Getting the Recovery Rebate Right

How to Get the Recovery Rebate Credit Right

The IRS sent taxpayers nearly 119 million stimulus payments last year. There are three ways individuals can find out how much they received:

1. Check the amount listed on Notice 1378, which the IRS mailed last year to individuals who received the economic stimulus payment.

2. Go to the How Much Was My Stimulus Payment? tool that is available on the IRS Web site, IRS.gov. This can provide the correct amount in a matter of a few seconds.

3. Individuals can call the IRS at 1-866-234-2942. After a brief recorded announcement they can select option one to find out the amount of their economic stimulus payment. They will need to provide their filing status, Social Security Number and number of exemptions.

With the amount of last year’s economic stimulus payment in hand, the taxpayer can then enter the figure on the recovery rebate credit worksheet or in the appropriate location when your Tax preparaer requests it.

If the taxpayer or preparer is using tax software, the amount of the recovery rebate credit will automatically be calculated and reported properly. If the taxpayer is using the paper method, the recovery rebate credit, as determined through the worksheet, should be reported on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ.

If there is any question at all as to the amount that should be reported for the recovery rebate credit, the taxpayer or preparer should enter "RRC" next to the appropriate line above, and the IRS will determine whether a recovery rebate credit is due, and, if so, how much.

Some of the major factors that could qualify you for the recovery rebate credit include:

Your financial situation changed dramatically from 2007 to 2008.
You did not file a 2007 tax return.
Your family gained an additional qualifying child in 2008.
You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as dependent by someone else in 2008.

New S-Corporation Franchise Tax Minimum Tax Payments

This is new for Tax Year 2008.

New York S corporations taxable under Article 9-A are required to pay
the fixed dollar minimum tax.

Fixed dollar minimum tax for all New York S corporations.
Not more than $100,000 $ 25 *
More than $100,000 but not over $250,000 $ 50 *
More than $250,000 but not over $500,000 $ 175 *
More than $500,000 but not over $1,000,000 $ 300
More than $1,000,000 but not over $5,000,000 $ 1,000
More than $5,000,000 but not over $25,000,000 $ 3,000
Over $25,000,000 $ 4,500

Schedule A- Either State & Local Income Tax or Sales Tax but not both

Another Tax tip from your Staten Island CPA

If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. This is especially helpful if you live in a state with no income tax or you live in a state with income tax, like New York, but purchased a large item (like a car, truck, boat, or appliances). Many smaller taxpayers forget this rule and forget to take the higher amount on their schedule A.

Retirement Contribution Due Dates

Here are some quick Retirement Contribution tips for 2009. These are federal tips and are not New York State specific.

1. Fund your retirement accounts. The deadline for this would be April 15th, 2009 for a 2008 tax year contribution to your retirement account (Traditional IRA or Roth IRA). However, if you have a Keogh or SEP and you get a personal filing extension to October 15, 2009, you can wait until then to put 2008 money into those retirement accounts.

Tips for Recovery Rebate Credit

Four Tips to Help People Avoid Errors On the Recovery Rebate Credit

Most people who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. A small number of taxpayers who did not receive the full economic stimulus payment last year may be eligible to claim the Recovery Rebate Credit on their 2008 federal income tax return.

Figuring the Recovery Rebate Credit incorrectly or entering inaccurate information will delay the processing of your tax return and any refund due.

Below are the four things every person should know about this one-time credit(only for 2008 tax year), which is related to last year’s Economic Stimulus Payment:

1. You do not have to pay back your Stimulus Payment and the payment is not taxable.

2. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.

3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:
• Your financial situation changed dramatically from 2007 to 2008.
• You did not file a 2007 tax return.
• Your family gained an additional qualifying child in 2008.
• You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.

4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.

IRS & Free File

Free File is the fast, easy, and free way to prepare and e-file your federal taxes online. The IRS has 2 ways to do so. One way is to utilize a participating company, the other way is to fill in the forms yourself and file them online yourself.

The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies.

Visit www.irs.gov for more details

Credit for First Time Home Buyer

Credit for First Time Home Buyer

Key Points

There is a credit available to individuals who purchased their first home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

The credit is 10 percent of the purchase of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing a joint return; $3,750 for married persons filing separate returns. The full credit is available for homes costing $75,000 or more.

The credit is actually an interest free loan and will be repaid over the next 15 years.
It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

Vacations home do not qualify for 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.