The TaxMan

9 IRS Tax Filing Tips

2009-01-18T01:13:00.000-08:00

The IRS is offering some tips for filing your 2009 tax returns. They recommend you log onto the IRS "new look" website (irs.gov) for improved online tools, new tax laws and enhanced electronic services that will better assist taxpayers and tax preparers.

The agency surpassed an important milestone last year as nearly 90 million returns were e-filed nationwide.

Here are some of the new laws to consider:

• First-Time Homebuyers Tax Credit: First-time homebuyers should begin planning now to take advantage of a new tax credit available for a limited time. The credit applies to primary home purchases between April 9, 2008 and June 30, 2009. This tax credit must be paid back in equal payments over 15 years. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. First-time homebuyers are those who have not owned a home in the three years prior to a purchase.

• Real Estate Tax Deduction: There is an additional standard deduction for those who don’t qualify to itemize their tax deductions, but pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers. This deduction is available for the 2008 and 2009 tax years. This property tax deduction is in addition to the standard deduction used by filers.

• Tuition and Fees Deduction: You may be able to deduct qualified tuition and required enrollment fees up to $4,000 that you pay for yourself, your spouse, or a dependent. You do not have to itemize to take this deduction. However, a taxpayer cannot take both the tuition and fees deduction and education credits (Hope & Lifetime Learning Credits) for the same student in the same year. Income limits and other special rules apply to each of these provisions. To determine whether your expenses are qualified, refer to IRS Publication 970, Tax Benefits for Education. IRS Publication 970 also describes other education-related tax benefits.

• Educators’ Out of Pocket Expense Deduction: The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment and software used in the classroom. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. Worth up to $250, the educator expense deduction is available whether or not the educator itemizes deductions on Schedule A.

• Recovery Rebate Credit: If you did not qualify or did not receive the maximum amount for the 2008 Economic Stimulus Payment you may be entitled to a Recovery Rebate Credit when you file your 2008 tax return. Review the tax return filing instructions including the Recovery Rebate Credit worksheet.

• Recordkeeping: Are your tax records organized? The IRS encourages taxpayers to take the time now to gather and organize their records to reduce stress at tax time. Check out the latest tax changes on the IRS.gov Web site and remember to e-file your tax return which helps ensure you do not miss out on any tax deductions, credits and benefits.

Here are some other tips:
1. By filing your tax return electronically, you can get a refund is as little as ten days.

2. Why not put your tax refund into purchasing a new home. It is certainly a buyer's market and even though you may not think so, financing is available.

3. Find out about more True Tax Facts

Mass Holes Tax Revenues Plunge

2008-12-16T05:25:00.000-08:00

The state of Massachusetts will be cutting state services to balance the budget due to a dramatic reduction of almost $800 million in tax revenues. The state's midyear shortfall may be well over $2 billion, or almost 8% of the entire budget.

The outlook is grim. State officials are expected to meet privately to come up ways to plug the deficit. It will be difficult with unemployment and declining revenues from the state lottery to plummeting of capital gain taxes.

It appears that lawmakers are ready to panic. Massachusetts is in the same boat as many other states. Gov. Patterson of New York already has come up with creative and painful ways to cut into it's deficit. The governor is proposing an "obesity tax" on non-diet soda, reviving the state sales tax on clothing, lifting the limit on how much state tax can be charged for gasoline and eliminating legal exemptions in the income tax that he considers "loop holes". Expect Massachusetts to look closely at these too!

Right now the options that Mass Holes will have to live with include raising the state's gasoline tax, tapping the $1.7 billion in the reserve account, and making deep cuts in spending. It is said that state officials are hoping a stimulus package from the incoming Obama administration could help alleviate some of the revenue problems.

A bailout by the government is wishful thinking - and even if one is granted - it will not be a long term solution. Only a reversal of the recession of can save Massachusetts - and the other states.

Get more information on taxes and the IRS

Tax rebate e-mail a scam says IRS

2008-11-20T15:29:00.000-08:00

The Internal Revenue Service says anyone in the United States who receives e-mail regarding help earning a tax rebate should view it as a scam.
Boston IRS spokeswoman Peggy Riley said while the e-mail messages appear official, they won't help anyone receive an Economic Stimulus refund and would instead endanger the user's computer, Boston's WCVB-TV said Wednesday.
"These 'very official' looking e-mail messages alert people about a refund owed to them but when opened they can be dangerous to you and your computer," Riley said.
The IRS official said the federal department had already received reports regarding the scam e-mail, which typically ask a user to open an attachment as part of the alleged IRS notice.
Riley said anyone who may have fallen prey to the e-mail scam should immediately take steps to ensure private information was safe and to prevent any incidents of identity theft, WCVB-TV said.
"If you have actually responded to a scam e-mail by giving out your private information, you should immediately take steps to prevent identity theft. You may now be a prime target," Riley said.

