by steve | Mar 4, 2010 | Tax Help, Uncategorized
The IRS News wire just posted their key tips regarding Debt Forgiveness. This is for your reading pleasure
If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.
Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
The limit is $1 million for a married person filing a separate return.
You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
Proceeds of refinanced debt used for other purposes ? for example, to pay off credit card debt ? do not qualify for the exclusion.
If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions ? such as insolvency ? may be applicable. IRS Form 982 provides more details about these provisions.
If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
Should you have any questions regarding your personal situation please fell free to call us.
by steve | Mar 3, 2010 | Tax Help, Uncategorized
IRS Newswire has come put with their latest tax credit tips. do they apply to you?
You might be eligible for a valuable tax credit. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are even refundable, which means you might receive a refund rather than owe any taxes at all. Here are five popular tax credits you should consider before filing your 2009 Federal Income Tax Return:
The Earned Income Tax Credit is a refundable credit for certain people who work and have earned income from wages, self-employment or farming. Income, age and the number of qualifying children determine the amount of the credit. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
The Retirement Savings Contributions Credit, also known as the Saver?s Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver?s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).
The Health Coverage Tax Credit pays up to 80% of the health insurance premiums for eligible Trade Adjustment Assistance recipients and Pension Benefit Guaranty Corporation payees. You can complete IRS Form 8885, Health Coverage Tax Credit to claim the credit on your tax return. To determine if you?re qualified, or to find out how to receive the HCTC each month, visit IRS.gov and search for ?HCTC.?
There are other credits available to eligible taxpayers. Since many qualifications and limitations apply to the various tax credits, taxpayers should carefully check their tax form instructions, the listed publications and additional information available at IRS.gov. IRS forms and publications are also available by calling 800-TAX-FORM (800-829-3676).
Should you have any questions please call Fresh Start Tax
by steve | Mar 1, 2010 | Tax Help, Uncategorized
Whistle blower – Informant Award
The IRS Whistle blower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistle blower, it can award the whistle blower up to 30 percent of the additional tax, penalty and other amounts it collects.
Who can get an award?
The IRS may pay awards to people who provide specific and credible information to the IRS if the information results in the collection of taxes, penalties, interest or other amounts from the non-compliant taxpayer.
The IRS is looking for solid information, not an ?educated guess? or unsupported speculation. We are also looking for a significant Federal tax issue – this is not a program for resolving personal problems or disputes about a business relationship.
What are the rules for getting an award?
The law provides for two types of awards. If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. If the whistle blower disagrees with the outcome of the claim, he or she can appeal to the Tax Court. These rules are found at Internal Revenue Code IRC Section 7623(b) – Whistle blower Rules.
The IRS also has an award program for other whistle blowers – generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million. In addition, the awards are discretionary and the informant cannot dispute the outcome of the claim in Tax Court. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) – Informant Claims Program, and some of the rules are different from those that apply to cases involving more than $2 million.
If you decide to submit information and seek an award for doing so, use IRS Form 211. The same form is used for both award programs.
by steve | Feb 24, 2010 | Tax Help, Uncategorized
From the IRS NEWSWIRE facts about investment income of children
The IRS wants parents to be aware of the tax rules that affect their children?s investment income. The following four facts will help parents determine whether their childs investment income will be taxed at the parents? rate or the childs rate.
1. Investment Income Children with investment income may have part or all of this income taxed at their parents? tax rate rather than at the childs rate. Investment income includes interest, dividends, capital gains and other unearned income.
2. Age Requirement The childs tax must be figured using the parents? rates if the child has investment income of more than $1,900 and meet one of three age requirements for 2009:
The child was born after January 1, 1992.
The child was born after January 1, 1991, and before January 2, 1992, and has earned income that does not exceed one-half of their own support for the year.
The child was born after January 1, 1986, and before January 2, 1991, and a full-time student with earned income that does not exceed one-half of the childs support for the year.
3. Form 8615 To figure the child’s tax using the parents? rate for the childs return, fill out Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, and attach it to the child’s federal income tax return.
4. Form 8814 When certain conditions are met, a parent may be able to avoid having to file a tax return for the child by including the childs income on the parent?s tax return. In this situation, the parent would file Form 8814, Parents’ Election To Report Child’s Interest and Dividends.
by steve | Feb 24, 2010 | Tax Help, Uncategorized
From the IRS NEWSWIRE facts about investment income of children
The IRS wants parents to be aware of the tax rules that affect their children?s investment income. The following four facts will help parents determine whether their childs investment income will be taxed at the parents? rate or the childs rate.
1. Investment Income Children with investment income may have part or all of this income taxed at their parents? tax rate rather than at the childs rate. Investment income includes interest, dividends, capital gains and other unearned income.
2. Age Requirement The childs tax must be figured using the parents? rates if the child has investment income of more than $1,900 and meet one of three age requirements for 2009:
The child was born after January 1, 1992.
The child was born after January 1, 1991, and before January 2, 1992, and has earned income that does not exceed one-half of their own support for the year.
The child was born after January 1, 1986, and before January 2, 1991, and a full-time student with earned income that does not exceed one-half of the childs support for the year.
3. Form 8615 To figure the child’s tax using the parents? rate for the childs return, fill out Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, and attach it to the child’s federal income tax return.
4. Form 8814 When certain conditions are met, a parent may be able to avoid having to file a tax return for the child by including the childs income on the parent?s tax return. In this situation, the parent would file Form 8814, Parents’ Election To Report Child’s Interest and Dividends.
by steve | Feb 23, 2010 | Tax Help, Uncategorized
The IRS offers five tips for taxpayers who have moved or are about to move. If you’ve changed your home or business address, make sure you update that information with the IRS to ensure you receive any refunds or correspondence from the IRS.
1. How to Change Your Address You can change your address on file with the IRS in several ways:
Correct the address legibly on the mailing label that comes with your tax package;
Write the new address in the appropriate boxes on your tax return;
Use Form 8822, Change of Address, to submit an address or name change any time during the year;
Give the IRS written notification of your new address by writing to the IRS center where you file your return. Include your full name, old and new addresses, Social Security Number or Employer Identification Number and signature. If you filed a joint return, be sure to include the information for both taxpayers. If you filed a joint return and have since established separate residences, both taxpayers should notify the IRS of your new addresses; and
Should an IRS employee contact you about your account, you may be able to verbally provide a change of address.
2. Notify Your Employer Be sure to also notify your employer of your new address so you get your W-2 forms on time.
3. Notify the Post Office If you change your address after you’ve filed your return, don’t forget to notify the post office at your old address so your mail can be forwarded.
4. Estimated Tax Payments If you make estimated tax payments throughout the year, you should mail a completed Form 8822, Change of Address, or write the IRS campus where you file your return. You may continue to use your old pre-printed payment vouchers until the IRS sends you new ones with your new address. However, do not correct the address on the old voucher.
5. Postal Service The IRS does use the Postal Service. change of address files to update taxpayer addresses, but it’s still a good idea to notify the IRS directly.
These tips are provided to you from Fresh Start Tax directly from the IRS Newswire
