Alliance Tax Service Blog Updated tax news and information from Alliance Tax Service Sun, 31 Jul 2011 12:35:51 +0000 en hourly 1 About Sun, 10 Jul 2011 02:46:01 +0000 Administrator Welcome to the Alliance Tax Service blog. Our company provides in person and online tax preparation services for our clients. In addition, we offer payroll and bookkeeping services. Feel free to look through our posts and add your own comments as you see fit.

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2011 Residential Energy Credit Sun, 10 Jul 2011 00:29:29 +0000 Administrator This credit is available for property placed in service in 2011, but with
new limitations. The credit now has a lifetime limit of $500, of which
only $200 may be used for windows.

This credit still consists of qualified energy efficiency improvements and
residential energy property costs, but it is figured differently. Subject to the lifetime limits, only 10% of qualified energy efficiency improvements is allowed. Subject to the lifetime limits, the residential energy property costs are limited to $300 for energyefficient building property, $150 for any qualified natural gas, propane, or oil furnace or hot water boiler, and $50 for any advanced main air circulating fan.

Exterior windows, doors, and skylights must now just meet or exceed the Energy Star program requirements. Wood stoves must have a
thermal efficiency rating of at least 75%. Natural gas, propane, or oil
furnaces or hot water boilers must achieve an annual fuel utilization
efficiency rate of not less than 95.

Expenditures which are made from subsidized energy financing cannot be used to figure the credit.

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American Opportunity Credit / Hope Credit Sun, 10 Jul 2011 00:16:13 +0000 Administrator The Hope credit is modified and renamed the American Opportunity tax credit for tax years beginning in 2009 through 2012. The credit equals the sum of:

• 100% of the first $2,000 of qualified tuition and related educational expenses, plus
• 25% of the qualified tuition and related educational expenses over $2,000 but not more than $4,000.

Take a minute and view this video from I.R.S.

The maximum credit a taxpayer may claim for 2009 or 2010 is $2,500 and is allowed for the first four years (used to be 2 years) of the student’s post-secondary education in a degree or certificate program. (Doesn’t have to be college, can be most Vocational Technical Schools or Cosmetology Schools.)

The definition of qualified tuition and related expenses is modified to include tuition, fees, and course materials. The credit is phased out for taxpayers with modified AGI between $80,000 and $90,000 ($160,000 and $180,000 for joint filers). Up to 40% of the credit is refundable (meaning after you use the credit to zero out your income tax, you get the rest of it back in your pocket). Effective for tax years beginning after December 31, 2008, but only for tax years beginning in 2009 and 2010.

Whoever claims the student is allowed the credit.

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Savings Bonds as a form of your tax refund. Sat, 09 Jan 2010 02:22:00 +0000 Administrator can request a portion of his refund be used to buy Treasury I Bonds.]]> Buying Savings Bonds

This year, a taxpayer for the first time can request a portion of his refund be used to buy up to $5,000 in low-risk, liquid Treasury I Bonds, which earn interest and protect owners against inflation.

The resulting bonds will be issued in the taxpayer’s name. If the refund is a joint refund, the bonds will be issued in the names of both taxpayers. No beneficiary may be selected. The taxpayer need not have a TreasuryDirect account to purchase I Bonds using this option.

Using Form 8888, the taxpayer enters 043736881 as the routing number and checks the “savings” box. He must use the letters “BONDS” as the account number.

An I Bond request must be a multiple of $50. The taxpayer also needs to designate an account to which he wants the IRS to deposit the balance of his refund. For example, if his refund is $280, the taxpayer can request that $250 be used to purchase I Bonds and that the remaining $30 be deposited into a checking, savings or investment account.

In cases where a refund is an exact multiple of $50 but less than $5,000, the taxpayer may direct that all of the refund be applied to I Bond purchases by filling out the direct deposit information on his tax return and simply not using Form 8888.

The savings bonds will be mailed to the taxpayer.

Bonds will not be purchased in situations where the taxpayer makes an error figuring his refund, or if the bond request is not a multiple of $50 or the refund is offset for any reason. In these cases, the requested purchase will be cancelled and the entire refund mailed to the taxpayer in the form of a check.

Once the IRS has processed a tax return and placed an order for I Bonds, the taxpayer can inquire about the status of his bond purchase by calling the Treasury Retail Securities Site at 1-800-245-2804.