Million$$$ In IRS Refunds Returned - Nov28 Cutoff

2008-11-07T09:40:00.000-08:00

Believe it or not, over 380,000 pieces of mail (containing refunds and economic stimulus payments) have been returned to the IRS.

WHY?

The pieces of mail were undeliverable due to bad addresses. This has caused frustration in taxpayers and it's created a problem for the IRS on how to get more than $226 million in tax rebate and tax refunds checks to the rightful owner.

If you haven't received your IRS rebate or refund tax you have until November 28, 2008 to claim your check.

Most of the money still unclaimed is from returned rebate checks. They total $163 million and the average rebate check is $583.00. The regular refunds are fewer and account for only $103 million, but the average returned refund check is $988. But remember, these are average. Yours could be more or less.

This year's returned tax check problem is three times the number from last year. This can be attributed to the economic stimulus payments, which were sent to taxpayers who met certain income requirements.

All these rebate-eligible filers had to do was file a 2007 tax return. But in 279,000 cases, the addresses on those 1040 forms were incorrect.

In many cases, the taxpayers moved after filing their returns and didn't let the IRS know their new addresses. In some cases, though, the addresses on the forms were illegible, so they bounced back to Uncle Sam.

The same problems showed up on another 104,000 or so returns filed by taxpayers who are due regular tax refunds.

Whatever the reason and whichever tax payment is involved, the IRS has money that could be yours.

"People across the country are missing tax refunds and stimulus checks. We want to get this money into the hands of taxpayers where it belongs," IRS Commissioner Doug Shulman said in announcing the returned check problem. The tax chief added that as soon his staff gets the updated addresses, the checks will once again be on their way.

Nov. 28 tax rebate deadline
Getting that information to the IRS is relatively simple, especially if you use the online options provided by the IRS.

If it's a rebate check you're missing, head to the IRS's "Where's My Stimulus Payment?" online tracking tool. There you can check the status of your stimulus check and receive instructions on how to update your address. If you prefer, you can do the same by calling the IRS at (866) 234-2942.

Just make sure you go online or make the call by Nov. 28.

By law, the rebate checks must be sent out by Dec. 31. So the IRS has established the late-November address change cutoff date to ensure that it can update its records and meet the final mailing deadline.

Recovering a regular refund
If it's a regular refund you're awaiting, check the IRS's popular "Where's My Refund?" money tracker. You'll need your Social Security number, filing status and the amount of refund shown on your 2007 return.

The online search option then will provide the status of your refund and, in some cases, provide instructions on how to resolve delivery problems. You'll also be given instructions on how to update your address.

Again, you can check on your refund and update your personal information by calling the IRS, this time at (800) 829-1954.

If you can afford to wait for your refund money or are just too busy right now to be bothered with tracking down missing tax money, you can wait. Your unclaimed tax refund check will find you next filing season when you send in your 2008 return that lists your current, correct address.

Missed deadline means credit, not cash
With a rebate check, however, such procrastination could be costly. You must meet the Nov. 28 address update deadline to get your money this year.

True, if you don't get the correct mailing information into the IRS by then, you'll get another chance in 2008 at a stimulus payment.

But next year the stimulus payment will be in the form of a credit on your tax return, not a separate check as was sent out this year.

And changes in your income and tax situation this year could affect your stimulus amount.

For example, if you have a child that qualified on your 2007 return for the child tax credit, you were eligible for an extra $300. However, if that child in 2008 does not meet the tax credit requirements, you won't get that added economic stimulus money on the return you file next year.

Also, keep in mind that although the stimulus payment was distributed in 2007 as a check, it actually is a tax credit. That means any amount of stimulus for which you qualify on a 2008 return will be accounted for against your tax liability.

This means, for example, if you qualify for a $600 economic stimulus amount on your 2008 return and owe $1,000 in taxes, that $600 will be used to reduce your tax bill. You will not get the $600 as a separate payment.

So if you haven't received your stimulus check yet, contact the IRS, either via the online rebate tracking tool or by phone, as soon as possible. And definitely do so by the Nov. 28 deadline. That's the only way you'll get your rebate money this year.