Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has kicked off the 2009 tax filing season by issuing guidance that announces and recaps a number of programs and tax law changes that affect the filing of 2008 tax returns, help financially distressed taxpayers receive their refunds faster and provide additional assistance to individuals who are struggling to meet their tax obligations. Several suggestions are offered to taxpayers who owe back taxes, such as additional review of offers-in-compromise and expedited levy releases. In addition, electronic filing options are offered to more taxpayers and many "fillable" tax forms are now available (TAXDAY, 2009/01/07, I.2).

 
IRS Fact Sheet FS-2009-1 recaps and highlights tax changes for the 2008 tax filing season. These highlights include a reminder that economic stimulus payments are not taxable, and they are not reported on 2008 tax returns. Additional highlights include the raising of the alternative minimum tax (AMT) exemption for 2008 and the limits on contributions to IRAs and other retirement plans; the first-time homebuyer credit for homes purchased from April 9, 2008, to June 30, 2009; special tax relief related to severe storms, tornadoes or flooding in the Midwest.

  The standard deduction has increased for most taxpayers and taxpayers can claim an additional standard deduction, based on state or local real-estate taxes paid in 2008. A taxpayer can also increase his standard deduction by the net disaster losses suffered from a federally declared disaster. Inflation adjustments have also increased the amounts of the personal and dependency exemptions, and the maximum earned income credit. The standard mileage rate for business use of a vehicle has increased, while the rate for use of a vehicle for medical reasons or as part of a deductible move has decreased. The rate for use of a vehicle to provide services to charitable organizations has not changed.

  Also new in 2008, the five-percent tax rate on qualified dividends and net capital gains is reduced to zero; the "kiddie tax" has been revised; any Conservation Reserve Program (CRP) payments are now exempt from the 15.3-percent Social Security self-employment tax; and more farmers and self-employed people this year can choose the optional methods for figuring and paying the self-employment tax. Several expiring deductions and credits also been renewed.

  In IRS Fact Sheet FS-2009-2, the IRS alerts taxpayers to the new first-time homebuyer credit and reminds taxpayers about other popular, but sometimes overlooked tax credits. Taxpayers who qualify can use these credits to increase their refund or reduce their tax bill.

  First-Time Homebuyer Credit. Taxpayers who bought a main home during the period from April 9, 2008, to June 20, 2009, may be able to claim a first-time homebuyer credit of up to $7,500. This credit works more like a 15-year interest-free loan in that it is repaid each year as an additional tax. The credit is claimed on new Form 5405. Various restrictions on income and prior home ownership apply.

  Earned Income Tax Credit (EITC). The EITC may be available to working families with incomes below $41,646 and childless workers with incomes under $15,880. The IRS has a tool on its website called the "EITC Assistant" that will be available in mid-January to help you see if you qualify for the credit.

  Child Tax Credit. Taxpayers may claim a $1,000 credit for each eligible dependent child under age 17, in addition to the regular $3,500 exemption that can be claimed for each dependent.

  Credit for Child and Dependent Care Expenses. The credit for child and dependent care expenses is claimed if the taxpayer pays someone to care for a dependent child under the age or 13 or a spouse or dependent who cannot care for himself or herself, in order for the taxpayer to work or look for work. The credit is claimed on Form 2441.

  Education Credits. The Hope credit and the lifetime learning credit help parents and students pay tuition and enrollment fees for post-secondary education. Many limitations apply, including a restriction that the education credit and the tuition and fees deduction cannot both be claimed for the same student in the same year.

  Saver's Credit. The saver's credit (also known as the retirement savings contributions credit) is designed to help low- and moderate-income workers save for retirement. The 2008 income limits for this credit are $26,500 for singles and married taxpayers filing separately, $39,750 for heads of household, and $53,000 for joint filers. Qualifying taxpayers must make contributions to an IRA or workplace retirement plan such as a 401(k) plan. 2008 IRA contributions can be made until April 15, 2009. The credit is claimed on Form 8880.

  Other Credits. The IRS has information on other credits, such as the recovery rebate credit, the District of Columbia first-time homebuyer credit, the foreign tax credit, the credit for the elderly or the disabled, the adoption credit, the residential energy efficient property credit, the alternative motor vehicle credit, the credit for prior year minimum tax, and various business credits, on its website, IRS.gov.

  In IRS Fact Sheet FS-2009-3, the IRS issued guidance addressing the recovery rebate credit for individuals who did not receive an economic stimulus payment in 2008. The recovery rebate credit is a special one-time benefit that most people received in 2008 as an economic stimulus payment, based on 2007 tax return information. Individuals who were not eligible for the economic stimulus payment or did not receive the maximum amount may be eligible for the credit based on 2008 tax return information due to a change in circumstances, including a change in income, addition of a child, or, for Social Security and veterans' benefits recipi ents, an increase in qualifying benefits.

