Update on First Time Home Buyer Credit

Credit for First Time Home Buyer
Credit for First Time Home BuyerKey PointsThere is a credit available to individuals who purchased their first home after April 8, 2008, and before December 1, 2009. So Hurry up the clock is ticking on this credit. This is an extension of the previous date of April 2009.

For homes purchased in 2008, you may be eligible for a credit of up to $7500, which is basically an interest free loan due and payable over the next 15 years in equal annual installments beginning in 2010.

For homes purchased in 2009, you may be eligible for a credit of $8000, the credit does not have to be paid back unless the home ceases to be the taxpayers primary residence during the three year period following the purchase date. The credit cannot be claimed before the closing date. You may amend your return if you have filed already in order to take the credit.

Taxpayers who have not owned another home at any time during the three years prior to the date of purchase are considered first time home buyers.The credit is claimed on a new form 5405.As with most credits, it is subject to income limitations.

New Payroll Tax form for some New York Businesses

A New : New York State Payroll Tax

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.)

Your MCTMT due is .34% (.0034) of your payroll expenses for all covered employees for each calendar quarter. The tax is remitted on a new quarterly form (MTA-305) Employer’s Quarterly Metropolitan Commuter Transportation Mobility Tax Return.

You can choose to pay this tax using the PrompTax program if you currently use the PrompTax program to file New York State withholding tax.

DUE DATES

Period	Due date
March 1, 2009 to September 30, 2009*	November 2, 2009
October 1, 2009 to December 31, 2009	February 1, 2010

For 2010, the return will be due quarterly with your other payroll tax returns so they will be due:

Quarter	Due date
January 1 to March 31	April 30
April 1 to June 30	July 31
July 1 to September 30	October 31
October 1 to December 31	January 31

You are not required to file until the first quarter when your payroll expense exceeds $2,500. However, if you previously filed but have a payroll expense of less than $2,500 for a later quarter, you must file a return showing no tax due.

Mortgage Workouts : What you should know

There is tax relief for struggling homeowners.

If your mortgage debt is partly or entirely written off/ canceled (forgiven) during 2007 through 2012; You may be able to claim a special tax relief for your federal taxes.

Here are few things the IRS wants you to know about mortgage debt forgiveness.

A. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

B. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.

C. The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

D. 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, other kinds of tax relief – based on insolvency, for example – may be available. In this economy, more and more clients are reducing their credit card debt via debt settlement companies, this will result in you receiving a 1099-C for the amount of debt canceled. You will be responsible to pay income taxes (ordinary income) on that amount.

E. If your debt is reduced or eliminated you should receive a Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven(canceled) and the fair market value of any property given up through foreclosure.

F. People who qualify claim the special exclusion by filling out Federal Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to their federal income tax return for the year.

For more information contact your CPA or tax professional.

Tax Tips for New Businesses

Thinking about Starting A New Business?

Here a few quick tax tips to help you along the way.

First, you must decide what type of business entity you are going to establish. This will determine how you are taxed by the IRS, State, and local (Including but not limited to Income tax, self-employment tax, employment or payroll taxes, and excise tax). The most common types of businesses are LLCs, sole proprietorship's, partnerships, corporations and S corporations.

Make sure you get An Employer Identification Number (EIN). Many people who use simple online sites to get Incorporated often neglect to get an EIN#. This is needed to open an bank account as well as report taxes to the various government agencies.

Keep Good records. If you can, purchase a computer based bookkeeping system such as QuickBooks. A good set of quickbooks is a valuable asset to have in case of a government audit as well as a client billing dispute. Also, there is a saying " Good Data In, Good Data out", so either learn quickbooks from a Quickbooks Proadvisor or hire a local bookkeeper to do the data entry for you.

Plan ahead. Many taxpayers fail to realize until the end of the year that they may owe tax. This occurs primarily because the taxpayer fails to notify his or her accountant of the activity inside the business until year-end. Ask your accountant to visit you at least quarterly to assure that your estimated tax payments are sufficient to cover your projected tax bill.

Filing Tax Returns Late or Paying Tax Returns Late

Filing Tax Returns Late or Paying Tax Returns Late

Which is the lessor of these two issues?

In this economy, it is not impossible to believe that small business owners or individual tax payers may have a hard time paying or completing their respective tax returns. There are options available for taxpayers who need assistance in preparing or paying their taxes.

Filing Late or not Filing

It is always in your best interest to file your taxes timely. If you cant file timely, prepare an extension to allow yourself additional time to prepare your returns. However, your tax (Money0 is due on the original due date either March 15th or April 15th depending on whether you are a corporation or a partnership.

If your return is late, and you have not filed; You should do so as soon as possible to avoid additional interests and penalties.

Paying Your Taxes

There are multiple options available to pay your taxes these days. From credit cards, to check, to the IRS's EFTPS (Electronic Funds Transfer Payment System). If you cannot pay your complete tax bill on time, you should pay as much as possible as soon as possible to reduce the amount of interest and penalties that will accrue.
Based on the circumstances, a taxpayer could qualify for an extension of time to pay, an Installment Agreement, temporary delay, or Offer in Compromise from the IRS. You must meet specific reasons and follow the appropriate procedures in order to qualify.

Keep in mind that with low borrowing rates, it may be cheaper to borrow the money to pay your taxes from a creditor rather than going on a n installment agreement with the IRS.

Retirement Plan Due Dates

Is your Corporate or Partnership return on extension? Do you have questions regarding your retirment plan contribution due dates? This post will help outline those dates for you so you can properly plan for the upcoming year as well as finalize your tax return that is on extension.


Consider a SEP
Simplified Employee Pension plans (SEPs) can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) for all employees (including the employer). A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.

SEP Plans can be extablished (started) as late as the extended due date of the tax return. That means if your corporation as a December 31, 2008 year end, you can start and fund your SEP for your business as late as the extended due date of September 15, 2009.

Check out IRS Publication 560 for more details or contact your Local CPA.

What Happens After I File?

What Happens After I File My Taxes with my Staten Island Accountant?

Most people have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.

Refund Information
If you dont want to call your Staten Island Accountant or local CPA, you can always go through the IRS. You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:

• Go to IRS.gov, and click on “Where’s My Refund.”
• Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• Call 1-800-829-1954 during the hours shown in your form instructions.

What Records Should I Keep?

Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.

Change of Address

If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.

What If I Made a Mistake?

Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:
1. You did not report some income,
2. You claimed deductions or credits you should not have claimed.
3. You did not claim deductions or credits you could have claimed.
4. You should have claimed a different filing status. Taxpayers who filed a joint return cannot choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.
5. If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.