http://www.delawareonline.com/newsjournal/business/kristof/11142004.htmlBig spenders, start saving your receipts.
The recently passed American Jobs Creation Act of 2004 includes a provision that gives taxpayers who itemize deductions a choice: They can write off the state income taxes they pay, or they can choose to claim their sales taxes instead.
This new tax break was pushed by members of Congress in states without income taxes, who saw it as a way of getting their residents an added deduction. But it also has potential for big spenders in some other states. The catch: To get any real mileage out of the deduction, taxpayers may need to maintain a shoebox full of receipts.
Clint Stretch, director of tax policy with Deloitte & Touche in Washington said this provision would have the greatest effect in the seven states that either have no income tax or assess taxes only on dividends and interest. "But someone in a state like California might want to consider this if they had low income but high wealth, so they found themselves buying a luxury car or boat in a year that they didn't pay a lot of income tax," Stretch said.
Deduction tied to spending
For instance, a family of four with $50,000 in taxable income would pay $1,263 in California income taxes. The family, assuming it had fairly standard expenses, would be unlikely to have bought enough taxable goods to make the sales tax write-off worthwhile, said John Logan, senior state tax analyst with CCH Inc., a Riverwoods, Ill.-based publisher of tax information.
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edit to add couple of related articles:
http://www.spokanejournal.com/spokane_id=article&sub=2181snip>
Chris Hesse, tax director at LeMaster & Daniels PLLC, of Spokane, says the American Jobs Creation Act of 2004, which President Bush signed into law late last month, repeals one provision for manufacturers who sell internationally, but adds another one for all manufacturers. It also expands rules regarding which businesses are eligible to become S-corporations, which could be a blessing for some mid-sized companies.
On the enforcement side, the new law tightens rules regarding deferred compensation to employees, and narrows a loophole involving charitable contributions, while stiffening penalties for using illegal tax shelters.
Meanwhile, the Working Families Tax Relief Act of 2004, signed into law early this fall, basically extends the effective date of a number of tax breaks already in place, Hesse says.
One purpose of the American Jobs Creation Act’s provisions regarding manufacturers is to resolve a conflict between the U.S. and the World Trade Organization, Hesse says.
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New US Jobs Act to result in profit repatriation
http://www.accountingnet.ie/content/publish/article_816.shtmlThe new legislation, signed in to law by President George Bush prior to the recent election, will enable US multinationals such as Intel, Oracle and Hewlett Packard, to repatriate profits from their Irish operations at an effective US tax rate of 5.25% - instead of the normal rate of 35%.
Any profits repatriated must be reinvested in the US under a reinvestment plan for the purposes of job creation or retention. Ernst & Young explained how the one time tax relief, which is valid for 12 months, could reduce the amount US multinationals invest in the Irish Economy over the next year while they absorb and reinvest the cash brought home.
A note of caution was sounded at the briefing to Irish subsidiaries, that they need to be aware of the complex implications of following this US legislation in Ireland.
Commenting on the legislation, Kevin McLoughlin, Director Corporate Tax, Ernst & Young said: “Irish subsidiaries of US multinational groups could breach Irish company law unless their CFOs and Directors are careful to ensure that the limits on the amount of dividends they can pay are not exceeded.
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