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
by steve | Feb 23, 2010 | Tax Help, Uncategorized
The IRS Newswire Service and the latest info on Retirement Saving Contributions.
If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be eligible for a tax credit. Here are six things you need to know about the Retirement Savings Contributions Credit:
1. Income Limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of:
Single, married filing separately, or qualifying widow(er), with income up to $27,750
Head of Household, with income up to $41,625
Married Filing Jointly, with income up to $55,500
2. Eligibility requirements To be eligible for the credit you must have been born before January 2, 1992, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return.
3. Credit amount If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.
4. Distributions When figuring this credit, you generally must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date – including extensions – for filing the return for the credit year.
5. Other tax benefits The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.
6. Forms to use To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.
For more information, review IRS Publication 590, Individual Retirement Arrangements (IRAs), Publication 4703, Retirement Savings Contributions Credit, and Form 8880. Publications and forms can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).
If you have any questions regarding their newswire program call us at Fresh Start Tax
by steve | Feb 19, 2010 | Tax Help, Uncategorized
The IRS Newswire has posted the latest facts about Capital Gains, here is what the Uncle had to say:
Have you heard of capital gains and losses? If not, you may want to read up on them because they might have an impact on your tax return. The IRS wants you to know these ten facts about gains and losses and how they could affect your tax situation.
Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
When you sell a capital asset, the difference between the amount you sell it for and your basis ? which is usually what you paid for it ? is a capital gain or a capital loss.
You must report all capital gains.
You may deduct capital losses only on investment property, not on property held for personal use.
Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.
The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2009, the maximum capital gains rate for most people is15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.
If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13of Form 1040.
If you have any questions about the IRS Newswire, give us a call.
by steve | Feb 18, 2010 | Tax Help, Uncategorized
Are gambling winnings taxable?
Gambling Winnings Are Always Taxable Income
Gambling winnings are fully taxable and must be reported on your tax return. Here are the top seven facts the Internal Revenue Service wants you to know about gambling winnings.
Gambling income includes ? but is not limited to ? winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other non-cash prizes.
Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.
The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ. This rule applies regardless of the amount and regardless of whether you receive a Form W-2G or any other reporting form.
If you itemize deductions, you can deduct your gambling losses for the year on line 28 of Schedule A, Form 1040.
You cannot deduct gambling losses that are more than your winnings.
It is important to keep an accurate diary or similar record of your gambling winnings and losses.
To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
