Monday, April 19, 2010

Here’s What Happens After You File - Refund Information

You can go online to check the status of your 2009 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return.

Be sure to have a copy of your 2009 tax return available because you will need to know your filing status, the first Social Security number shown on the return, and the exact whole-dollar amount of the refund.

You have two automated options for checking on your refund:
• Go to, and click on "Where’s My Refund" or "¿Dónde está mi reembolso?"
• Call 1-800-829-4477 24 hours a day, seven days a week for automated refund information

What Records Should I Keep?
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending already filed returns or preparing future returns.

Change of Address
If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also file a change of address with the U.S. Postal Service.

Email me with questions or visit for more information on refunds, recordkeeping, and address changes.

Monday, April 12, 2010

Keeping Tax Records

Q - How long should I keep tax records?

A - There are many records you have that may help document items on your tax returns. You’ll need this documentation should the IRS select your return for examination.

Normally, tax records should be kept for three years.

Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer. You should keep documents related to long lived assets for as long as you own the asset.

In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return for at least three years beyond the date the tax return was originally due.

Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available at or by calling 800-TAX-FORM (800-829-3676).

Friday, April 9, 2010

Ways to Pay Your Federal Income Tax

Q - I can't pay the entire amount I owe for income taxes by April 15. What are my options?

A - People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest.

If you can’t pay the full amount, you can contact the IRS to ask about alternative payment options. Here are some of the alternative payment options you may want to consider.

Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at or by calling 800-829-1040.

Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.

Or, you can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval. Generally, the IRS with accept a payment amount that will pay off your tax debt in five years. (Divide the amount you owe by 60 months to arrive at the suggested minimum monthly payment.)

You may make additional, unscheduled payments when you are on an installment payment agreement, and you can pay the full amount off early at any time.

This option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing.

You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan.

I will be happy to help you with any of these options.

You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. Do not add the convenience fee or flat fee to your tax payment.

Thursday, April 8, 2010

I will File your Income Tax extension for FREE with no obligation

April 15 is around the corner. I will file your automatic six month extension with the IRS for your individual income tax return for FREE with no obligation for me to prepare your tax return.

We can do this online or from your smart's easy and it will save expensive failure-to-file penalties.

Remember: if you owe money, you are required to estimate and pay what you owe by April 15, even if you have an extension. An extension will not relieve you of failure-to-pay penalties if you owe tax and under-estimated.

If your tax situation is simple and you're comfortable with computers, there are many good, free tax prep methods out there. Maybe you can file online yourself.

But if your tax and financial situation is more complex, you could be leaving money with the IRS. Do you really want to do that?

Consultations are always free.

Are you happy with your CPA/tax preparer? Isn't it time you had a CPA of your own?

Monday, April 5, 2010

Charitable Deduction for Reduced Rent? Part 2

Here is the same situation, but the question is coming from the not-for-profit...

Q - We are a not-for-profit; we asked our landlord to lower our rent by $500. He said he would agree if we gave him a receipt saying he had donated $500. Can we do this since we did not actually receive the $500? How do we balance our books if no contribution was actually received?

A - It is quite proper for you to give the landlord a contribution receipt for his gift-in-kind contribution.

The not-for-profit records gift-in-kind income to recognize the transaction. The books balance the contribution income with rental expense. Rental expense is recorded just as it would if cash had been spent. Again, it is a wash transaction. But there was a real donation of the rental space that the organization can recognize.

Many organizations don't properly recognize all of the gift-in-kind income they receive by way of donated services. However, not all donated services should be recognized, only those that the organization would have had to spend cash on if they had not been donated. Examples are legal, accounting, or other professional services. Normal 'volunteer' activities that a person performs for the organization are not included.

Charitable Deduction for Reduced Rent?

Q - I own a building that I rent to a non profit organization for $500/month. If I decide to lower the rent to $400/month, can I ask for a receipt stating I gave the organization $100/month as a donation and use that for a tax deduction?

A - Basically, no.

In order to claim a charitable deduction of the $100, you would have to report $500 in income. The IRS would look at your situation as a wash transaction: it is as though you received the full $500 in rent, and then turned around and donated $100 in a separate transaction.

The situation could even be worse by recognizing the contribution if you do not itemize deductions: you would be reporting the full $500 in rent and you wouldn't be able to deduct the charitable contribution because you didn't itemize.

The IRS only recognizes gifts of property as charitable contributions, not gifts of services or gifts of the partial use of property.

Saturday, April 3, 2010

Disability Income

Q I received disability income while I was off from work for several months. Now my employer is telling me I have to pay taxes on that money. Is this true?

A If you receive income for personal injury or sickness, the income is taxable if your employer paid the cost of the premiums for the coverage. If you paid the cost for the disability income coverage, the payments are not taxable to you. If you and your employer both contributed to the payment of the coverage, a portion of the income will be taxable.

If you are covered by an accident or health insurance plan as a part of a cafeteria plan and the premiums were not included in your income, you are not considered to have made the payments, and the income is taxable.

If you receive a pension or annuity for personal injury or sickness resulting from active service in the armed services of any country, the National Oceanic and Atmospheric Administration, the Public Health Service, or the Foreign Service you may be able to exclude the income from taxation.

Amounts you receive as workers' compensation for a work-related injury or illness are fully exempt from tax if paid under a workers' compensation act or statute. The exemption also applies to your survivors. Compensatory damages received for physical injury or illness are not taxable.

Loss of Function Compensation you receive for permanent loss of use of a part or function of your body, or for permanent disfigurement are not taxable. Reimbursements for medical care are not taxable, but may reduce your medical expense deduction.

Friday, April 2, 2010

New Small Business Health Care Tax Credit

Health coverage legislation enacted last month includes a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations afford the cost of covering their workers.

A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate. A qualifying employer must also have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible), and the employer must pay average annual wages below $50,000.

Both taxable (for profit) and tax-exempt firms qualify.

The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

An enhanced version of the credit will be effective beginning in 2014. The new law, the Patient Protection and Affordable Care Act, was passed by Congress and was signed by President Obama on March 23, 2010.

Thursday, April 1, 2010

Are Summer Camp Expenses Deductible for the Child & Dependent Care Tax Credit?

Expenses for summer day camps can count toward the Child & Dependent Care Tax Credit if certain requirements are met. Overnight camps don't count, but the Internal Revenue Service says day camp expenses do qualify for this popular credit.

Regardless of whether you paid for after-class child care during the school year or a week of day camp during summer break, you can apply the costs to the Child and Dependent Care tax credit and use it cut your tax bill at filing time.

There are limits that reduce the actual amount of the credit. Plus, you must make sure you and the person being cared for meet IRS eligibility guidelines.

Then there's the credit's job catch. You can only claim dependent care that was necessary so that you can go to or look for work.

If you're married, the IRS requires both of you to be employed or seeking a job. The only exception is when one spouse is either a full-time student or is physically or mentally incapable of self-care.

After clearing the employment hurdle, other requirements to claim the credit include:

* A filing status of single, head of household, married filing jointly or qualifying widow or widower with a dependent child. In most cases, married taxpayers who file separate returns cannot claim the dependent-care credit.
* The payments for care cannot be made to someone you can claim as your dependent on your return or to your child who is younger than age 19.

Please talk with me about the details of your situation to see if your expenses qualify for the Child & Dependent Care tax credit.