Thursday, March 25, 2010

Non-Profit Tax Returns are Open for Public Inspection

Q I get several requests each year from charitable organizations? Can I ask to see their financial statements? And how do I know if my contributions will be tax deductible for the IRS?

A You can do one better: you can ask to see their tax returns.

Exempt organizations generally must make their annual returns - Form 990, Return of Organization Exempt From Income Tax - available for public inspection. This also includes the organization’s application for exemption.

These documents must be made available to any individual who requests them, and must be made available immediately when the request is made in person. If the request is made in writing, an organization has 30 days to provide a copy of the information, unless it makes the information widely available.

Another great way to find out information about charitable organizations is the website Many charitable organizations voluntarily post their Form 990s with GuideStar to make their financial information immediately available to all prospective donors.

It is important to know whether an organization is qualified to receive tax deductible contributions.

The easiest way is to ask them. You can ask to see an organization's exemption letter, which states the Code section that describes the organization and whether contributions made to the organization are deductible. You can also search for organizations qualified to accept deductible contributions in IRS Publication 78, Cumulative List of Organizations and its Addendum, available at Taxpayers can also confirm an organization’s status by calling the IRS at 877-829-5000.

Not all exempt organizations are eligible to receive tax-deductible charitable contributions. Organizations that are eligible to receive deductible contributions include most charities described in section 501(c)(3) of the Internal Revenue Code and, in some circumstances, fraternal organizations described in section 501(c)(8) or section 501(c)(10), cemetery companies described in section 501(c)(13), volunteer fire departments described in section 501(c)(4), and veterans organizations described in section 501(c)(4) or 501(c)(19).

If an exempt organization is ineligible to receive tax-deductible contributions, it must disclose that fact when soliciting contributions.

Tuesday, March 23, 2010

Income Earned Working in a Foreign Country

Q I worked overseas part of the year last year for a foreign company. Do I have to report that income on my US income tax return?

A Citizens and resident aliens who live and work abroad may be able to exclude all or part of their foreign salary or wages from their income when filing their U.S. federal tax return. They may also qualify to exclude compensation for their personal services or certain foreign housing costs.

To qualify for the foreign earned income exclusion, a U.S. citizen or resident alien must have a tax home in a foreign country and income received for working in a foreign country, otherwise known as foreign earned income. The taxpayer must also meet one of two tests: the bona fide residence test or the physical presence test.

The foreign earned income exclusion is adjusted annually for inflation. For 2009, the maximum exclusion is up to $91,400 per qualifying person.

The foreign earned income exclusion and the foreign housing exclusion or deductions are claimed using Form 2555, Foreign Earned Income, which should be attached to the taxpayer’s Form 1040.

For more information about the Foreign Earned Income Exclusion, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. This and other IRS publications are available at or by emailing me.

Please contact me directly to see how these rules apply to you individually.

Saturday, March 20, 2010

New Tax Incentive for Hiring New Workers

Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law Thursday.

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.

In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period. The IRS is currently developing a form employees can use to make the required statement.

Protect yourself from Identity Theft: Get a Free Credit Report

At tax season, it is a important to remember to guard access to your social security number and other sensitive, personal financial information. For this reason, GurelCPA uses an SSL secure web portal to password protect any sensitive data we send you or that we request from you. And, we strongly suggest that you never include your social security number in unencrypted emails, or attach documents containing your SSN to an email.

In addition, we highly recommend that you obtain a FREE credit report annually to monitor your credit report to make sure you have not been a victim of identity theft. Now, more than ever, it is important to monitor your credit report and make sure no one has gained fraudulent access to your social security number

What is is the ONLY authorized source for the free annual credit report that's yours by law. The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies — Experian, Equifax, and TransUnion — every 12 months. The Federal Trade Commission has received complaints from consumers who thought they were ordering their free annual credit report, and yet couldn't get it without paying fees or buying other services. TV ads, email offers, or online search results may tout "free" credit reports, but there is only one authorized source for a truly free credit report.

