unique way to save for your children's college education, but it will likely cover only a small fraction of those costs. To begin the program, you must sign up at www.upromise.com and submit your credit card information. Thereafter, you will open a tax-advantage Section 529 plan for the beneficiary of your choice (your children, grandchildren, or other relatives). Section 529 plans are college savings accounts that allow funds to grow tax-deferred, with the earnings paid out tax-free if used for qualified educational expenses.
You then use your credit card to earn rebates by purchasing merchandise from participating companies, signing up for specific programs affiliated with Upromise, or simply shopping online through its Web site. Rebates are automatically deposited into the Section 529 plan. You do not need to save receipts or submit reimbursement forms.
Some cautions, however:
1 Do not buy unnecessary items simply to receive the small (typically 1 to 4 percent of purchase price) rebate credited to the plan.
2 Read the fine print. If you do not follow the rules, you will not receive credit for your purchases.
For a comprehensive approach to funding college expenses, send a self-addressed, stamped ($0.60) envelope to Blair/McGill & Co., 2810 Coliseum Centre Dr., Ste. 360, Charlotte, NC 28217. Request "How To Save 50% Off College Costs."
I have been incorporated for many years as a regular "C" corporation. Three years ago, due to an accounting oversight, my corporation ended up with a substantial amount of retained earnings on which it paid taxes. I want to pay out a bonus on or before Dec. 31 to create a net operating loss that I could carry back to recoup the taxes previously paid. My consultant says it's too late, since more than two years have passed from the date of filing. My CPA disagrees. Who is correct?
Your CPA. There was a two-year limit on a new net operating loss to recoup prior-year taxes. A recent change in law increased that limit to five years. To obtain the refund, the corporation should file either Form 1139, Corporate Application for Tentative Refund, or Form 1120X, Amended U.S. Corporate Income Tax Return.
I am planning to buy a new business car, and am interested in deducting a portion of this for my business use. My CPA says that recent tax law changes have increased the potential tax deductions for business cars. What is the new law?
The new tax law allows additional first-year depreciation deductions for listed property, such as home computers and automobiles, that are used more than 50 percent of the time for business purposes, subject to the limits discussed below. Under prior law, the regular first-year depreciation allowance for luxury automobiles was capped at $3,060. Under the new law, the combined first-year depreciation write-off for a qualifying luxury automobile (one used more than 50 percent of the time for business purposes) is $7,660 (an increase of $4,600).
For details on how to generate the largest business car deductions, send a self-addressed, stamped ($0.60) envelope to Blair/McGill & Co., 2810 Coliseum Centre Dr., Ste. 360, Charlotte, NC 28217. Request "How To Maximize Business Car Tax Deductions."
Mr. John McGill and Dr. Charles Blair will be speaking at the 2003 Thomas P. Hinman Dental Meeting, March 20-22, 2003. Mr. McGill will present two courses: "Successful Tax and Financial Planning Strategies for the Younger Doctor — Getting Started Right!" and "Achieving Financial Independence." Dr. Blair will present two courses: "Money Management" and "Positioning Your Practice for Profit."
Dr. Blair is a nationally known consultant and lecturer, and is a member of the American Academy of Dental Practice Administration. McGill is a tax attorney, CPA, and MBA, and is the editor of the Blair/McGill Advisory, a monthly newsletter helping dentists to maximize profitability, slash taxes, and protect assets. The newsletter ($184 a year) and consulting information are available from Blair/McGill and Company, 2810 Coliseum Centre Drive, Suite 360, Charlotte, NC 28217, or call (704) 424-9780.