David Kirkpatrick

February 26, 2010

Tax deductions — the odd, the strange and the crazy

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 3:58 pm

Ever wonder if your crazy tax deduction idea would pass the IRS’s muster? Here’s a list of 14 “oddball” deduction that did just that.

And here’s three samples from the  link:

4. Cat food. A couple who owned a junkyard were allowed to write off the cost of cat food they set out to attract wild cats. The feral felines did more than just eat. They also took care of snakes and rats on the property, making the place safer for customers. When the case reached the Tax Court, IRS lawyers conceded that the cost was deductible.

And:

7. Breast augmentation. In an effort to get bigger tips, an exotic dancer with the stage name “Chesty Love” decided to get implants to make her a size 56-FF. The IRS challenged her deduction, saying the operation was cosmetic surgery. But a female Tax Court judge allowed this taxpayer to claim a depreciation deduction for her new, um, assets, equating them to a stage prop. Alas, the operation later proved to be a problem for Ms. Love. She tripped, rupturing one of her implants. That caused a severe infection, and the implants had to be removed.

And finally:

10. Free beer. In a novel promotion, a service-station owner gave his customers free beer in lieu of trading stamps. Proving that alcohol and gasoline do mix — for tax purposes — the Tax Court allowed the write-off as a business expense.

February 17, 2010

The 2009 Taxpayer Attitude Survey

Some very interesting results from the eighth survey by the IRS Oversight Board.

From the TaxProf Blog link:

  • How much, if any, do you think is an acceptable amount to cheat on your income taxes? A little here and there, 9% (highest in 6 years)
  • How important is it to you, as a taxpayer, that the IRS does each of the following to ensure that all taxpayers honestly pay what they owe — Ensures high-income taxpayers are reporting and paying their taxes honestly? Very important, 83% (all-time high)
  • How important is it to you, as a taxpayer, that the IRS does each of the following to ensure that all taxpayers honestly pay what they owe — Ensures small businesses are reporting and paying their taxes honestly? Very important, 76% (all-time high)
  • How much influence does each of the following factors have on whether you report and pay your taxes honestly — Fear of an audit? Great deal of influence, 39% (all-time high)
  • How much influence does each of the following factors have on whether you report and pay your taxes honestly — Belief that your neighbors are reporting and paying honestly? Great deal of influence, 17% (all-time low)

February 16, 2010

New deductions and credits for 2009 tax year

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 1:27 pm

Here’s a handy list of ten new deductions and credits for this year’s taxes from Thomson Reuters.

From the link, numbers four and five — one for the employed and one for the unemployed:

4. Making work pay credit. Income tax withholding was reduced during 2009 to reflect the new making work pay credit, which slashes tax liabilities by up to $400 ($800 on a joint return). “Employers had to shoulder all the work of the withholding adjustment, but employees now need to claim the credit on their tax returns in order to hold on to that extra take-home pay,” Scharin explains. Tricky aspects of this credit arise from the eligibility rules; some folks whose withholding was reduced are not actually eligible for the credit. Ineligibility could arise because the credit phases out in the MAGI range of $75,000 to $95,000 ($150,000 to $190,000 for joint returns).

5. Unemployment compensation. Up to $2,400 of unemployment compensation benefits are completely tax-free in 2009. “These benefits are not included in your adjusted gross income, and that could help you to qualify for other tax benefits that have AGI restrictions,” Scharin points out.

June 5, 2009

IRS announces tax preparer review

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 4:26 pm

A release from the Internal Revenue Service:

IRS Launches Tax Return Preparer Review; Recommendations to Improve Compliance Expected by Year End

 
IR-2009-57, June 4, 2009

WASHINGTON — IRS Commissioner Doug Shulman announced today that by the end of 2009, he will propose a comprehensive set of recommendations to help the Internal Revenue Service better leverage the tax return preparer community with the twin goals of increasing taxpayer compliance and ensuring uniform and high ethical standards of conduct for tax preparers.

