Jun 30

Homebuyer Credit

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On June 29, the House of Representatives by a vote of 409–5 approved H.R. 5623, the Homebuyer Assistance Improvement Act of 2010. This bill would provide first-time homebuyer credit relief to taxpayers who can’t meet a key June 30, 2010, closing date.

H.R. 5623 would amend Code Sec. 36(h)(2) to provide that if a written binding contract to purchase a principal residence was entered into before May 1, 2010, the credit may be claimed if the purchase is closed before Oct. 1, 2010. Thus, this extension would allow homebuyers who signed a contract no later than April 30th deadline to complete their closing by the end of September.

The three-month extension of the closing date is intended to provide tax relief for those who couldn’t close on time because of backlogs at lenders and federal programs involved in homebuyer loans. In the words of the bill’s supporters, the three-month extension “will give time for all the new mortgages to be processed and not punish those homeowners who have been delayed through no fault of their own.”

The Senate will likely vote on the bill by July 1.

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May 21

Donations of Unreimbursed Expenses

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May I deduct as charitable contributions expenses that I incur on behalf of a charitable organization that are not reimbursed?

Per IRS Publication 1771:

If a donor makes a single contribution of $250 or more in the form of unreimbursed expenses, e.g., out-of-pocket transportation expenses incurred in order to perform donated services for an organization, then the donor must obtain a written acknowledgment from the organization containing:

    a description of the services provided by the donor

    a statement of whether or not the organization provided goods or services in return for the contribution

    a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution

    a statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits (described earlier in this publication), if that was the case.

In addition, a donor must maintain adequate records of the unreimbursed expenses. See Publication 526, Charitable Contributions, for a description of records that will substantiate a donor’s contribution deductions.
Example of an unreimbursed expense: A chosen representative to an annual convention of a charitable organization purchases an airline ticket to travel to the convention. The organization does not reimburse the delegate for the $500 ticket. The representative should keep a record of the expenditure, such as a copy of the ticket. The representative should obtain from the organization a description of the services that the representative provided and a statement that the representative received no goods or services from the organization.
Publication 1771 also reviews the disclosure requirements of charitable organizations.
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Apr 12

Combs Apologizes for Rebate Fiasco

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We All Deserve Answers About the Appliance Rebate Program

By Susan Combs

It is not acceptable that thousands of Texans spent hours trying to reserve appliance rebates on Wednesday, April 7, only to be met with dropped calls and an unavailable online reservation system. It is not acceptable to me or the many Comptroller employees who worked diligently to ensure mechanisms were in place to accommodate the extremely high demand we expected. And it certainly isn’t acceptable to the citizens of our state. We all deserve real answers.

With high-value rebates, a large population and limited funds, we knew not everyone interested in the program would be able to reserve rebates. We closely watched similar rebate programs in other states. Within days of seeing the experiences of Iowa and Minnesota, whose systems were overloaded, we were on the phone requiring increased safeguards from Helgeson Enterprises, the company contracted through a competitive bid process to manage our rebate fulfillment. We accurately projected the estimated traffic we thought we would receive in the first few hours. We looked closely at the contractor’s system bandwidth and infrastructure. We provided clear steps they needed to take at a minimum to prepare for Texas.

On our end, we immediately recognized the need to create our own Web front door for the contractor’s online system to provide program information and updates. We took the steps needed to handle millions of hits concurrently to our Texas Powerful Smart site atwww.TexasPowerfulSmart.org. We did it right, and our Web front door handled about 40 million hits in less than 12 hours without fail. This allowed us to provide real-time updates about the contractor’s system and direct people to our e-mail subscription service and Twitter feed for updates to keep them informed of rebates remaining and other important details.

Prior to April 7, at our request, the contractor did a test run of their system and stated that the online reservation system should be able to handle 25,000 users at a time. The wait time for those trying to access the system online was estimated by the contractor at three minutes. Dropped calls were never acceptable to us, and no one should have been kicked out in the middle of an online reservation.

However, problems with their online reservation system began immediately. With their online system unavailable, the phones were completely overloaded. Our agency took thousands of calls as well. Through a conference call on early Wednesday morning, we demanded updates from our contractor on the system status so we could pass along this information via our site and other communication channels.

By mid-morning, the contractor reported their system may have been affected by a Web attack, which consumed about 75 percent of their capacity.

The online reservation system was brought back online at 12:15 p.m., and reservations started flooding in. Just after 2 p.m., all rebate reservations were taken, and the waitlist was opened. It filled by 6 p.m. However, many still reported problems with the system.

To the thousands of frustrated Texans who experienced problems: we are as mad as you are. We are gathering information to identify the full scope of the problem. We have received feedback from more than 15,000 of you, and we are taking action.

Before the end of the day on Wednesday, we sent a letter to Thomas Helgeson, president of Helgeson Enterprises, expressing our dissatisfaction with the company’s performance and requesting specific sets of data that will help us determine whether the company is meeting its contractual obligations for items such as Web site uptime and answer time for phone calls. We also requested a specific description of the steps Helgeson is taking to avoid additional problems with rebate fulfillment.

Not one dollar has been paid to Helgeson. Payment is based on the number of rebate claims processed. This means no payment to Helgeson will be made until Helgeson begins to issue rebate checks to Texans, and we have a team actively monitoring this entire process.


