Archive for FED 2009 Tax News
Making Work Pay Credit – Schedule M
Posted by: | CommentsTwo special tax credits offer taxpayers an opportunity to lower their tax bill or increase their refunds this filing season. Both credits are claimed on new Schedule M, Making Work Pay and Government Retiree Credits.
The Making Work Pay Credit is intended to help millions of workers and self-employed individuals, while the government retiree credit especially targets former government workers who aren’t receiving Social Security benefits. Income limits apply to the making work pay credit but not to the government retiree credit. Both credits are refundable –– meaning that those eligible can get them even if they owe no tax.
Dependents & Exemptions
Posted by: | CommentsWhen you prepare to file your tax return, there are two things that will factor into your tax situation: dependents and exemptions. Here are five important facts the IRS wants you to know about dependents and exemptions before you file your 2009 tax return.
>> If someone else claims you as a dependent, you may still be required to file your own tax return. Whether or not you must file a return depends on several factors, including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and, any advance Earned Income Tax Credit payments you received.
>> Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2009 tax return. Exemption amounts are reduced for taxpayers whose adjusted gross income is above certain levels, depending on your filing status.
Cobra Subsidy Extended
Posted by: | CommentsThe ARRA (American Recovery and Reinvestment Act of 2009) provided a COBRA subsidy which was due to expire on December 31,2009. That subsidy has now been extended to February 28, 2010. An employee who is involuntarily terminated on or before February 28, 2010, may elect to participate in COBRA continuation coverage and pay only 35% of the COBRA premium. The federal government will reimburse the employer the 65% that the employer paid. AGI limits for participation in the subsidy continue unchanged. The timeframe that eligible individuals are entitled to the COBRA subsidy has been expanded from 9 months to 15 months.
Flexible Spending Accounts
Posted by: | CommentsUpdate: See updated info under FSAs AND HSA dated April 28, 2010
Check your Flexible Spending Account balance. You must clean it out by December 31st if your employer has not adopted the 2-1/2 month grace period that IRS now permits. Otherwise, any money left in your account is forfeited.
Solar Energy Credit
Posted by: | CommentsThe 30% solar energy credit also applies to reflective roof coating as well. The coating reflects the sunlight that passes between the cylindrical solar panels back up to the underside of the panels, helping to generate more electricity. Remember, the system must be placed in service by December 31, 2009 to get the credit for 2009.
Contributions
Posted by: | CommentsIf there are contributions already planned, ask if you can afford to make them this year. Get the savings now. If you’re thinking of cleaning out the garage, do it now. Call your favorite charity, make a good list (possibly even a couple of snapshots!) and get your deduction in 2009.
Standard Mileage Rates
Posted by: | Comments
The IRS announced in its Revenue Procedure 2009-54 (http://www.irs.gov/pub/irs-drop/rp-09-54.pdf) the revised 2010 standard mileage rates.
| 2009 | 2010 | |
| Business | 55 cents per mile | 50 cents per mile |
| Medical and moving | 24 cents per mile | 16.5 cents per mile |
| Charitable contribution | 14 cents per mile | 14 cents per mile |
Timing of Income/Expense
Posted by: | CommentsAn expense item is counted when you pay. Sign the check. Sign the credit card slip. Postmark the mail. When the funds leave your control, payment has been made.
With income, you cannot simply wiat to cash a check — IRS says you have “constructively received” the money — it’s yours right now. (You are free to delay billings, though!)
Mortgage Interest Update
Posted by: | CommentsMortgages 9over $1 Million) have tough rules. The law allows interest deductions on up to $1 Million of “acquisition debt”, lus another $10,000 of “equity debt” for your main home, plus one other property you use personally.
“Acquisition” debts are to “buy, build, or improve” the property. “Equity” debt is any other debt secured by the property.
Note: It is my understanding that IRS is now routinely auditing any return claiming over $75,000 in mortgage interest.
IRS on YouTube
Posted by: | CommentsIRS is using videos to explain some newer tax provisions. You can view them at http://www.youtube.com/irsvideos .
There are a couple of dozen videos. Most are in English, but there are a few in Spanish, and even some in American Sign Language.
Curiously, IRS has resisted such things in the past. They continue to warn that they never send emails to taxpayers. They even ask you to forward suspicious emails and bogus websites to phishing@irs.gov.