Some of the potential recommendations could focus on a new model for the regulation of tax return preparers; service and outreach for return preparers; education and training of return preparers; and enforcement related to return preparer misconduct. The Commissioner will submit recommendations to the Treasury Secretary and the President by the end of the year.

“Tax return preparers help Americans with one of their biggest financial transactions each year. We must ensure that all preparers are ethical, provide good service and are qualified,” Shulman said. “At the end the day, tax preparers and the associated industry must be part of our overall game plan to strengthen the integrity of the tax system.”

The first part of this groundbreaking effort will involve fact finding and receiving input from a large and diverse constituent community that includes those that are licensed by state and federal authorities — such as enrolled agents, lawyers and accountants — as well as unlicensed tax preparers and software vendors. The effort will also seek input and dialog with consumer groups and taxpayers.

“We plan to have a transparent and open dialogue about the issues,” Shulman said. “At this early and critical stage of the process, we need to hear from the broadest possible range of stakeholders.”

Later this year, the IRS plans to hold a number of open meetings in Washington and around the country with constituent groups.

More information, including schedules and agendas for public meetings, will be posted on the “Tax Professionals” page on this Web site and will be communicated to stakeholder groups.

June 1, 2009

Massive privacy violation in Colorado

Filed under: Politics — Tags: , , , , , — David Kirkpatrick @ 3:46 pm

Astounding investigative overreach in Colorado while looking for illegal immigrants. Glad to see the judges in the case see things the same way. Fourth Amendment anyone?

From the link:

Immigrant advocates say they’ve seen nothing like it before or since: A prosecutor looking for illegal immigrants seized thousands of confidential tax records from an income tax preparer popular with Hispanics in this northern Colorado city.The October seizures led to identity theft and criminal impersonation charges against more than 70 people, and prosecutors allege that as many as 1,300 suspected illegal immigrants were working using false or stolen Social Security numbers.

But the American Civil Liberties Union said the documents of as many as 4,900 people were seized, many of them legal residents, and that the probe was the “equivalent of a house-by-house search of innocent homeowners in order to find a suspect believed to be somewhere in the neighborhood.”

Two judges have agreed, ruling that Weld County District Attorney Ken Buck had no probable cause to seize the records. Buck is appealing, however, and a ruling in his favor could open up a new avenue for prosecuting illegal immigrants.

April 17, 2009

Friday video fun — tax facts via Reason Magazine

Filed under: Business, Media, Politics — Tags: , , , , — David Kirkpatrick @ 5:54 pm

Points to ponder this week. Went out to dinner Wednesday night and ran into my CPA with his family. He looked pretty relieved.

It’s been a long time since I’ve done any video, so without further ado , courtesy of Reason Magazine, here’s “W-2 WTF?!?!: Tax Facts to Make Your Head Explode!”

April 16, 2009

Obama’s tax return

Filed under: Business, et.al., Politics — Tags: , , , , — David Kirkpatrick @ 3:51 pm

For the very curious, here’s a PDF of the 43-page document.

The AGI? $2,656,902. Almost all of it royalties on his books.

April 2, 2009

IRS website gets traffic spike

No surprise IRS.gov’s traffic is up here on the homestretch to tax day, but almost 25% over last year? That’s a significant uptick.

The IRS release:

Visits to IRS.gov Up Sharply as Taxpayers Go Online to Get Tax Information

 
IR-2009-31, March 31, 2009 WASHINGTON — The number of visitors to IRS.gov is up more than 24 percent compared with last year, and more taxpayers rely on the Internal Revenue Service’s online resources to get answers to tax questions on the economic recovery legislation and to prepare and file tax returns accurately and timely.More than 138 million taxpayers already visited the IRS Web site this year, up from about 111 million from the same period last year.

Taxpayers can find the latest information about the American Recovery and Reinvestment Act of 2009, including details on extending health insurance for people who lost their jobs and tax breaks for first-time homebuyers. IRS also has developed “What if” scenarios and the possible tax implications for people who may be facing financially difficult times. Taxpayers periodically should check for updates to these pages.

