Tax Tips, and email access directly to Charles Coker, CPA - to get your specific questions answered.
Tax Tips:
•2010-2013 Small Business New Health Care Credit is one of the first health care provisions to go into effect under the new "Patient Protection and Affordable Care Act" signed by President Obama in March 2010. The credit is available to small businesses that pay at least half the cost of single health care coverage for their employees starting in 2010. Eligible businesses can claim the credit on their 2010 income tax return.
•What Happens After you File your Taxes? You can check the status of your refund 24/7 by calling 1-800-829-4477 or online at www.irs.gov by clicking on "Where is my Refund". You should keep your income tax documents indefinitely, along with other documents relating to a home purchase or sale, stock transactions, IRAs and business or rental property. If you discover an error or missing information from your return, we can help you file an amended one.
•If you receive an IRS Notice - Don't Panic! There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. My best advice is to send me a copy of the letter - I can then advise you as to how to respond.
•College can be expensive. To help students and their parents, the IRS offers Five Ways to Offset Education Expenses... scroll down to the bottom of this page for more information.
• In 2009 and 2010, the Making Work Pay provision provides a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns.
• Cash contributions made to qualified charities for Haiti Earthquake Relief between Jan 11, 2010 and Mar 1, 2010 can be considered as charitable contributions on your 2009 tax return.
•To Claim the First-Time Homebuyer Credit, you must enter into a binding contract for a principal residence before April 30, 2010, file a paper tax return with form 5405, and attach your executed settlement statement.
•The error rate is significantly reduced from 20 percent with paper returns to about 1 percent with e-filed returns. We include FREE electronic filing when we prepare your income taxes.
•What records should you keep for at least 3 years? Any and all documents that have an impact on your tax return, including: W2, 1099's, 1098, bills, credit card and other receipts, invoices, mileage logs, canceled checks, any other records to support deductions or credits you claim on your return.
• How long should you keep your tax records? Normal tax records should be kept for three years, but some documents - such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property - should be kept longer.
• According to the IRS, the average time required to complete and file a Form 1040 is 26 hours. Let us help you save time (and money) by having a professional CPA prepare your tax return. Our goal is to make your life less taxing.
• Make sure you are taking all the deductions you are allowed, including education and moving expenses. Talk to Charles about your unique situation to help reduce your tax liability.
• Need information on running a small business? This new web site, operated by the Small Business Administration, provides guides on starting and managing a business, government contracting, taxes, and a host of other helpful topics, including what types of permits and licenses are needed for your location and type of business. Visit www.business.gov
• Will you be susceptible to the AMT (alternative minimum tax) this year? Come in for a fall tax planning session or give me a call to review your situation.
• Other deductible items that you should keep track of include: child care expenses, alimony payments, non-reimbursed business expenses (such as union dues and subscriptions), and your safe deposit box fee.
• Ideas for helping to keep track of your income tax deductions: 1) Keep a separate folder or envelope for tax deductible receipts, and drop items in it throughout the year. 2) In your checkbook, mark checks with a code for deductible items, such as MD for medical, CH for charitable, TU for tuition.
• Do you qualify for a home office deduction? Yes, if your home office is the principal place of business. The IRS also considers the nature and extent of activities, and time spent at other locations.
•When you're putting your warm weather clothes away - consider bundling up those items you never wore and donating them to a charity. Keep the receipt, and you can take that as a deduction on your taxes.
•Review your income taxes withheld on your year-to-date pay stub. If you made any major tax-related changes this year- such as marital status, mortgage, dependents or capital gain/loss - you may want to change your withholding deductions for the rest of the year.
Ask Charles
Submit your tax, financial, or investement question to Charles and he'll get back to you!
Five Ways to Offset Education Costs College can be very expensive. To help students and their parents, the IRS offers the following five ways to offset education costs. 1.The American Opportunity Credit This credit can help parents and students pay part of the cost of the first four years of college. The American Recovery and Reinvestment Act modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student. Generally, 40 percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. 2.The Hope Credit The credit can help students and parents pay part of the cost of the first two years of college. This credit generally applies to 2008 and earlier tax years. However, for tax year 2009 a special expanded Hope Credit of up to $3,600 may be claimed for a student attending college in a Midwestern disaster area as long as you do not claim an American Opportunity Tax Credit for any other student in 2009. 3.The Lifetime Learning Credit This credit can help pay for undergraduate, graduate and professional degree courses ? including courses to improve job skills ? regardless of the number of years in the program. Eligible taxpayers may qualify for up to $2,000 ? $4,000 if a student in a Midwestern disaster area ? per tax return. 4.Enhanced benefits for 529 college savings plans Certain computer technology purchases are now added to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services. 5.Tuition and fees deduction Students and their parents may be able to deduct qualified college tuition and related expenses of up to $4,000. This deduction is an adjustment to income, which means the deduction will reduce the amount of your income subject to tax. The Tuition and Fees Deduction may be beneficial to you if you do not qualify for the American opportunity, Hope, or lifetime learning credits. You cannot claim the American Opportunity and the Hope and Lifetime Learning Credits for the same student in the same year. You also cannot claim any of the credits if you claim a tuition and fees deduction for the same student in the same year. To qualify for an education credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
For more information, see Publication 970, Tax Benefits for Education, which can be obtained online at IRS.gov or by calling Charles Coker CPA, who can advise you on the best solution to your situation.
Charles Coker, CPA One Skyline Place, 5205 Leesburg Pike Suite 213, Falls Church, VA 22041 Phone: (703) 931-3290 Fax: (703) 931-3690 Email:
