Energy Savings Credit for 2009 & 2010

The year end is approaching.  If you were thinking about doing windows, adding insulation, or upgrading your heating or a/c system.  Do so before December 31, 2009 to tke advantage of the credit, up to $1500 on your 2009 tax return.  The credit will also be available in 2010.

The American Recovery and Reinvestment Act (ARRA) provides numerous tax incentives for individuals to invest in energy-efficient products.

Residential Energy Property Credit (Section 1121): The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.
The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient” for purposes of this tax credit

Fake IRS email sends Malware to your computer

Scam E-mail Sends Malicious Software to Recipients' Computers

In recent weeks, a phony e-mail claiming to come from the IRS has been circulating in large numbers. The subject line of the e-mail often states that the e-mail is a notice of underreported income. The e-mail may contain an attachment or a link to a bogus Web page directing taxpayers to their "tax statement." In either case, when the recipient opens the attachment or clicks on the link, they download a Trojan horse-type of virus to their computers. A few of my clients have received this type of fake email and the senders address looked like Official@irs.gov.taxnotices.com Malicious code (also known as malware), of which the Trojan horse is but one example, can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scammer. The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more. The IRS does not send unsolicited e-mails to taxpayers about their tax accounts. Anyone who receives an unsolicited e-mail claiming to come from the IRS should avoid opening any attachments or clicking on any links. People can report suspicious e-mails they receive which claim to come from the IRS to a mailbox set up for this purpose, phishing@irs.gov. Those who believe they may already be victims of identity theft should find out what do by going to the U.S. Federal Trade Commission's Web site, OnGuardOnLine.gov. More information on e-mail scams may be viewed on How to Report and Identify Phishing, E-mail Scams and Bogus IRS Web Sites and Suspicious e-Mails and Identity Theft.

American Opportunity Tax Credit

American Opportunity Tax Credit


Many Parents and college students will be able to offset the cost of college over the next two years under the new American Opportunity Tax Credit.  This tax credit is part of the American Recovery and Reinvestment Act of 2009.


1. The credit, which expands and renames the Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 & 2010.  Qualified tuition and related expenses included tuition, related fees, books, and other required course materials.


2. The credit is equal to 100% of the first $2000 spent and 25% of the next $2000 per student each year.  Basically, the full $2500 credit will be available for taxpayers who paid $4000 or more in qualifying expenses for an eligible student.


3. The full credit is subject to income phase outs (AGI limitations) of $80,000 for single taxpayers and $160,000 for married couples.


4. 40% of the credit is refundable, so even those who owe no tax can get up to $1000 of the credit for each eligible student as cash back.


5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.


6.  You cannot claim the tuition and fess tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit.  You must choose to either take the credit or the deduction, which ever is more beneficial for you.

IRS Extends Offshore Account Disclosure Deadline

IRS Extends Offshore Account Disclosure Deadline for the Last Time....Seriously no more extensions

The Internal Revenue Service has again extended the deadline for taxpayers to make voluntary disclosures of the unreported income they have stashed in hidden offshore accounts, but warned this would be the final extension.
The deadline was originally supposed to be Sept. 23, 2009  but has been extended to a new deadline of Oct. 15, 2009 “Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution,” said the IRS.  We are talking big fines here in excess of $10,000 per year (Consult with your CPA or Tax attorney for account specific penalties)

IRS officials decided to extend the deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS said it is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it. The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.

This is all a component of the IRS Voluntary Disclosure as seen Here: http://www.irs.gov/newsroom/article/0,,id=104361,00.html

The September 23, 2009, deadline for certain FBAR (Foreign Bank and Financial Accounts) filers and certain offshore-related information returns (Federal Form 5471, etc..) who have no unreported income is also extended to October 15, 2009.

Here is the IRS Q&A with regards to both Voluntary Disclosures and FBARs, it has been updated 4 times so make sure if you use it as a guide you read it more than once, http://www.irs.gov/newsroom/article/0,,id=210027,00.html

Sales Tax on Shipping & Handling in NYS

New York State Sales Tax

From time to time I get asked very specific questions regarding the collection and remittance of sales tax in New York State.  A question that recently came up by my client was one regarding the partial refund of a transaction that involved shipping and handling. 

