FREQUENTLY ASKED QUESTIONS

What are the current mileage rates?

How much can I contribute to a 401(k) plan or an IRA?

What address do I use for sending tax returns via Federal Express?

Where can I find federal and California tax forms?

How do I track my tax refund?

How long do I need to keep records?

Q. What are the current mileage rates?
A. The 2008 standard mileage rates for transportation used to conduct business, to perform services on behalf of a charitable organization, for medical purposes or moving, are as follows:

• Business mileage rate is $.505 per mile (up from $.485 in 2007)
• Charitable rate remains unchanged at $.14 per mile
• Medical and moving rate is $.19 per mile (down from $.20 in 2007)

Q. How much can I contribute to a 401(k) plan or an IRA?
A. The deferral limits are as follows:

• 401(k) plan is $15,500 in 2008 and 2007 (plus $5,000 catch-up contributions for those over 50)
• Sep IRA is $46,000 in 2008 and $45,000 in 2007
• Traditional maximum deductible and non-deductible for IRA's is $5,000 in 2008 (up from $4,000 in 2007)

Q. What address do I use for sending tax returns via Federal Express?
A. When shipping your federal or California income tax returns via Federal Express, use the following addresses:

Internal Revenue Service
5045 E. Butler Avenue
Fresno, CA 93778

Franchise Tax Board
9645 Butterfield Way
Sacramento, CA 95827

Q. Where can I find federal and California tax forms?
A. The Spector & Associates web site provides links to both the IRS and California Franchise Tax Board for downloading and printing forms.

Q. How do I track my tax refund?
A. The Spector & Associates web site provides links to both the IRS and State of California Franchise Tax Board for checking on the status of income tax refunds.

Q. How long do I need to keep records?
A.The Basic Rule: Every person liable for payment or collection of any internal revenue tax must keep such records as the IRS may require. These records must be retained for so long as their contents may become material in the administration of any internal revenue law.

So, what does this mean?

When thinking of records it is best to think of items you own separately, or as a balance sheet vs. income. For items you own, such as a home, securities or investment properties, you must keep those records for as long as you own these items. Once you sell or dispose of the items, they then enter the category of "income".

Income records need to be kept a minimum of four years because the normal statute of limitations is three years from the date of return filing for Federal income tax purposes but four years for California. However, if the IRS asserts that there has been a misstatement of your income of 25% or greater, then they may attempt to have a statute of limitations of six years apply. It should also be noted that for the statute of limitations to apply at all, returns must be filed. So, for example, if one did not file an income or gift tax return in a particular year, then the statute of limitations would never start to run on that year.

Also, the statute of limitations may be extended by agreement between the taxpayer or the taxpayers agent in connection with an audit.

You should also be aware that for any security transactions which are transacted through broker-dealers, the broker-dealers are required to keep a history of those transactions for seven years.

One final situation can occur if you have a substantial estate . The IRS, upon audit of the estate tax return, will request copies of all gift tax returns and substantiating data made during the taxpayer's life. In one recent audit we were asked to produce data on all gifts over $2,500 that were made during the taxpayer's life . Another problem is that even with the repeal of estate tax, the current proposals would require that the beneficiaries "step into the shoes" of the decedent as to basis. So, the person inheriting your property would have to know what your cost basis was. Therefore, you should keep a simple record for such basis items.

As always, if you have additional questions, please contact us.