Some IRS online publications contain hyperlinks allowing users to get the answers they need quickly. The links allow users to jump immediately to other parts of publications and external Web sites, reducing the time it takes to access information.

A total of 14 publications contain tailored hyperlinks that provide easier access, including Publication 3, Armed Forces’ Tax Guide, Publication 970, Tax Benefits for Education, and Publication 936, Home Mortgage Interest Deduction. Publication 17, Your Federal Income Tax, was issued for the first time with hyperlinks last year, and the new version now has more links than ever before. Publication 17 also is available online in Spanish for the first time.

Available on IRS.gov this year is a new on-line tool that allows taxpayers to complete tax forms, perform basic mathematical calculations and e-file their federal income tax returns free of charge. Free File Fillable Forms is most suited for those who prepare their own paper returns without the assistance of a tax return preparer or tax preparation software. There are no income limitations to use Free File Fillable Forms, and the most commonly-used federal tax forms are available.

Also available to taxpayers is Free File, which provides taxpayers with an adjusted gross income of $56,000 or less in 2008 with free federal income tax preparation and electronic filing. Free File is free, fast and accurate.

Taxpayers also can download IRS audio podcasts on a variety of topics in English and Spanish. Video tax tips are also available.

Other electronic tools can be found on IRS.gov. Highlights include the following:

  • Where’s My Refund? — Whether taxpayers opted for direct deposit or asked the IRS to mail a check, they can track their refund through the Where’s My Refund? tool.
  • The Recovery Rebate Credit Calculator —The recovery rebate credit is a one-time benefit for people who didn’t receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion of the credit. In most cases, taxpayers who received the full amount of the stimulus payment last year will not be eligible for it this year. The recovery rebate credit can be calculated using the online tool, Recovery Rebate Credit Calculator.
  • How Much Was My 2008 Stimulus Payment? — Taxpayers will need to know the amount of their 2008 economic stimulus payment to calculate the recovery rebate credit. Taxpayers can use the online tool, How Much Was My 2008 Stimulus Payment?, to check how much their payment was in 2008.Taxpayers don’t need to report the 2008 stimulus payment as income because it’s not taxable.
  • EITC Assistant — The earned income tax credit is a substantial credit for people who work but don’t earn a lot of money. Find out if you are eligible for the EITC by answering some questions and providing basic income information using the online EITC Assistant.

 

Taxpayers looking for the IRS online should type http://www.irs.gov into their Internet browser. Taxpayers should also beware of Web sites that may resemble IRS.gov but end in .com, .net, .org, .biz or any other domain name extension.

 

Also available isIRS.gov/Español, the IRS Web site offering tax forms, publications and information in Spanish. Interactive tools such as the following are available for individuals: EITC Assistant, (Asistente EITC); Free File(Presentacion FreeFile) Where’s My Refund? (¿Dónde Está Mi Reembolso?), How Much Was My 2008 Stimulus Payment (¿Cuánto fue mi Pago del Estímulo Económico?) and Recovery Rebate Credit (RRC) Calculator (Calculadora para el Crédito por Recuperación de la Devolución de Estímulo Económico.)

Go below the fold for 2009 filing season stats: (more…)

March 30, 2009

Wild tax deductions

Filed under: Business — Tags: , , — David Kirkpatrick @ 12:37 pm

Tax season is nigh and insane tax deductions are always a rich vein to mine. Here’s nine “wacky” deductions curtesy of MSN Money.

From the link:

3. At least it wasn’t ‘travel and entertainment’

Sometimes business owners will try to slide a fast one by the IRS by classifying a business deduction in a category where the dollar signs might not raise an eyebrow.

 

One such fastball didn’t pass the eyebrow test with this Oklahoma accountant, however.

“We were reviewing a business client’s accounting entries and noted a check for over $2,000 written to a gynecologist. It was classified on the business books as ‘repairs and maintenance.'”

March 17, 2009

Taxpayers worried about mistakes

There is a simple solution. Hire a qualified tax preparer, or better yet a licenced CPA to prepare your taxes. Unless your tax forms are kindergarten-level simple, a professional will save you more money than the expense.

