Tax hikes for the rich

Tax hikes for the rich: Can the economy afford them? http://money.cnn.com/2010/07/26/news/economy/Bush_tax_cuts/index.htm

Big help for condo buyers

F.H.A.’s new rules opens an important lending option to condo buyers. The FHA has relaxed their rules attracting more borrowers to purchase condos.
1. Borrowers don't need excellent credit. This opens doors to borroweres with weak credit
2. Borrrow amount increase from $362,790 to $729,750
3. More condos will be able to qualify for the FHA loans.
The downside if you qualify and take out a FHA loan is that borrowers must pay an FHA insurance premium which is similiar to the PMI.

$8K Homebuyer Tax Credit extended

President Obama signed the extension and expansion of the Homebuyer Tax credit. The credit amount is 10% of the the purchase price of the primary residence, up to a maximum of $8,000 for 1st time home buyers and $6,500 for repeat buyers who owned and lived in their home for at least 5 years. First time home buyers are taxpayers who have not owned a home in the past 3 years. Purchase agreements must be signed by 4/30/10, and closings must be finalized by 6/30/10. To qualify for the full credit,the income limitations for individuals are $125K and joint filers are $225K. To qualify for the reduced credit, the income limitations for individuals are $145K and joint filers are $245K.

1st Time Homebuyer credit extended

The 1st time homebuyer credit of $8,000 which has been set to expire in November has been extended to 2010. The tax credits would be available to home buyers who sign sales agreements by the 4/2010. Taxpayers would have until 6/2010 to close on their new homes.
In addition, the credit is now offered to taxpayers who already own a home for at least 5 years. Qualified taxpayers may qualify up to $6,500 for this credit.

Metropolitan Commuter Transportation Mobility Tax

Metropolitan Commuter Transportation Mobility Tax

Just a reminder that the 1st payment of the new Metropolitan Commuter Transportation Mobility Tax is due Monday, November 2, 2009. The New York State Department of Taxation and Finance has contacted more than 700,000 employers and self-employed individuals doing business in the Metropolitan Commuter Transportation District who may be required to pay this new tax. The District encompasses the five boroughs of New York City and the Counties of Dutchess, Nassau, Orange, Rockland, Suffolk and Westchester.
The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a new tax imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). This department administers the tax for the Metropolitan Transportation Authority. (The MCTD includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.) The tax applies to:
• Employers who are required to withhold New York State income tax from wages and who have payroll expenses exceeding $2,500 in any calendar quarter. The tax is retroactive to March 1, 2009 for employers.
• Self-employed individuals who have net earnings in the District that exceed $10,000 for the tax year. The tax is retroactive to January 1, 2009 for self-employed individuals

A couple of new tax laws for 2009

A couple of new tax laws for 2009

If you purchased a motor vehicle from 2/09 through the end of the year, you may qualify to deduct the sales tax on your income tax return up to $49,500 on the new car. If you were planning to purchase a new vehicle for home or business, this provides an excellent incentive for taxpayers to consider. You must be the 1st owner of the car. Tax benefit is subject to taxpayer’s adjusted gross income.

If you’re a small business owner, you may qualify to reduce your 2009 estimated taxes. The estimated payments are 90% of your 2008 or projected 2009 tax liability, whichever amount is smaller. In addition to lower estimated taxes, small business owners may take advantage of increased section 179 deduction for up to $250K. This deduction allows small business owners to deduct most tangible business property such as office equipment, computers and the vehicles.

Oct 15 Deadline

Reminder - The Oct 15 deadline approaches for taxpayers who:
1. applied for the 6 month extension for their 2008 tax return
2. it is also a special voluntary disclosures by taxpayers with assets in previously undisclosed offshore accounts

Several tax facts about the American Opportunity Tax Credit

The new American Opportunity Tax Credit provides many benefits. One of the benefits of the credit is that many taxpayers will be able to apply the cost of qualified educational expenses at a qualified educational institution for the next two years under the American Opportunity Tax Credit. In addition, the credit is a refundable credit which means that even if the taxpayer has no tax liability, they may qualify to receive cash back. Below are several important tax tips about the American Opportunity Tax Credit.
1. The full credit is limited to $2,500. This is broken down by first $2,000 paid is applied as credit. Then extends to 25% of the next $2,000 up to $500 for qualifying expenses.
2. The credit is a refundable credit up to $1,000 per student.
3. The credit is available for qualified expenses for higher education in 2009 and 2010. Qualified expenses is defined as expenses related to tuition and related fees, books and other required materials for course.
4. The credit is dependant on the taxpayers income. It phases out for higher income taxpayers.
5. The credit is available for any of the first 4 years of post-secondary education.



