Posted by Wally Ross on Tue, Jul 13, 2010
Written by: Jordan Baigas, Office Manager
When a client has a tax liability our accountants will often help them set-up a payment plan with the IRS. In this regard, last month a client of ours received the following notice:
In the past, even if only one payment was missed the entire installment agreement was terminated and all outstanding tax liability was due immediately. Now, as it appears from this notice, not only does the Fed "understand" the hardships of current economic conditions, but they even "might be able to reduce monthly payment."
Shocked? Definitely. Humored? A bit. But, hey, we aren't complaining. If the IRS has taken a friendly-turn it is welcomed whole-heartedly. However, once Uncle Sam starts negotiating your tax payments, doesn't it make you wonder? Why is the IRS so desperate for money? Shouldn't the administration be cutting taxes for everyone? Should I adjust my W-4 so that less is withheld from each paycheck in case there's no money for a refund in the future?
Honestly, only time will tell. We suggest that you have discipline in your savings and always use your money wisely. And, who knows, maybe the IRS will continue to be as understanding when you get in a sticky situation.
Posted by Wally Ross on Fri, Feb 19, 2010
As an initiative to encourage people to use their tax refund for retirement savings, tax payers can now elect to have their 2009 tax refund automatically sent to them as savings bonds. When filing your 2009 tax return, it is as easy as checking a box on IRS Form 8888 to notify the IRS that you want to use your refund (or part of it) to purchase Series I savings bonds. Savings bonds are a great way to protect your money from inflation & also a great option for saving for your children. Here a few details about this 2010 savings initiative:
- The type of bonds available for this program are U.S. Series I Savings Bonds. These low-risks bonds are a combination of two interest rates: a fixed rate that is determined by the US Treasury (currently 0.30%) & a variable rate that is based on inflation (currently 3.36%).
- Each social-security number is limited to $5,000 worth of bonds.
- Bonds must be purchased in multiples of $50 (i.e. if your refund is $280 you will get 5 $50 bonds and the remaining $30 will be deposited in a checking or savings account of your choice). If more than $250 of bonds are purchased, you will receive higher denomination bonds ($100, $200, $500, & $1,000).
- If you're married and filing a joint return, the bonds will be issued in both names.
- Bonds purchased will be sent to you directly by mail.
- You must hold on to Series I Bonds for at least 12 months before cashing them in (emergency exceptions apply).
This is part of President Obama's retirement savings initiative. The idea is to give tax payers an easy way to start (or continue) building a comfortable nest egg. Keep you ears open for changes in this program in the 2011 tax season.
If we are currently preparing your 2009 tax return, or you plan on bringing it to us soon, please indicate if you are interested in this new way of using your tax refund. Call us today, at 704-341-9611, or complete our contact us for on our website for further information.
Posted by Wally Ross on Fri, Jan 22, 2010
Deduction Reminders
With the tax laws changing from year to year, it's easy to lose track of what's deductible this year vs. last year. Be sure not to miss these deductions for your 2009 return:
* New Vehicle Deduction. You can deduct up to $49,500 of the sales tax on the purchase price of a new car.
* Educator's Deduction. If you're a teacher, you can deduct up to $250 for classroom supplies purchased.
* College Deduction. If you or your dependents are in college, don't miss out on deducting tuition and fees.
* Standard Deduction. Additional standard deduction of up to $500 ($1,000 for couples) for real estate taxes paid.
* Choice of deducting sales taxes paid in 2009 or state and local income taxes paid.
Please note - there are most always various restrictions and income limits.
IRA contributions
If you didn't make your IRA contribution in 2009, make it now. You can still contribute in 2010 (until April 15th to be exact) and use this contribution as a deduction on your 2009 tax return.
Tax Returns For Children
Did your children have income in 2009? If so, they may be required to file a 2009 income tax return, too. A child will need to file a 2009 tax return if any of the following apply:
had wages of more than $5,700,
had self-employment earnings over $400, or
had investment income (such as dividends, interest, or capital gains) over $950.
(If your child had both earned and investment income, other thresholds apply)
Don't let your child miss out on their opportunity to receive a refund.
Charitable Contribution Record Keeping
There are strict record keeping requirements for deducting charitable contributions. For cash contributions under $250, you must have a bank record such as a cancelled check, credit card record, or receipt from the charity. For donations of $250 or more, a receipt from the charity must be obtained before filing your return.
Your Rax Refund
If you're among the many taxpayers who get a large tax refund this year, do yourself two favors:
Invest the refund instead of spending it, and
Adjust your 2010 withholding so that your money can be invested rather than giving the government an interest-free loan.
You can track your refund on our website by clicking here.
Extension request
As always, the deadline for filing a 2009 individual income tax return is April 15, 2010. If you cannot file your return on time, be sure to file an extension request with the IRS by this date. If you project that you owe money on your 2009 tax return you must pay it by the April 15 deadline to avoid penalties and interest (yes, even if you have an extension filed). An extension gives you six more months to gather your data, thus your new due-date is October 15, 2010.
Ross Tax & Accounting will gladly file an extension for you. Please contact our office for more information.