A new law requires commercial websites that say they offer free credit reports to include a box letting you know you can get a free credit report at Click on the link to, the only place to get the free report that's yours by law.

Many companies claim to offer free credit reports – and some do. But others give you a report only if you buy other products or services. Still others say they’re giving you a “free” report and then bill you for services you have to cancel. If you go to and follow the prompts for your free credit report, you can be sure the reports you get really are free.

Thursday, March 18, 2010

Take Digital Pictures of your Home Office

Do you have a small business? Do you use a part of your home regularly and exclusively for business purposes?

If so, you may be able to take a home office deduction.

Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly as your principal place of business, or as a place to meet or deal with patients, clients or customers in the normal course of your business.

A separate, detached structure such as a garage or guesthouse that is used regularly and exclusively for business also may qualify as a home office.

The amount you can deduct depends on the percentage of your home used for business. And, your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

Different rules apply for claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer.

The home office deduction got a bad name because abuse in the past caused the IRS to deny many deductions.

However, if your home office meets the regularly and exclusively test, and your office is the base of your small business operations, I recommend taking advantage of this deduction.

Want additional documentation to support your home office deduction? Take digital pictures or video clips of your home office showing your exclusive use of the area. A picture can be worth a thousand words.

Tuesday, March 16, 2010

Did you receive a $250 Economic Recovery Payment in 2009?

You'll need to know if you are claiming the Making Work Pay Tax Credit on your 2009 tax return.

Only individuals who received income from the Social Security Administration, Department of Veterans Affairs and Railroad Retirement Board received a $250 Economic Recovery Payment.

If you received benefits from one or more of these agencies, but you are unsure if you received the $250 Economic Recovery Payment, you can find out by using the "Did I Receive a 2009 Economic Recovery Payment?" feature online at or by calling 1-866-234-2942. These tools give you an easy way to verify if you received the one-time Economic Recovery Payment and which agency made the payment. These payments must be included when claiming the Making Work Pay Tax Credit on 2009 tax returns.

You must make a separate inquiry for each person on the tax return when using the "Did I Receive a 2009 Economic Recovery Payment?", even if you are filing a joint tax return.

Not claiming the Economic Recovery Payment on the Schedule M can delay the processing of your tax return. To avoid delays be sure to use the "Did I Receive a 2009 Economic Recovery Payment?" feature to find out if you received the payment.

Monday, March 15, 2010

To Avoid Penalties, File even if You Don't Have the Money to Pay

The tax filing deadline for individual income taxes is approaching. If you don’t file your return and pay your tax by the due date you may have to pay penalties.

If you do not file by the deadline, you might face a failure-to-file penalty. In addition, if you do not pay by the due date, you could face a failure-to-pay penalty. Here are some things to know about the two different penalties you may face if you do not pay or file on time.

The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.

If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

Automatic six-month extensions are available for individual income tax returns. However, an extension is an extension to FILE, not an extension to PAY. Unless you pay at least 90 percent of your actual tax liability by the due date, you will be faced with a failure-to-pay penalty even if the remaining balance is paid by the extended due date.

So, it is always better to file your tax return by the due date or the extended due date, even if you don't have the funds to pay your taxes at the time of filing. Failure-to-pay penalties may be added, but you will avoid failure-to-file penalties.

Thursday, March 11, 2010

Facts the IRS Wants You to Know about Suspicious E-mails

There are many e-mail scams circulating that fraudulently use the Internal Revenue Service name or logo as a lure. The goal of the scams – known as phishing – is to trick you into revealing personal and financial information. The scammers can then use your personal information – such as your Social Security number, bank account or credit card numbers – to commit identity theft and steal your money.

The IRS does not send unsolicited e-mails about a person’s tax account or ask for detailed personal and financial information via e-mail. The IRS never asks taxpayers for their PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site, do not reply to the message or open any attachments. Attachments may contain malicious code that will infect your computer.