http://www.irs.gov/newsroom/article/0,,id=213584,00.html

First Time Homebuyer Credit- expiring soon

With the market the way it is, the American Recovery and Reinvestment Act has placed several programs for taxpayers to take advantage. One of the popular one is the First Time Home Buyer Credit. This credit has provided tax benefits to over 1.4 million taxpayers and counting. Unfortunately, the First Time Home Buyer Credit is available for a limited time. As a result, the IRS has announced that in order to qualify for the credit, potential homebuyers must close on their new home by 11/30/09 and complete their first-time home purchase before 12/1/09.
Just a quick reminder about the First Time Homebuyer Credit- The Credit is available to US citizens or residents purchasing a qualified home in the United States. This credit is 10% of the purchase price or up to $8,000 maximum. In addition, homebuyers with qualifying income levels could not have owned a home in the past 3 years. Another added benefit is that this credit is a refundable credit, meaning the taxpayer will be able to receive the money even if they owe no tax or the credit is more than the tax liability.



source: http://www.irs.gov/newsroom/article/0,,id=213375,00.html

Several facts about New Vehicle Sales and Excise Tax Deduction

For 2009, there are special tax deductions for taxpayers who purchase new motor vehicles. The sales and excise tax may qualify for deduction for qualified taxpayers. For taxpayers in states where sales tax is not applied may be eligible to deduct other fees and/or taxes. Listed below are several facts about new vehicle sales and excise tax deduction-
1. Qualified vehicles generally include new car, motorcycles, light trucks that weigh $8,500 pounds or less and motor homes (not subject to weight limit)

2. Qualifying vehicles up to $49,500 of the purchase price may qualify to deduct the state and local sales and excise taxes on their 2009 returns.
3. Purchase of the qualified vehicle must be after Feb 16, 2009 and before Jan 1, 2010
4. Taxpayers who purchase new motor vehicles in states that do not have state sales taxes may be entitled to deduct other fees or taxes assessed on the purchase of those vehicles. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee. These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
5. This deduction applies to taxpayers who takes the itemized and standard deductions
6. The amount of the deduction is phased out for taxpayers after a certain income threshold




source: http://www.irs.gov/newsroom/article/0,,id=213200,00.html

529 Education Savings Plan- Extended

With rising tuition costs, 529 plans has been growing in popularity since it is an attractive way to save for college. 529 plans allow the taxpayer to contribute money in the plan and withdraw the money tax-free so long as it is used for qualified education-related expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books, supplies, equipment and special needs services. In addition, it can be used to buy computer equipment and services for an eligible student. For 2009 and 2010, 529 plan benefits have been extended to expenses for computer equipment and technology or internet access and related services to be used by a qualified student while enrolled at qualified educational institution.

IRS provides savings & retirement initiatives to help Americans save for the future

The Treasury and IRS has issued some initiatives for retirement and savings. Listed below are a few ways to help save for the future and retirement.
1. Automatic enrollment in retirement plans- The US Treasury and IRS has issued guidance for employers to add automated enrollment in their 401(K) or SEP IRA plans to boost up savings and retirement.
2. Receive your tax refund as a U.S. Savings Bond- For the 2010 tax season, taxpayers will be able to convert their income tax refunds into I Savings Bonds
3. Unused vacation days- The Treasury and the IRS have issued guidance where for those employees who receive cash payment for unused vacation days (or other similar leave) at the end of the year or at termination of employment. These guidelines addresses the amount the employee is entitled to receive for the unused days to be put in by the employer in employee’s retirement plan as employer contribution or elective 401(K) contributions.


Source: http://www.irs.gov/retirement/article/0,,id=212061,00.html

Did you have a child this year?.. You may be able to qualify for child tax credit and reduce your tax liability.

Did you have a child this year? You may be able to qualify for child tax credit and reduce your tax liability up to $1,000 per qualifying child. A qualifying child is someone who meets the following:
1. Was under the age of 17 by 12/31/08
2. The child is your son, daughter, step child, adopted child, eligible foster child, brother, sister or a descendant of any of these individuals
3. The child did not provide over 50% of their own support
4. Lived with you for more than 50% of 2008.
5. Is a US citizen, US national or a US resident
There are exceptions to the general rule and the credit amounts are phased-out after certain income levels.