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Looking for the status of your income tax refund? Fri, 08 Jan 2010 06:00:00 +0000 Administrator If you are looking for the status of your IRS tax refund, click here
You will need to provide the following as they appear on your tax return:
1. Social Security Number
2. Filing Status
3. Exact Amount of Tax Refund

If you are looking for the status of your bank tax refund loan, click here
You will need to provide the following as they appear on your tax return:
1. Social Security Number
2. Filing Status
3. Exact Amount of Tax Refund

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Vehicle Expenses for Business Use Mon, 07 Sep 2009 15:18:48 +0000 Administrator It is a misconception that you may deduct the full cost of a passenger vehicle if you use it in your business with no restrictions. Utility trucks, work vans with no passenger seats, over-the road tractors, vehicles left at your place of business, and some other types of specialty vehicles are not usually passenger vehicles, and might POSSIBLY be allowed a deduction of 100% of all expenses without logs. But this is determined by considering each vehicle and the situations surrounding the use of each vehicle. An additional note; just because you have a sign on your vehicle, advertising your business does not make your vehicle 100% business use. It does make the sign a business deduction, however.

There are two types of deductions for the business use of your passenger vehicle. But BOTH of them only allow a deduction for the business use of your passenger vehicle. You may take the standard mileage rate which varies from year to year, or you may take the actual cost of your vehicle including the cost to use and maintain it.

For the standard mileage rate, you are required to keep a mileage log of the business miles driven to multiply by the allowable rate. These logs need the beginning odometer reading on your vehicle on January 1 or the first day of use and the ending odomoeter reading on the last day of use, or December 31, which will give you the total mileage driven during the year. Then your daily logs will need four things for each business trip, no matter how short or long. 1) the date, (We suggest a pocket planner or appointment calendar and your date is already there for you.) 2) the destination (You do not necessarily need a long explanation, just a simple city or community.), 3) the business purpose (A two or three word purpose like to bid, or get supplies, or show house to ____, or whatever suits your profession, will be sufficient.), and 4) the number of miles (just the number of miles should be fine, odometer readings each day would not usually be required). The only receipts that would need to be retained for this deduction would be some maintenance records with odometer readings to prove the miles driven during the year, and some evidence that the miles driven were actually necessary and customary in your profession.

With the actual expenses, all expenses are kept for the entire year and then you will arrive at the deductible percentage of business use, using the percentage of business miles driven versus the total miles driven. The same log explained in the standard mileage deduction in the previous paragraph would also be required for this deduction. These actual expenses would include, but not be limited to, fuel, maintenance, repairs, insurance, and license tags. The cost of the vehicle would also be deducted over a period of years using IRS’s depreciation rules. The allowable exception to this would be the option of using special rules to take all, or at least a large portion of the cost of the vehicle in the first year. There are other requirements that would need to be met to allow the exception that would allow this deduction.

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Converting Traditional IRA’s to Roth IRA’s Mon, 07 Sep 2009 14:23:21 +0000 Administrator Caution: If you convert your regular IRA to a Roth, watch out for this payout quirk.

You can be hit with a 10% penalty on withdrawals in the first five years after the conversion, even if you take out funds you converted from the IRA tax free. Normally, the penalty only applies to taxable withdrawals. But IRS regulations say the entire payout is hit with the 10% penalty unless you’ve turned 59½, are disabled or have elected to take a series of substantially equal distributions from the Roth.

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NEW – FSA’s, HSA’s, and HRA’s Mon, 07 Sep 2009 14:18:42 +0000 Administrator A new restriction … no more using Flexible Spending Accounts, Health Savings Accounts, or Health Reimbursement Arrangements to pay for any over-the-counter medicines.

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Making Home Affordable – Refinance and Modification Sat, 29 Aug 2009 17:53:26 +0000 Administrator The Treasury Department has introduced a program called Making Home Affordable, which is intended to stabilize the housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

There are two parts to the new program, the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP). The Home Affordable Modification Program gives homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. Qualifications for eligibility for HARP, which expires on June 10, 2010, can be found on the program’s website. A refinance under HARP must have a mortgage note date on or before that date.

The Home Affordable Modification Program commits $75 billion to preventing avoidable foreclosures. Only loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible. Qualifications for HAMP, which expires on December 31, 2012, can be found on the program’s website.

More information is available at the Making Home Affordable website, which provides homeowners with self-assessment tools and calculators to help determine whether they might be eligible for a modification or a refinance under the program.

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Tennessee New Workers’ Compensation Law Sat, 23 May 2009 00:58:54 +0000 Administrator Public Chapter 1041 (SB1748/HB1645) clarifies that unless you are a sole proprietor or partner (with no employees) getting paid directly by the property owner, an employer in the contracting group designated by the National Council of Compensation Insurance (NCCI) must have workers’ compensation insurance on themselves. This Act becomes effective December 31, 2009.

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