Tax Season

Posted on 30. Nov, 2010 by in

The end of the year is upon us and that means tax season is around the corner!

Today’s intention is RECORD KEEPING **RECORD KEEPING**RECORD KEEPING

With everyone of the thousands . . .and thousands . . . and thousands . . .of forms the IRS generates, there is a time estimate for completion. Although their estimates are somewhat fanciful, in the long run, good, consistent and complete records save everyone time and money. Talk to your tax professional and get to know what records are important to your situation and WHY!

Also, for the daring and those with simple returns, the IRS is sponsoring free electronic filing for just about anyone. E-filed returns with can get funds returned within 10 days

Collect ALL your information:

· Watch your tax ID numbers

o For individuals and social security numbers, names and numbers must match. Sounds simple, but if for any reason a new Social Security card has been issued (marital name change, naturalization, etc) there may be a mis-match. This delays and confuses filing

· Any W-2’s or 1099’s are also submitted to the IRS. In the age of computers, that means you will be subject to interest and penalties if you fail to retain and report any taxable income

· From year to year, keep your returns, with any notes, and a basic record of tax treatments. For instance, your basis in your home changes as you depreciate for a home office or for rental property. Just like going to the doctor, it helps if you know your situation rather than just relying on your tax professional

2009 Threshholds:

· Social Security payments apply to the first $106,800 of your wage base. If you are a high income employee, especially if you receive more than one W-2 watch your earnings for deductions

· As part of the economic stimulus package, there are no minimum distribution requirements for 2009. This is good news on the investment front as it allows your IRA or other qualified retirement plan to “rest” and recover

· Annual gift exclusions are $13,000 for gifts by an individual or $26,000 by spouses

· Long term capital gains remain at reasonable rates, 15%

· Remember to maximize your Roth and IRA contributions

If you have a small Business or Business Income:

· Know your status and file consistently. Are a cash basis or accrual basis filer? Schedule “C” filers usually also have to file Schedule SE. Know which types of income require which schedules

· Collect all 1099’s or other records of income

· Declare all appropriate expenses and deductions

· Visit the IRS web-site. The site has been improved in recent years to make it more user friendly. It contains many helpful hints for individuals and businesses
First Time Home Buyer Tax Credit:

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009.

The credit:

· Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.

· Applies only to homes used as a taxpayer’s principal residence.

· Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.

· Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

Energy Credits:

· Residential Energy Property Credit (Section 1121): The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.

· There are also specific credits for such things as electric vehicles, solar energy and other alternative fuel sources

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