Business Use of Your Home
Posted by: | CommentsDo you use part of your home exclusively for your business on a regular basis?
To qualify under the exclusive use test you must use an area of your home only for your trade or business. The business area doesn’t have to be in a separate room or blocked off by a partition, but it must be identifiable. For example, a workstation in the corner of a living room may qualify, but piling papers on your kitchen table would not. (Note: The exclusive test doesn’t apply to daycare facilities, or in some other cases, for the storage of business inventory or product samples. Check irs.gov/smallbiz for the special rules.)
Regular use means that you use part of your home for your business on a continuing basis. Occasional business use is not enough to meet this requirement – even if you use an area designated exclusively for business purposes.
Unemployment Insurance
Posted by: | CommentsPresident Obama Nov. 6 signed a bill (H.R. 3548) which includes …
Providing 14 more weeks of unemployment insurance benefits in all 50 states, and up to 20 more weeks in states with a three-month average total unemployment rate of at least 8.5 percent, through an extension of the 0.2 percent Federal Unemployment Tax Act surtax through June 30, 2011.
By Christine Grimaldi and Brett Ferguson
Home Buyer Credit
Posted by: | CommentsObama Signs Legislation Expanding Home Buyer Credit
By Christine Grimaldi and Brett Ferguson
President Obama Nov. 6 signed a bill (H.R. 3548) extending and expanding home buyer tax credits and net operating loss carryback rules into 2010.
The Worker, Homeownership, and Business Act extends the $8,000 first-time home buyer tax credit, established through the American Recovery and Reinvestment Act (Pub. L. No. 111-5), through April 30, 2010. Existing homeowners may take a new $6,500 tax credit if they opt to purchase a different home as their primary residence.
Parties who have already entered into a binding contract on a home could still take the home buyer credits if they close on the home in 60 days.
The law increases ARRA’s income caps for credit eligibility to $125,000 for individuals and $225,000 for couples.
The Senate Nov. 4 passed the bill, 98-0, and the House Nov. 5 voted 403-12 under an expedited process to send the legislation to the president’s desk (213 DTR GG-1, 11/6/09; 212 DTR GG-1, 11/5/09).
Home Energy Credit
Posted by: | CommentsHome Energy Credit …
Install insulation, heating or cooling system, specifically rated windows and doors and you can get a tax credit up to $1500. NOTE: Be sure to check the specific IRS requirements for any of these home improvements and then ask the contractor if their product(s) meet those requirements
Education Credits
Posted by: | CommentsEducation Credits …
New American Opportunity Credit allows students to claim up to $2500 for college expenses.
529 College Savings Plan now allows student to purchase a computer for course work.
First Time Homebuyer Credit
Posted by: | CommentsFirst Time Homebuyer Credit …
If you purchase a home or condo between January 1, 2009 and November 30, 2009, then you may qualify for a credit of up to $8,000. To qualify, neither you or your spouse (if applicable) can have owned a home during the past 3 years, and you MUST CLOSE escrow not later than November 30th, 2009. You can only get the credit after the closing date. As long as you live in the home for at least 3 years, the mo
Vehicle Tax Deduction
Posted by: | CommentsVehicle Tax Deduction …
If you purchased a new car, a light truck, motorcycle, or a motor home after Feb 16, 2009 and before December 31, 2009, save your receipt because you may be able to deduct the state and local sales tax, or excise tax, on the first $49,500 of the purchase price when you file your 2009 tax return. You do not need to itemize to get it but there are some income restrictions. Ask you tax advisor if your 2009 new vehicle purchase qualifies.
Making Work Pay Credit
Posted by: | CommentsMaking Work Pay Credit …
This credit gives a $400 tax cut to most working people. For last year’s rebate IRS sent checks. This year’s “rebate” has been handled by reducing your withholding at work. Most employers started using new withholding tables on April 1st, 2009. So … while you have had a few extra dollars every pay day, if you are married and your spouse is also working, or if you have a second job, you might have received more than your allotted amount … in which case you will have to repay any excess you have enjoyed spending.
(For specific information regarding Married Filing Joint Couples and Retirees … Read More→
Unemployment Insurance
Posted by: | CommentsUnemployment …
Up to $2400 received in 2009 is NOT taxable. Any amount received above $2400 IS taxable, so make sure you have the correct amount of withholding taken out.