From the link:

Taxpayers’ Fears of Errors and Oversights May Be Well Founded, CCH Survey Finds
RIVERWOODS, Ill.–(BUSINESS WIRE)– Most taxpayers are concerned they may be making costly mistakes or overlooking tax breaks that could save them money, according to findings from a nationwide CCH CompleteTax(R)survey.

The survey of more than 1,000 U.S. adults, commissioned by CCH and conducted by GfK Roper, found that nearly two in three (66 percent) taxpayers fear they may overlook tax breaks or make mistakes that could cost them in fines or penalties. At the same time, most taxpayers also were unable to determine which tax breaks may be most beneficial, indicating their concerns about costly oversights or mistakes may be well founded.

“It’s always important for taxpayers to understand what they can do to minimize their tax obligation, but it’s even more crucial in tough economic times when people are watching every penny,” said David Bergstein, CPA, a tax analyst for CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer. “Yet, many people are simply not up-to-speed on tax rules, which may mean they are paying more in taxes than required.”

Specifically, the CCH CompleteTax survey, also discussed in a podcast today, asked taxpayers about basic tax breaks. In each instance less than one-half of taxpayers were able to identify the most beneficial. For example:

  • Less than one-fourth could identify that tax credits are generally more advantageous than deductions;
  • Only about one-third identified the child-related tax break offering the greatest savings; and
  • Less than one-half identified the education-related tax break offering the greatest savings.

In addition, only about one-half of taxpayers report they are planning to contribute to tax-advantaged retirement plans in 2009, and the vast majority of taxpayers still perceive that getting a tax refund is better than owing taxes on April 15.

Take Credits When Eligible

Fewer than one in four individuals (22 percent) were able to answer correctly that a tax credit is generally more advantageous than a tax deduction of the same value, according to the survey.

“Tax credits save you more than tax deductions because they reduce your tax bill dollar for dollar,” said Bergstein.

A taxpayer in the 25-percent tax bracket, for example, claiming a $2,000 credit will reduce his tax bill by $2,000. However, if he claimed a $2,000 deduction, he will only reduce his tax bill by $500.

Know About Other Tax Breaks

Taxpayers also were generally unable to identify the most beneficial tax breaks tied to various life events.

Child-related tax breaks

When asked to identify which child-related tax break offers the typical taxpayer the greatest savings, about one-third (36 percent) identified the child credit, which generally is most likely to yield the greatest tax break to most taxpayers. One in four (24 percent) selected the dependent and child care credit and 23 percent selected the personal exemption. The remainder of those surveyed said they did not know the correct answer.

Exemptions are similar to deductions in that they remove a certain amount of a taxpayer’s income from being taxed. However, unlike credits, they are not a dollar-for-dollar reduction in a person’s tax bill. So even though the personal exemption for a parent with a child under 19 or a full-time student under 24 is $3,500 for 2008, the tax savings for someone in the 15-percent tax bracket, for example, would amount to only $525 ($3,500 x 15%).

The dependent and child care tax credit ranges from 20 percent to 35 percent of expenses for the first $3,000 in care for a child up to age 13 or an older child who is physically or mentally challenged. This can result in a tax savings of $600 to as much as $1,050 for someone with a very low income.

The $1,000 child credit is available to taxpayers with a child under age 17. Income restrictions apply to each.

“Raising children is expensive. But it’s significantly more costly if you are not aware of or taking advantage of the tax breaks for which you may be eligible,” said Bergstein.

Higher education tax breaks

The survey found that people overwhelmingly leaned toward the education deduction over the credits as offering the most tax savings. Specifically, two in five respondents (41 percent) said a deduction for higher education will save a qualifying taxpayer the most compared to only 16 percent choosing the Hope Credit and 14 percent the Lifetime Learning Credit as the bigger tax breaks. The remaining 29 percent said they did not know.

However, the Lifetime Learning Credit or the Hope Credit would likely offer a qualifying taxpayer a bigger tax break than the higher education deduction. The Lifetime Learning Credit is $2,000 per return based on expenses for post-secondary education and the Hope Credit is up to $1,800 per student based on expenses in the first two years of post-secondary undergraduate education. The deduction for higher education is up to $4,000 for qualifying taxpayers. Income restrictions apply to both the deduction and credits.