You can help shut down these schemes and prevent others from being victimized. If you receive a suspicious e-mail that claims to come from the IRS, you can forward that e-mail to a special IRS mailbox,

Remember, the official IRS Web site is Do not be confused by sites claiming to be the IRS but end in .com, .net, .org or other designations instead of .gov.

Monday, March 8, 2010

Checking the Status of Your Refund

Are you expecting a tax refund from the Internal Revenue Service this year?

You can check your refund status online with Where’s My Refund? or ¿Dónde está mi reembolso? on This is the fastest, easiest way to get information about your federal income tax refund. Whether you split your refund among several accounts, opted for direct deposit into one account, used part of your refund to buy U.S. savings bonds or asked the IRS to mail you a check, Where’s My Refund? and ¿Dónde está mi reembolso? give you online access to your refund information nearly 24 hours a day, 7 days a week. It’s quick, easy and secure.

If you e-file, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you file a paper return, refund information will generally be available three to four weeks after mailing your return.

To get your personalized refund information you will need the following:
• Your Social Security Number or Individual Taxpayer Identification Number
• Your filing status which will be Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er)
• Exact whole dollar refund amount shown on your tax return

Once you enter your personal information, you could get several responses, including:
• Acknowledgement that your return was received and is in processing.
• The mailing date or direct deposit date of your refund.
• Notice that the IRS could not deliver your refund due to an incorrect address. In this instance, you may be able to change or correct your address online using Where’s My Refund?.

You can also check the status of your refund in English or Spanish by calling the IRS Refund Hotline at 800-829-1954 or the IRS TeleTax System at 800-829-4477. You will need all of the same information.

Sunday, March 7, 2010

Rebates for ENERGY STAR Appliances

The U.S. government’s stimulus package signed into law earlier this year includes $300 million to fund the Energy Efficient Appliance Rebate Program, which offers rebates to consumers who buy Energy Star-rated appliances.

Under this program, eligible consumers can receive rebates to purchase new energy-efficient appliances when they replace used appliances.

Each state and U.S. territory was allowed to design its own rebate program, and all 56 plans have now been approved by the U.S. Department of Energy (DOE). Learn about those programs and when they are projected to start at this website. Click on your state to learn about the program that applies to you:

(Note: This Web site is the only official DOE-sponsored Web site; be cautious of "fake" Web sites.)

Types of Appliances

More than 70% of the energy used in our homes is for appliances, refrigeration, space heating, cooling, and water heating. Replacing old appliances and equipment with those that are ENERGY STAR® labeled can help American families save significantly on their utility bills. Each state and territory may select its own set of ENERGY STAR qualified products to rebate. DOE has recommended that states select from among the following appliances:

* Boilers
* Central air conditioners
* Clothes washers
* Dishwashers
* Freezers
* Furnaces (oil and gas)
* Heat pumps (air source and geothermal)
* Refrigerators
* Room air conditioners
* Water heaters

Note that these are actual rebates, not tax credits.

Friday, March 5, 2010

IRS Has $1.3 Billion for People Who Have Not Filed a 2006 Tax Return

Unclaimed refunds totaling more than $1.3 billion are awaiting nearly 1.4 million people who did not file a federal income tax return for 2006, the Internal Revenue Service announced today. However, to collect the money, a return for 2006 must be filed with the IRS no later than Thursday, April 15, 2010.

The IRS estimates that the average unclaimed refund for tax-year 2006 is $604.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury.

For 2006 returns, the window closes on April 15, 2010. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2006 refund that their checks will be held if they have not filed tax returns for 2007 or 2008. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2006. For example, most telephone customers, including most cell-phone users, qualify for the one-time telephone excise tax refund. Available only on the 2006 return, this special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. For details, see the Telephone Excise Tax Refund page on

In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2006 were $38,348 for those with two or more children, $34,001 for people with one child and $14,120 for those with no children. For more information, visit the EITC Home Page.

Contact me for a free consultation; I want to help you get up-to-date with filing your tax returns. Even if you don't think you can pay your tax bill, the sooner you file, the less your penalties will be.