It’s Tax Time. Are You Taking All the Deductions Allowed?

Five words or less(NewsUSA) – Here’s a scary number to keep in mind if you’re just getting your tax receipts together: $1 billion.
No, it’s not the amount that Warren Buffet’s secretary — let alone Buffet personally — paid the IRS in her lifetime. It’s how much taxpayers approximately wind up forfeiting each year to the government because of self-inflicted tax errors like: failing to claim tax credits and deductions legally due them; choosing the wrong filing status; and not bothering to send in a return at all.
Well, guess what? A slew of recent changes in the tax law won’t make things any easier this year.
“At a time when taxpayers are hurting, it really doesn’t make sense to leave money on the table,” says Elaine Smith, master tax advisor at H&R Block, the giant tax preparation firm (www.hrblock.com).
Here are some things — good and bad — to watch out for:
* Casualty losses. Hurricane Irene. Midwest tornadoes. Texas wildfires. Mother Nature went a little nutty last year, and — if the president declared your area a disaster — you could be able to claim your loss as an itemized deduction on your 2011 return or on an amended 2010 one.
* Reduction in the Energy Savings Home Improvement Credit. At its height, this was a 30-percent credit on the cost of high-efficiency windows, furnaces, central AC and the like. It’s now 10 percent. Plus, the maximum lifetime credit went from $1,500 to $500. “That means if you spent a total of $5,000 on IRS-approved upgrades in 2011,” says Smith, “you can claim a $500 credit. Unless, that is, you’d already maxed out in prior years.”
* Expiration of the tax credit for hybrid cars. If you bought a Prius last year, you did so without the feds’ help. However, the green cars du jour — i.e., the electric-drive Chevy Volt and Nissan Leaf — will score you a $7,500 credit. And there are goodies for things like conversion kits, too.
* New cost-basis reporting requirements. Apparently, some of you were inflating the price you paid for stocks to reduce the taxes owed on capital gains. Or at least the government fears that was happening. So look out for a mandatory statement from your broker reporting your “cost basis” for stocks and securities held in taxable accounts — as opposed to 401(k)s and IRAs — that you sold in 2011.
Of course, with the April 17 filing deadline approaching, those worried about becoming a member of the $1 Billion Club might want to consult a professional like those at H&R Block, which offers in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.

File an Extension or Need to Amend Your 2009 Return? Don’t Forget These Credits

<b>File an Extension or Need to Amend Your 2009 Return? Don’t Forget These Credits </b>“></td>
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<p>(<a href=NewsUSA) – Dozens of new tax laws could impact your 2009 federal taxes. Experts recommend taking extra time and care with this year’s return so you don’t miss out on any tax breaks.

Only the Making Work Pay, energy and American Opportunity credits will be available again for 2010 returns, so take advantage of the other breaks while you can,” advises Jessi Dolmage, spokeswoman for 2nd Story Software, Inc., makers of TaxACT.

1. Get organized. Using TaxACT to file your return by October 15, 2010, or amend your 2009 return. If you’ve filed an extension, you can still prepare, print and e-file your 2009 federal return free with TaxACT Free Federal Edition at taxact.com. If you need to amend your return, you can do that quickly and easily with TaxACT Deluxe.

2. Contribute to your traditional IRA. The Making Work Pay Credit will again be distributed through decreased federal withholding in 2010, so if you were under 70-1/2 years of age at the end of 2009, contributing to your traditional IRA through April 15, 2010, can lower your 2009 tax bill. You and your spouse can contribute up to $5,000 each ($6,000 if age 50 or older at the end of 2009). Depending on your filing status, modified adjusted gross income and whether you or your spouse were covered by a retirement plan, your deduction may be limited.

3. Use tax preparation software. Free and low-cost solutions like TaxACT guide you through the new credits, deductions and tax laws. They also do the math, help find missing information and identify potential errors. TaxACT Free Federal Edition allows everyone to prepare and e-file for free — regardless of income, age, state of residence and military status. TaxACT also includes a maximum-refund guarantee and all e-fileable forms for simple and complex returns.

4. Consider itemizing. The standard deduction for 2009 is $5,700 for individual or married filing separately returns, $11,400 for joint returns or qualifying widow(er) returns and $8,350 for head-of-household returns. If your eligible deductions exceed the standard deduction amount, you’re likely better off itemizing. Software like TaxACT will identify your best option after you enter your deductions.

5. File and pay as much as possible by April 15. Even if you can’t pay your entire tax bill by the deadline, file early and schedule payment any time before April 15 (June 15 for taxpayers who qualify as “out of the country”) to avoid penalties and interest. If you need a six-month extension (four months if “out of the country”), Form 4868 is due by April 15 and will extend your filing deadline to October 15, 2010. Remember, an extension to file is not an extension to pay.