The client's transaction was as follows:
Sale of $100
Shipping & Handling of $25
Subtotal $125
Sales Tax (NYC) $11.09
Total $136.09

Now what happens if the client refund the sale but retians the shipping and handling as part of their terms and conditions.

Refund of Sale $(100)
Refund of sales tax on Sale $8.84
Total refund $108.84

As you can see, the client retianed the sales tax on the shipping and handling and will be liable to remit that sales tax collected to NYS with their next sales tax return (Either Annualy, Quarterly, or Monthly depending on their sales figures).

Staten Island CPA

End of Summer - Tax Credits for September & Education

Education tax credits can help offset the costs of higher education for yourself or a dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. Because they are credits rather than deductions, you may be able to subtract them in full, dollar for dollar, from your federal income tax.

The Hope Credit

• The credit applies for the first two years of post-secondary education, such as college or vocational school. It does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional-level programs. After your first two years you are entitled to take the lifetime learning credit.
  
• It can be worth up to $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student, per year.
• You're allowed a credit of 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area).
• Each student must be enrolled at least half-time for at least one academic period which began during the year.
• The student must be free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Basically, no drug convictions.
  

The Lifetime Learning Credit

• The credit applies to undergraduate, graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program.
• If you qualify, your credit equals 20% (40% if a student in a Midwestern disaster area) of the first $10,000 of post-secondary tuition and fees you pay during the year, for a maximum credit of $2,000 ($4,000 if a student in a Midwestern disaster area) per tax return.

You cannot claim both the Hope and Lifetime Learning Credits for the same student in the same year. You also cannot claim either credit if you claim a tuition and fees deduction for the same student in the same year. To qualify for either credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.

As with almost every good credit, These credits are phased out for Modified Adjusted Gross Income over $48,000 ($96,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $58,000 or more ($116,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.

Talk with your NY Accountant come tax time so that you take full advantage of the tax savings these credits provide.

Hurricane Season - How to Claim a Casualty Loss

Top Ten Tips for Taxpayers Deducting Casualty and Theft Losses

People who find themselves the victim of a natural disaster or theft this summer should know the rules for deducting their casualty losses next year when they file their federal tax return. Generally, you may deduct losses to your home, household items and vehicles on your federal income tax return.

Here are ten things the IRS wants you to know about deducting casualty or theft losses.

You may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement. You must reduce your loss by the amount of the reimbursement. I.E. Hurricane takes the roof off your home and the cost of the repairs EXCEEDS your insurance coverage, you have a deductible loss.

A casualty does not include normal wear and tear or progressive deterioration from age or termite damage.

The damage must be caused by a sudden, unexpected or unusual event like a car accident, fire, earthquake, flood or vandalism.

If your property is not completely destroyed or if it is personal-use property, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty or theft, reduced by any insurance or other reimbursement you receive or expect to receive.

If business or income-producing property, such as rental property, is completely destroyed, the amount of your loss is your adjusted basis in the property minus any salvage value, and minus any insurance or other reimbursement you receive or expect to receive.

To claim a casualty or theft loss, you must complete Form 4684, Casualties and Thefts, and attach it to your federal tax return. Generally, you may claim casualty or theft loss of personal use property only if you itemize deductions on Form 1040, Schedule A. However, you can deduct a 2008 or 2009 net disaster loss from a federally-declared disaster even if you do not itemize your deductions.

If the property was held by you for personal use, you must further reduce your loss by $100. This $100 reduction for losses of personal-use property applies to each casualty or theft event that occurred during the year other than 2009. For 2009, individuals must reduce their casualty and theft losses for personal-use property by $500 instead of $100. This $500 reduction for losses of personal-use property applies to each casualty or theft event.

The total of all your casualty and theft losses of personal-use property usually must be further reduced by 10 percent of your adjusted gross income. The 10 percent AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009. Also if you are a Madoff victim, there are special rules that apply.

In figuring your loss, do not consider the loss of future profits or income due to the casualty. Its a shame but tis true, if your work truck gets destroyed and you use it to earn a living. Your Casualty loss is limited to truck, not the income earning potential of the truck.

Casualty losses are normally deductible only in the year the casualty occurred. But if you have a deductible loss from a federally declared disaster you can choose to deduct that loss on your tax return for the previous year. If you have already filed your return for the preceding year, you can claim the loss on the previous year tax return by filing an amended return.