Tax tips for sudents

It's back to school time and many students will be going back to school. Below are several of tax tips.
1. Scholarships may qualify to be tax-free if you are a candidate for a degree at an eligible institution and the scholarships are used for qualified education expenses. Expenses such as room, board and travel generally do not qualify.
2. Textbook Tax credit- The credit will give students up to $2,500 for their out-of-pocket expenses, focusing on textbooks. The first $2,000 in out-of-pocket expenses goes toward the tax credit and is returned.
3. The American Opportunity Credit is available and allows more flexibility for taxpayers to qualify for this credit. For 2009, the Hope credit has changed substantially. Prior to 2009, the credit would apply only to the first 2 yrs of college. Now, the credit applies to all 4 yrs of college. In addition, the credit increased to $2,500 (100% of the first $2K of qualified expenses plus 25% of the next $2k of qualified expenses for a total of $2,500). Any amount more than $2,000 will have 25% of the remaining expenses paid back up to $2,500. Another change to this credit is that up to 40% of the credit is refundable. This means that whether or not you owe taxes, you may still qualify to receive up to $1,000.

Importance of recordkeeping and documentation

It is very important to keep accurate records and documentations from all income and expense related to your tax returns for individuals and small businesses.

The following are the common areas where individual taxpayers should be aware of:
1. receipts
2. mileage logs
3. credit card and bank statements
4. broker statements
5. home purchase.improvement records
6. home rental records
7. other records that will support your deductions/credits

The following are common areas where small business taxpayers should be aware of:
1. employment/payroll tax records
2. supporting documentations related to expenses
3. supporting documentations related to income
4. bank statements, credit card statements, cash register, canceled checks, etc.

It is always good to have more than enough documentation. When your return gets selected for further questioning, having proper recordkeeping and documentation may avoid headaches when you can provide the items in question.



source: http://www.irs.gov/newsroom/article/0,,id=172250,00.html

Check your withholdings to avoid any surprise

If you're an employee, your employer is required to withhold taxes (FICA, FUTA, etc.) from your paycheck. The amount your employer withholds from your paycheck depends on how many exemptions you claim on your w4 when you started the job.

Did you have a baby? Did you get a divorce? Did you get married? These are all occurances that happens but we do not think about the tax implications of these matters. Check your withholdings and adjust accordingly to reduce your chances any tax surprises at year end. Below is link to the IRS website with the withholdings calculator.
http://www.irs.gov/individuals/page/0,,id=14806,00.html


source: http://www.irs.gov/newsroom/article/0,,id=210152,00.html

Were you a victim of a natural disaster or theft this year? Here are some tax tips:

If you're a victim of a natural disaster or theft this year, then here are several things you should be aware of:

1. In order to qualify to claim deductions for casualty and theft loss, you must itemize your return on Schedule A.
2. Disaster damages are not minor wear and tear "damage" of the property. It must be substantial, sudden, unusual and unexpected.
3. Generally, casualty and theft losses covered by insurance is not deductable, unless the amount of loss is greater than the reimbursement by the insurance and the taxpayer files timely.
4. The deduction is generally the lesser of your adjusted basis or the decrease in value of the property.
5. If it's personal property, then your loss is subject to 10% AGI limitation and also further reduced by additional $500. If it's business property, then your loss is your adjusted basis, less salvage value, less reimbursement from insurance and the additional $500 reduction and 10% does not apply.
6. Different rules apply to "Federally-Declared Disaster" areas.

source: http://www.irs.gov/newsroom/article/0,,id=212012,00.html

Do you donate to charitable organizations? Here are some tax tips regarding chartibale contributions-

1. In order to receive charitable contribution deduction, you must itemize your deductions using Schedule A.
2. Make sure the organization is a bonafide qualified organization.
3. Keep good records, receipts and documentations.
4. Contributions of $250 or more must have a written acknowldgement from the organization.
5. If you contributed a non-cash item with a fair value of $500 or more, you must complete Form 8283 and attach with your return.

source: http://www.irs.gov/newsroom/article/0,,id=172936,00.html

UBS agreed to reveal 4,450 wealthy Americans holding offshore accounts. US will soon begin criminal prosecution of people using foreign bank accounts to evade income taxes.

A hedge fund bet millions that natural gas prices will triple by winter as commodity prices slides to a seven-year low.