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Dec 09

Any points you paid to refinance your home can be deducted over the life of the new loan. So if you refinanced your mortgage on September 1, 2009 for a 15-year term, you can deduct a percentage of the points (4 out of 180 months) in 2009. The amount may not be huge, but every little bit helps.

Don’t forget the points on the old mortgage. The remaining unamortized points on the old mortgage are deducted in the year of you refinance

Dec 07

If you’re planning on giving large cash gifts this holiday season, you can give up to $13,000 per person (to any number of persons) without having to file a gift tax return. The limit is doubled ($26,000) if you’re married and the gift is from you and your spouse.

In most cases, the gift is not complete until the recipient cashes or deposits the check. Be sure this is done by the end of the year.

Dec 04

The IRS intends to start a research study on employment tax compliance beginning in February, 2010. The IRS will randomly select 2,000 taxpayers each year for the next three years for audit.

Why? The IRS believes that its data on employment tax compliance is dated. It has been over 20 years since their last study.

When done, the IRS will use the results to help select and audit employment tax returns. The IRS wants to select the returns which have the most compliance risk, that is, the highest likelihood of collecting additional tax.

Dec 02

Well, if you use Kruse and Crawford to prepare your individual tax return in 2010 figure that you will be e-filing your return. We don’t have a lot of choice here. Congress decreed this result in the Worker, Homeownership and Business Assistance Act (signed November 6, 2009). Actually what Congress did is require us – as professional tax preparers – to electronically file the individual income tax returns we prepare.

They got to you through preparers like us. Sorry about that.

Dec 01

Many family-owned businesses shift income between family members.

The kiddie tax requires the excess unearned income of children to be taxed at their parents’ marginal rate. Unearned income would include interest and dividends, for example.

It used to apply only to children under 18 in 2007. Beginning in 2008 it now applies to all children under 19 and to full-time students under age 24, unless the student’s earned income is one-half of his or her support.

Nov 23

If you installed energy-efficient doors, windows or skylights, added insulation or bought an energy efficient furnace and air conditioning systems, you’ll qualify for a tax credit equal to 30% of the cost, up to a maximum of $1,500.

The residential energy property credit will also apply for 2010.

Nov 17

The IRS has issued guidelines for taxpayers making year-end charitable contributions.

 The IRS reiterated that contributions are deductible only if made to qualified organizations.

 Credit Card

 Contributions are deductible in the year made. Therefore, if you charge a donation on a credit card before the end of 2009, it is deductible in 2009. This is true even if you do not pay the credit card bill until 2010.

 Clothing and Household Goods

 Donations of clothing and household items must generally be in “good used condition or better” to be deductible.

 The fair market value of used clothing and other household items is usually far less than the original purchase price. There are no fixed methods for determining the value of used clothing. Taxpayers should claim the price used in thrift and consignment stores.

 If you donate property at a charity’s unattended drop site, you should maintain a written record of the donation, including information as to the property donated, location of the site, charity’s name, description of the property, and method used to determine the value. Additional substantiation rules apply to contributions of $250 or more.

 Regardless of the amount, donations of money must be evidenced by a bank record or a written communication from the charity. You must also get an acknowledgment from the charity for each deductible contribution (either money or property) of $250 or more.

 

Nov 17

Remember that you may be entitled to a “worthless stock” deduction in 2009.

Nov 11

The IRS has released (IR-2009-111) the standard mileage rates for 2010 (Rev. Proc. 2009-54)

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

  • 50 cents per mile for business miles driven [down from 55 cents last year]
  • 16.5 cents per mile driven for medical or moving purposes [down from 24 cents]
  • 14 cents per mile driven in service of charitable organizations [same as last year]

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago. to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

Nov 10

If you did, you can deduct state and local sales tax from your 2009, regardless of whether you itemize or not.

 A qualified motor vehicle is a passenger automobile, light truck, or motorcycle with a gross vehicle weight rating of 8,500 pounds or less. The car has to be new. The new car sales tax deduction is limited to the first $49,500 of vehicle’s price. There is no limit to the number of vehicles that you can buy. 

This tax break begins to phase out for single filers with modified AGI of $135,000 and for couples with modified AGI of $260,000.