As a result, if a taxpayer in the 15 percent tax bracket, for example, takes a $4,000 tuition and fees deduction, it would be a $600 savings. In comparison a Lifetime Learning Credit of only $2,000 would reduce a qualifying taxpayer’s tax bill by the full $2,000. The benefit of a credit is a dollar-for-dollar offset rather than the percentage reduction in tax that a deduction provides.

“Tax rules also change so it’s important to keep current. For example, for 2009 and 2010, the Hope Credit is being renamed to American Opportunity Tax Credit; the credit amount is increasing and the coverage expanding,” said Bergstein. “So, it’s important to stay current so that you can maximize your tax savings.”

Retirement tax breaks

Several tax breaks also exist for saving for retirement. Taxpayers were not quizzed on which was the most beneficial, but on whether they plan to contribute to tax-advantaged retirement accounts in 2009. Slightly more than one-half of respondents (51 percent) indicate they will be making contributions; an additional 27 percent of eligible taxpayers will not be contributing at all and 18 percent are not contributing as they’ve already retired; the remainder are not sure of how much, if at all, they will be contributing.

Those planning to contribute include 30 percent who will be contributing about the same amount they did last year, 13 percent who will be contributing more and 8 percent who plan to contribute less than in 2008, the survey found.

“Many people have immediate demands on their finances given the economy, but they should also try to save as much as they can for retirement. Using the available tax benefits offered for IRAs, 401ks and other retirement accounts means more money being set aside for retirement and less being paid in taxes,” said Bergstein.

Refunds Are a Penalty, Not Reward

Finally, taxpayers were asked whether or not they believed it is better to receive a refund or to owe taxes on April 15. Only 7 percent answered correctly that it is better to owe some money, according to the CCH CompleteTax survey.

“Taxpayers still have the misperception that a tax refund is new-found money. It’s not. It’s your money. During the time you’ve left it with the IRS, you have not had it available for your use and you’ve earned no interest on it,” said Bergstein.

For example, rather than receiving a $1,000 refund, had the $1,000 been put in a savings account, even at very low interest rates, a taxpayer could reasonably earn an additional $30 in interest over a year. That may not seem like a lot but even that will cover the cost of using tax software to help prepare and e-file their tax return.

About the Survey Methodology

The nationwide telephone survey was conducted by GfK Roper on behalf of CCH CompleteTax from February 13-25, 2009, among 1,004 adults (age 18 and over). The margin of error on weighted data is +/- 3 percentage points.

About CCH CompleteTax

CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer, continues to set the standard when it comes to making online tax prep and e-filing easy, efficient and affordable. CCH CompleteTax offers comprehensive support to help taxpayers through each step of preparing and e-filing both federal and state income tax returns.

About CCH, a Wolters Kluwer business

CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx(R) Office, CorpSystem(R), CCH(R) TeamMate, CCH(R) Tax ResearchNetWork(TM), Accounting Research Manager(R) and the U.S. Master Tax Guide(R). CCH is based in Riverwoods, Ill.

Wolters Kluwer is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, legal, and regulatory sectors. Wolters Kluwer had 2008 annual revenues of EUR3.4 billion, employs approximately 20,000 people worldwide, and maintains operations in over 35 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Visit http://www.wolterskluwer.com for information about our market positions, customers, brands, and organization.

nb-09-64

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5917572&lang=en

 

 

CCH CompleteTax

Source: CCH CompleteTax

Need tax help?

The IRS is opening its doors this coming Saturday to offer advice and answer questions.

The release:

IRS, Partners Mark Super Saturday March 21 to Help Taxpayers

 
IR-2009-25, March 16, 2009

Audio Files for Podcasts: English Spanish

WASHINGTON — The Internal Revenue Service and scores of its community partners will open their doors on Saturday, March 21, to help people who need free tax preparation, a question answered or a payment schedule arranged.

