RR Financial
Services Group believes in helping our clients make the best
informative decision. This is why
we take the time
to educate our clients with changes in the tax law that could have
an impact on their tax
return.
Below are a few changes you should be aware of:
THE 2009
TAX SEASON:
The Worker, Homeownership, and Business
Assistance Act of 2009 was signed into law by the President Obama on
November 6, 2009. Below is a brief summary of the tax provisions:
-
Extension and Modification of the
First-Time Homebuyer Credit: The new law extends the deadline
for qualifying home purchases from Nov. 30, 2009, to April 30,
2010. If a buyer enters into a binding contract by April 30,
2010, the buyer has until June 30, 2010, to settle on the
purchase.
-
Taxpayers should be aware of some changes
to the law that apply to home purchases after Nov. 6, 2009, the
date of enactment of the new law. The new law expands the
tax credit to include not just first-time buyers but also
long-time residents who buy a new principal residence. They are
eligible for a credit of 10 percent of the purchase price up to
a maximum credit of $6,500. A long-time resident is an
individual who, with his or her spouse if married, has owned and
used the same home as a principal residence for any period of 5
consecutive years during the 8-year period ending on the date of
purchase of the new principal residence for which the credit is
being claimed.
American Opportunity College Credit
-
This credit modifies the existing Hope
credit for tax years 2009 and 2010, making it available to a
broader range of taxpayers. Income guidelines are expanded and
required course materials are added to the list of qualified
expenses. Many of those eligible will qualify for the maximum
annual credit of $2,500 per student.
New Vehicle Purchase Incentive
-
New car buyers can deduct the state or
local sales or excise taxes paid on the purchase of new cars,
light trucks, motor homes and motorcycles. There is no limit on
the number of vehicles that may be purchased, and eligible
taxpayers may claim the deduction for taxes paid on multiple
purchases. However, the deduction is limited to the tax on up to
$49,500 of the purchase price of each qualifying new vehicle.
Qualifying new vehicles must be purchased, not leased, after
Feb. 16, 2009, and before Jan. 1, 2010. Taxpayers who buy
a new vehicle may deduct state or local fees or taxes that are
similar to a sales tax whether or not their state imposes a
sales tax. To qualify, the fees or taxes must be assessed on the
purchase of the vehicle and must be based on the vehicle’s sales
price or as a per-unit fee.
Making Work Pay Credit
-
Most eligible taxpayers qualify for the
maximum making work pay credit of $800 for a married couple
filing a joint return or $400 for other taxpayers. The credit
equals 6.2 percent of earned income up to the maximum amount.
Thus, any eligible couple whose earned income is $12,903 or more
qualifies for the $800 maximum credit. Other taxpayers qualify
for the $400 maximum if their earned income is $6,451 or more.
For most workers, the credit is based on the taxable wages
reported to them on Forms W-2. Self-employed individuals figure
the credit using the net profit or loss they receive from a
business or farm. Additional calculations are necessary for some
taxpayers, including those who have net business losses, wages
from work performed while a prison inmate or foreign earned
income.
THE 2008
TAX SEASON:
|
Tax
Provisions in New Housing Act
On July 30th President Bush approved the
Housing and Economic Recovery Tax Act of
2008(H.R. 3221, now Public Law No.
110-289). The full text will be posted
soon at the Library of Congress and
Government Printing office websites (thomas.loc.gov/
and
www.gpo.gov/). Here are highlights
of its tax provisions:
-
A new refundable tax credit for
first-time homebuyers.
Your clients’ adult children may
want to take advantage of a new
refundable credit equal to the
lesser of $7,500 or 10% of the price
of a first home purchased between
April 8, 2008 and July 1, 2009. The
credit phases out at AGI levels over
$150,000 for MFJ and $75,000 for
singles. The credit must be repaid
over 15 years in equal installments
(or entirely repaid if sold
earlier), but in the meantime, it’s
like an interest-free loan.
-
Additional standard deduction for
state and local real property taxes
paid in 2008.
Home owners who claim the standard
deduction would get an additional
deduction for state and local real
property taxes for 2008. The
maximum amount that may be taken for
this additional standard deduction
is the lesser of the real estate
taxes paid or $500 for single
taxpayers and $1,000 for joint
filers. This may help older clients
who have paid off their mortgages,
or clients in states with little or
no income tax to itemize.
|
THE 2007
TAX SEASON:
| New recordkeeping
requirements for cash contributions.
You cannot deduct a cash contribution,
regardless of the amount, unless you
keep as a record of the contribution a
bank record (such as a canceled check, a
bank copy of a canceled check, or a bank
statement containing the name of the
charity, the date, and the amount) or a
written communication from the charity.
The written communication must include
the name of the charity, date of the
contribution, and amount of the
contribution. For more information, see
Publication 526, Charitable
Contributions. |
|
The following tax benefits have
expired and will not apply for 2007.
-
Relief granted for Hurricanes
Katrina, Rita, and Wilma.
-
Qualified electric vehicle credit.
|
|
Mortgage Insurance
Premiums Treated as Home Mortgage
Interest
Premiums that you pay or accrue for
"qualified mortgage insurance" during
2007 in connection with home acquisition
debt on your qualified home are
deductible as home mortgage interest. |
|
THE 2006
TAX SEASON:
| IRS telephone tax refund!
In general, anyone who paid the
long-distance telephone tax will get the
refund on their 2006 federal income tax
return. This includes individuals,
businesses and nonprofit organizations.
The IRS is making it easier for
taxpayers by offering a standard refund
amount between $30 and $60, so they
don’t need to gather old phone bills. |
|
TAX Breaks Continue!
12/11/06 - Congress has recently
passed legislation to continue several deductions that had expired
at
the end of 2005. Ask your
CPA how you can take advantage of these deductions.
Hybrid Tax Credits!
Did you know you can receive a
tax credit for the purchase of a Hybrid vehicle? Ask your CPA
which vehicles qualify for the
credit.
TAKE A LOOK AT
THESE OFTEN MISSED DEDUCTIONS.
Tax Credits
for energy efficient home improvement purchases
Sales Tax
deduction for major purchases (i.e. auto, boat, etc)
Retirement
Plan Contribution
Depreciation and Section 179
Home Office
deduction.
Unreimbursed job expense and job
hunting expenses.
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