Mar 31

Don’t Forget the Extra Sales Tax!

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Generally, taxpayers may add to the table amount any sales taxes paid on:
  • A motor vehicle, but only up to the amount of tax paid at the general sales tax rate;
  • and an aircraft, boat, home (including mobile or prefabricated), or substantial addition to or major renovation of a home, if the tax rate is the same as the general sales tax rate;
  • sales tax paid on materials purchased to build a home or substantial addition or to perform a major renovation.

Motor vehicles include cars, motorcycles, motor homes recreational vehicles, sport utility vehicles, trucks, vans and off-road vehicles. Taxpayers may also include any state and local general sales taxes paid for leased motor vehicles.

Here’s a calculator:  Sales Tax Deduction Calculator.

Mar 15

Economic Recovery Payment

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From the IRS website:

A one-time payment of $250 was  made in 2009 to:
  • Retirees, disabled individuals and Supplemental Security Income (SSI) recipients receiving benefits from the Social Security Administration.
  • Disabled veterans receiving benefits from the U.S. Department of Veterans Affairs.
  • Railroad Retirement beneficiaries.
The IRS did not make this payment, unlike last year’s economic stimulus program.   The economic recovery payment will be a reduction to any Making Work Pay credit for which the recipient qualifies. The Making Work Pay credit will be claimed on the recipient’s 2009 tax return filed in 2010. For more information regarding the economic recovery payment and the Making Work Pay credit see these questions and answers.

Taxpayers who can’t recall whether they received the payment may may call the automated telephone service at 1-866-234-2942 and select Option 1. When you call, you will need your social security number, birthdate, and ZIP code available.

Starting March 23, 2010, they may use the Did I Receive a 2009 Economic Recovery Payment? online tool to verify whether they received the payment. Taxpayers may also contact their respective agencies for confirmation before completing and filing their 2009 tax returns in 2010.
Mar 15

Death of a Marriage

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Couples going through a divorce often fare better if they continue to file joint tax returns for as long as they can. Melissa Labant of the American Institute of CPAs said timing is critical, but many divorcing couples will do better if they file jointly and then negotiate who owes what.  Read the full article on filing status here: Wall Street Journal.

Mar 11

Tax Center to Assist Unemployed Taxpayers

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The IRS has set up a web page to give additional assistance to unemployed taxpayers.  There are references to publications that may prove helpful to the unemployed.  IRS also points unemployed taxpayers toward the possibility of starting a new business.  Here’s a video that talks about what to do if you’re unable to pay (IRS uses YouTube!)

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Mar 05

Know a Non-Filer?

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Unclaimed refunds totaling more than $1.3 billion are awaiting nearly 1.4 million people who did not file a federal income tax return for 2006, the Internal Revenue Service announced. However, to collect the money, a return for 2006 must be filed with the IRS no later than Thursday, April 15, 2010.  The IRS estimates that the median unclaimed refund for tax-year 2006 is $604.

Feb 16

Help! It’s time for my tax appointment!

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Here’s a checklist that will help you organize the documents that are necessary for your tax preparer to assist you in the preparation of a complete and accurate return.

  • Estimated tax payments
  • Wages, salaries, and other employee compensation – Forms W-2
  • Pension and annuity income – Forms 1099R
  • Social Security benefits received – Forms SSA
  • Interest income, statements of tax exempt interest earned, and
  • seller-financed mortgages – Forms 1099-INT
  • Dividend income and statements of tax exempt dividend earned – Forms 1099-DIV
  • Miscellaneous income – Forms 1099 or other forms
  • Stock brokerage statements
  • Income from business – Attach a schedule of income and expense for each business
  • Details of home office expenses
  • Capital gains and losses – Forms 1099-B and 1099-S
  • Sale/purchase/refinance of personal residence; home equity loans
  • Job-related moving expenses
  • Rental income – Provide a separate schedule for each property
  • Income from partnerships, estates, trusts, or S corporations – Forms K-1
  • Contributions to retirement plans including IRA’s and ROTH IRA’s
  • Alimony paid/received
  • Itemized deductions including:
  • Medical and dental expenses
  • Taxes (including Sales Tax!)
  • Interest – Mortgage, student loan, other
  • Contributions, including expenses incurred in performing volunteer work, auto mileage
  • Casualty and theft losses
  • Investment-related expenses
  • Employee business expenses
  • Business mileage and travel
  • Child care expenses
  • Education Expenses
  • Please note any changes in dependents or filing status.

ps, a nice bottle of wine is always appropriate.

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Feb 02

The Sky is Falling-Paulson as Chicken Little

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Source: CPA Letter Daily

In his book “On the Brink,” former Treasury Secretary Henry Paulson recounts the 48 hours before Lehman Bros. declared bankruptcy. Paulson explains the conversations he had with various Wall Street CEOs, including Ken Lewis of Bank of America, John Mack of Morgan Stanley and Dick Fuld of Lehman as federal officials and bankers scrambled to find a resolution. Paulson also delves into how he was feeling as he explained the situation to his wife. “ ’What if the system collapses?’ I asked her. ‘Everybody is looking to me, and I don’t have the answer. I am really scared.’ ”

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