Recent Articles
Making Work Pay and Government Retiree Credits
Jan 13, 2010 Tax Changes 1 Comment
The American Recovery and Reinvestment Act of 2009 (ARRA) was passed to help the US economy, with almost $800 billion in stimulus money, to recover from the recent financial crisis. Three provisions affect the average taxpayer in 2009; the Making Work Pay Credit (MWPC), the Economic Recovery Payment (ERP), and the Government Retiree Credit (GRC).
In brief:
Making Work Pay Credit (MWPC) is a refundable credit available in 2009 and 2010 worth 6.2% of earned income up to $400 ($800, MFJ). You are not eligible for this tax credit if you do not have a valid for work social security number, are a dependent or non-resident alien. When filing MFJ, only the taxpayer needs a valid social security number. Most taxpayers will have already received this “tax benefit” through the mid-year reduction in tax withholdings.
H&R Block settle IRA lawsuit in NY
Jan 12, 2010 Federal Tax Return 1 Comment
A shameless “cut and paste” directly from Reuters News:
NEW YORK (Reuters) – H&R Block Inc will pay as much as $20.2 million to settle a New York lawsuit accusing it of fraudulently marketing retirement accounts that caused hundreds of thousands of mostly lower-income clients to lose money. New York Attorney General Andrew Cuomo said the accord calls for the largest U.S. tax preparer to refund $11.4 million to $19.4 million of fees to customers nationwide who opened one of its Express IRAs, a type of individual retirement account.
2009 IRS Uniform Definition of a Child has changed
Jan 11, 2010 Tax Changes 2 Comments
Beginning January 1, 2009, the Internal Revenue Service has changed their Uniform Definition of a Child regulation. As of 2009, a qualifying child (QC) must be younger than the taxpayer except when the QC is totally and permanently disabled. You cannot claim a child as a QC if they file a joint return with another individual unless that tax return is a claim for refunding payroll withholdings. IRS Form 8901, Information on Qualifying Children Who Are Not Dependents, is, as of 2009, obsolete. Your child is a QC only if you can and do claim them as a tax exemption. Furthermore, rules for filing IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, have changed. A divorce decree or other court documents no longer serves as notification a custodial parent has released the child tax exemption to the non-custodial parent; the non-custodial parent must file IRS Form 8332 that has the signature of the custodial parent.
2009 Earned Income Tax Credit (EITC) changes
Jan 10, 2010 Tax Changes Leave a comment
The Earned Income Tax Credit (EITC) is one of the few refundable tax credits available to the “average” tax payer. It is designed for the low-income individual by offsetting any income tax liability. It is important and, unfortunately, a target for fraudulent filings because any balance that remains after the tax liability is covered will be refunded to the tax payer. When a person supports dependents, the refundable credit can be significant.
IRS watching professional tax preparers
Jan 7, 2010 Tax Strategies Leave a comment
Beginning 2011, the Internal Revenue Service (IRS) will require professional tax preparers to register, pass competency tests and enroll in continuing education classes. Certified public accountants, attorneys, and tax practitioners called enrolled agents will not be subject to these new competency requirements. Representatives from the IRS have said that regulating this seasonal industry is reasonable especially given the impact the activity could have on a person’s life. The top national tax preparation companies have welcomed this new program; they typically train and test their employees on a seasonal basis.