This is not the year to procrastinate, especially if you’re getting a refund. You could have your refund in as few as eight days by e-filing and selecting direct deposit. The exception is taxpayers claiming the first-time homebuyer credit. The IRS requires that a copy of your settlement statement be mailed with your return (to prevent fraud), and the IRS likely won’t start issuing those refunds until the end of March.

Learn more about 2009 tax law changes and TaxACT at www.irs.gov and www.taxact.com.

Save on Your Taxes by Starting Your 2010 Return Early

<b>Save on Your Taxes by Starting Your 2010 Return Early</b>“></td>
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<p>(<a href=NewsUSA) – Some major tax breaks included in the American Recovery and Reinvestment Act (ARRA) and the Worker, Homeownership and Business Assistance Act passed last year are expiring for 2010, including the First-time Homebuyer credit, new vehicle credit and unemployment deduction and government retiree credit. However, many credits will again be available for 2010 federal returns -; the Making Work Pay, American Opportunity, additional child, expanded earned income and home energy improvement credits are among them.

“Certain credits and deductions require advanced planning in order to get the maximum tax benefit. Although it may seem really early to start tax planning for next year, it’s a smart move that could save you thousands.,” explains Jessi Dolmage, spokeswoman for Second Story Software, the makers of TaxACT.

A few easy steps will help you avoid missing out on credits and deductions, and minimize your tax liability.

First, familiarize yourself with both acts by visiting www.IRS.gov. An entire section of the website is dedicated to the ARRA, and additional information and a Making Work Pay Calculator are available at www.TaxACT.com/recovery-act.

Second, get organized. Put all tax records in one secure place, including receipts and statements related to:

* Child and dependent care

* College expenses

* Medical expenses

* Vehicle taxes

* Real estate taxes and mortgage interest

* Charitable contributions

* Business or employee expenses

* Investments and retirement contributions

* Energy-efficiency property expenses

* Expenses related to job searches

Sort documents by topic to easily access the information when working on related deductions and credits. In addition, include a copy of your 2009 tax return for reference and comparison. If you plan to e-file, you’ll need it for your 2009 Adjusted Gross Income or Self-select Personal Identification Number.

Third, start your 2010 federal tax return in October and create your year-end tax plan with the preview versions of TaxACT. Starting your federal return early will save time when you’re ready to file, reduce errors (because you won’t be rushing), and find all your deductions and credits.

Dolmage explains, “Whether you typically do your own taxes or have never done them, a solution like TaxACT Online Free Federal Edition will show you exactly how these tax law changes will affect your 2010 return. Choose a step-by-step interview or complete the IRS forms yourself, at your own pace. Either way, TaxACT will help you capitalize on the acts and estimate your refund amount or taxes owed.”

To start your free 2010 federal tax return or for more information about TaxACT, visit www.TaxACT.com.

Time and Money Saving Tips for Your 2010 Tax Return

<b>Time and Money Saving Tips for Your 2010 Tax Return</b>“></td>
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<p>(<a href=NewsUSA) – The American Recovery and Reinvestment Act of 2009 will still benefit millions of workers, families and college students on their 2010 federal tax returns.

The Making Work Pay Credit is equal to 6.2 percent of your earned income, up to $400 for individuals and $800 for joint filers in 2010. It starts phasing out at $75,000 for individuals and $150,000 for joint filers. Like last year, the credit is already being distributed in paychecks through increased federal withholding. (If you don’t withhold federal taxes, you’ll receive the credit when you file your 2010 return.) Even though you receive this credit in each paycheck, you’ll generally still need to claim the credit on your 2010 tax return. The credit on your federal return makes up for the reduced withholding throughout the year.

The credit should be figured using Schedule M and recorded on Form 1040, 1040A or 1040EZ.

Certain energy-efficient home improvements are worth up to $1,500 through the Nonbusiness Energy Property Credit and Residential Energy Efficient Property Credit. Then add this sentence: The $1,500 limit is the maximum amount that can be claimed for both 2009 and 2010 combined, and you must claim the credit in the year that the improvements were made. Both credits should be claimed on Form 5695.

The HOPE credit is now called the American Opportunity Credit and is worth up to $2,500 per student for tuition, related fees and required course materials in 2010. It phases out at a modified adjusted gross income of $80,000 for individuals and $160,000 for joint filers.

Form 8863 must be filed to claim this credit.

Jessi Dolmage, spokeswoman for 2nd Story Software, Inc., the makers of TaxACT, recommends these steps:

1. Using the preview versions of TaxACT made available in early October for year-end tax planning and to get a head start on your 2010 federal return.

2. Reviewing your withholding. The Making Work Pay Credit is being distributed through decreased federal withholding, so having too little tax withheld may result in a smaller refund or more taxes owed.

3. Learning more about the ARRA at www.IRS.gov/recovery and www.TaxACT.com/recovery-act.