The IRS will open more than 250 local offices from 9 a.m. to 2 p.m. Community partners will open approximately 1,000 sites on March 21. Tax return preparation is limited to people who earn $42,000 or less. There is no income limitation for people needing IRS assistance for other services at Taxpayer Assistance Centers.

“Because of the economic downturn, many financially distressed taxpayers may be in need of free services. Our Super Saturday service will make it a little easier for people to get that help. Although our Taxpayer Assistance Centers are not normally open on Saturdays, we’re trying to go the extra mile in these difficult times,” said Doug Shulman, IRS Commissioner. “Our Super Saturday service will help people get their refunds quickly. Also, if you think you owe taxes and can’t pay, please come in and talk to us about it. There are steps we can take to help.”

Locations and hours of operation of Super Saturday sites are available at IRS.gov, keyword Super Saturday.  People without computer access can call 1-800-906-9887 to find a nearby IRS or partner office. IRS customer service telephone lines, 1-800-829-1040, also will be available on Super Saturday from 9 a.m. to 2 p.m. to answer tax questions.

People who earn $42,000 or less can have their tax return prepared by the IRS or a community volunteer at participating locations. Filing a tax return may also be the fastest way to get some extra money. More than 80 percent of all taxpayers receive a refund. IRS employees and the community volunteers can help people get all the tax credits and deductions for which they are eligible. Taxpayers who electronically file their tax returns and who use direct deposit can receive their refunds in as few as 10 days.

Because of lost jobs or reduced income, many people may be eligible for certain tax credits for the first time. For example, the Earned Income Tax Credit is for people who work but who do not earn a lot of money. The EITC adds an extra $2,000 benefit on average. It is the government’s largest anti-poverty program. The additional child tax credit and the first-time homebuyers’ credit are important benefits also affected by a taxpayer’s income.

People who owe taxes but who cannot pay should contact the IRS as soon as possible. Regardless of income, people who need payment options can get help at an IRS office. The IRS can help set up an installment payment plan or a deferred payment plan. It is important that people contact the agency so they can avoid penalties and interest that will make their tax bill even higher.

People who want their tax returns prepared should bring the following information:

  • Valid driver’s license or photo identification (self & spouse, if applicable)
  • Social Security cards for all persons listed on the return
  • Dates of birth for all persons listed on the return
  • All income statements: Forms W-2, 1099, Social Security, Unemployment, or other benefits statements, self-employment records and any documents showing taxes withheld
  • Dependent child care information: payee’s name, address and Social Security Number or Taxpayer Identification Number
  • Proof of account at financial institution for direct debit or deposit (i.e. cancelled/voided check or bank statement)
  • Prior year tax return (if available)
  • Any other pertinent documents or papers

For those who don’t want to make a trip, the IRS also offers other free services for tax preparation including the Free File program on IRS.gov.

For people with computer access, the IRS web site remains the best place to go for answers, access to forms and publications and other free services. For example, taxpayers will find the latest details on the American Recovery and Reinvestment Act of 2009 on the IRS.gov homepage.

People also can track their refunds through “Where’s My Refund?” – another free service offered by the agency. People without computer access can still use “Where’s My Refund?” by calling 1-800-829-1954. Taxpayers should have their tax return handy to use the “Where’s My Refund?” application.

March 12, 2009

Tax break hints from AICPA

Helpful tax hints curtesy of the American Institute of Certified Public Accountants.

From the link:

AICPA to Taxpayers: Take Advantage of Tax Breaks to Help Offset Economic Hard Times
PR Newswire via NewsEdge :

WASHINGTON, March 11 /PRNewswire-USNewswire/ — The American Institute of Certified Public Accountants is reminding taxpayers to use the special provisions in the tax law that can help them save money and deal with the current difficult economic environment.

“In these tough economic times, taxpayers need every advantage they can get,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. “Losing a home to foreclosure, losing money on investments, and/or losing a job are some of the most stressful events in people’s lives, and they need these breaks.”

Taxpayers who lost their homes to foreclosure or had their mortgage restructured get a pass on paying taxes on the amount of debt the lender discharged under the Mortgage Forgiveness Debt Relief Act of 2007. The exception applies only to principal residences, not to second homes or vacation homes. Married taxpayers can exclude up to $2 million and single taxpayers up to $1 million.

The Mortgage Bankers Association’s National Delinquency Survey reported on March 5 that mortgage delinquencies are continuing to climb, making it increasingly important that taxpayers remember this tax break. According to the survey, the seasonally adjusted delinquency rate for one-to-four-unit residential properties rose to 7.88 percent of all outstanding loans at the end of 2008. The 2008 fourth-quarter increase was up 89 basis points from the third quarter of 2008.

Individuals who sold investments at a loss in 2008 can use those losses to reduce their 2008 tax bill. First, they can use the losses to offset any profits made from selling stocks, bonds or property. Second, up to $3,000 of losses not used to offset capital gains can be deducted from other income. If losses exceed these amounts, the remaining losses can be applied in future years.

“If you lost your job and moved to take a new one, remember that moving expenses you paid are deductible, but only if the new job is at least 50 miles from the previous job site and you stay for a certain period of time,” said Ochsenschlager. “If you did not have a full-time job before the move, then the new job has to be at least 50 miles from your old home. Also, be sure to keep good records of your moving expenses and note that meals are not a deductible moving expense.”

Ochsenschlager also added some job search expenses, such as the cost of printing a resume or hiring a consultant to help with the job search, are deductible.

It’s important that taxpayers not procrastinate. “Always file your tax return on time – even if you do not have the money to pay the entire amount,” said Ochsenschlager. “The IRS often allows taxpayers to pay their tax bill in installments. If you are getting a tax refund, file your tax return as soon as possible, so you can put the money to work for you rather than making an interest-free loan to Uncle Sam.”

About the AICPA

The American Institute of Certified Public Accountants (www.aicpa.org) is the national, professional association of CPAs, with more than 350,000 CPA members in business and industry, public practice, government, education, student affiliates, and international associates.

It sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.

The AICPA maintains offices in New York, Washington, D.C., Durham, N.C., Ewing, N.J., and Lewisville, Tex.

SOURCE American Institute of Certified Public Accountants

February 4, 2009

Tips on finding a tax professional

Filed under: Business — Tags: , , , , , , — David Kirkpatrick @ 2:37 pm

This six-part list from H&R Block is a good place to start if you’re looking for a CPA or a professional to prepare your taxes this year.

Unless your taxes are outrageously straightforward, I heartily recommend employing a professional. Most likely whatever the cost will be offset by the money they save you. And do not count on tax preparation software to maximize your return. Over time, informally, I’ve found competent preparation along with advice beats the software every time.

From the link:

The federal tax code has more than one million words, is several thousand pages long, and in 2008 alone, there were 500 changes to the code, or more than one per day*. More than ever, Americans need the counsel of trusted tax professionals to decipher the complex tax code and apply it to their unique financial situations.

“The tax code is like a thousand-page instruction manual that’s always changing. Reading, interpreting and applying this technical document is no easy feat for the untrained eye,” said Amy McAnarney, executive director of The Tax Institute at H&R Block. “In this tough economic climate, taxpayers can’t afford to leave money on the table. So, they should only work with a tax advisor who’s up-to-date on the latest tax law changes.”

H&R Block (NYSE: HRB) offers six tips to help taxpayers find the right tax professional:

1. Ask about experience. Inquire about the tax preparer’s years of experience and continuing education. Does the preparer have the tax knowledge to accurately represent your interests? Many Americans don’t realize how important up-to-date training is when selecting a tax advisor. A recent survey from The Tax Institute at H&R Block found 76 percent of participants failed to list “knowledge of current tax laws” as an important trait when picking a tax professional**. One of the top traits survey participants chose? Location.

“Convenience is important but when it comes to taxes, knowledge can translate into dollars saved,” said McAnarney. “The tax code is always changing, so it’s critical taxpayers select a tax professional who receives ongoing education and training.”