Category: Federal Income Tax

Economic Recovery Payment

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.

Tax Center to Assist Unemployed Taxpayers

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!)

Help! It’s time for my tax appointment!

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.

The Sky is Falling-Paulson as Chicken Little

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.’ ”

Lent is Coming-Consider a Financial Fast

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money,” which appears in The Post on Thursday and Sunday. Her award-winning column is also carried in more than 120 newspapers. Her third book, “The Power To Prosper,” is scheduled to be released in January 2010. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges. She was recently selected to receive the Distinguished Alumni Award from The Johns Hopkins University.

See her column on a financial fast. Good words here.

Savings Opportunities for 2009 from Tax Law Changes

IRS Fact Sheet FS 2010-4 provides a summary of new and expanded deductions and credits available for the 2009 filing season.  Here are some topics that are covered:

  • American Opportunity Credit helps pay for the first four years of college.
  • Many energy improvements qualify for expanded tax credits.
  • New vehicle purchase incentives.
  • Tax credits for low and moderate income workers.
  • Standard deduction increases for most taxpayers.

Read the full text at the link provided above.

Extended Business Carryback Period

IRS Rev. Proc. 2009-52 provides guidance under Section 13 of the Worker, Homeownership, And Business Assistance Act 2009.  Section 13 allows taxpayers to elect to carry back an applicable NOL for a period o 3, 4, or 5 years, to offset taxable income in those preceding taxable years.  It applies to NOLs for a taxable year ending after December 31, 2007, and beginning before January 1, 2010.  An election must be attached to the appropriate carryback form.  Here is sample language from the IRS website:

ABC Company is electing to apply Section 172(b)(1)(H) under Rev. Proc. 2009-52.  ABC Company is not a TARP recipient and was not an affiliate of a TARP recipient during 2008 or 2009.  We are electing a 4 year carryback period.