  Taxpayers can choose to have the IRS calculate their eligibility for the credit and the amount that should be claimed by following the "Credit Figured by the IRS" instructions on the 2008 Form 1040, 1040A or 1040EZ. Taxpayers who choose to calculate the credit themselves can do so by using commercial tax preparation software or a worksheet included with the instructions for Forms 1040, 1040A and 1040EZ. To calculate the recovery rebate credit, individuals will need to know the amount of the economic stimulus payment received in 2008. Two online tools, The Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment? will be available to taxpayers through the Recovery Rebate Credit Information Center on the IRS website, www.irs.gov.

  The numerous ways taxpayers can access free assistance with their tax-related concerns are addressed in IRS Fact Sheet FS-2009-6. A comprehensive listing of these services is found in IRS Publication 910, Guide to Free Tax Services. Taxpayers with personal computers can access information on almost every tax topic and check the status of their refunds on the IRS's website, www.irs.org.

  Free help can be obtained via telephone on individual and business-related tax issues. In many communities, in-person tax preparation assistance is available through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites. IRS Taxpayers Assistance Centers also offer personal help with tax issues that cannot be handled on-line or by phone, including inquiries, adjustments, letters, notices and payment plans. In addition, the IRS's Taxpayer Advocate Service can help those taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working properly.

  Low-income taxpayers can obtain assistance, for free or for a nominal charge, through a Low Income Taxpayer Clinic. Finally, forms and publications can be obtained at many libraries and post offices. Most of the IRS materials are available, free of charge, in Braille.

 
IRS Fact Sheet FS-2009-5 helps taxpayers understand the process and advantages of e-filing returns and using other electronic tax tools. The IRS predicts that nearly 90 million of the 140 expected returns for 2009 will be filed electronically. Benefits of e-filing include faster refunds, elimination of paperwork, file now - pay later options, reduction of errors, quick confirmation and easier state return filing. Taxpayers can e-file by using the Free File program for eligible taxpayers, low-cost filing programs with IRS private sector partners, IRS-approved tax preparation software, paid tax preparers, volunteer tax preparers and Tax Counseling for the Elderly.

  All taxpayers who e-file must sign their returns using a Personal Identification Number (PIN). Form 8453-OL, U.S. Individual Income Tax Declaration for an IRS e-file Online Return, has been eliminated as a paper signature document and taxpayers must now use Form 8453. The IRS claims that the new method makes e-filing of Forms 1040 more secure.

  Taxpayers may choose to use direct deposit for their tax refunds, which can be split up among and deposited directly to up to three different bank accounts. Most e-file and tax preparation software provides the split refund option. Paper filers must use Form 8888, Direct Deposit of Refund to More than One Account. Taxpayers using direct deposit will receive refunds more quickly (often within 10 days) and avoid lost or stolen paper refund checks. Furthermore, the Electronic Federal Tax Payment System (EFTPS) allows taxpayers to pay both their business and individual taxes through the internet or by telephone. EFTPS is a free and secure service offered through the U.S. Department of Treasury. For more information go to www.eftps.gov or call EFTPS customer service at 1-800-555-4477.

 
IRS Fact Sheet FS-2009-4 reminds taxpayers that the official web site of the Internal Revenue Service is IRS.gov., and that all of its webpages begin with that address. Numerous phony internet sites impersonate federal and state revenue sites in order to "phish" for taxpayers' personal identification information as well as passwords to access financial accounts. The IRS reiterated that it does not send unsolicited e-mail regarding taxpayers' accounts and never requests taxpayers' personal or financial information, such as Social Security numbers and bank PINS. Links embedded in these e-mails should never be opened, and such scams should be reported immediately. Finally, taxpayers are reminded that they may access state revenue information from the IRS website.

 
IRS Fact Sheet FS-2009-7 urges taxpayers to be careful when choosing a tax preparer. Return preparer fraud generally involves the preparation and filing of income tax returns that claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions. Preparers may also fraudulently obtain tax credits, such as the earned income tax credit, by manipulating income figures. The fact sheet reminds taxpayers that even if they are unaware of false information that may appear on their returns, they are responsible for any additional taxes and interest and may be subject to penalties. The fact sheet includes information regarding when choosing a return preparer, criminal investigation statistical information on return preparer fraud, case summaries of criminal and civil legal actions against certain return preparers, and directions for reporting suspected tax fraud activity.

IR-2009-2, 2009FED ¶46,227

IRS Fact Sheet FS-2009-1, 2009FED ¶46,228

IRS Fact Sheet FS-2009-2, 2009FED ¶46,229

IRS Fact Sheet FS-2009-3, 2009FED ¶46,230

IRS Fact Sheet FS-2009-4, 2009FED ¶46,231

IRS Fact Sheet FS-2009-5, 2009FED ¶46,232

IRS Fact Sheet FS-2009-6, 2009FED ¶46,233

IRS Fact Sheet FS-2009-7, 2009FED ¶46,234

Other References:

 
Code Sec. 1

  CCH Reference - 2009FED ¶3270.30

 
Code Sec. 21

  CCH Reference - 2009FED ¶3507.10

 
Code Sec. 24

  CCH Reference - 2009FED ¶3770.11

  CCH Reference - 2009FED ¶3770.25

  CCH Reference - 2009FED ¶3770.30

 
Code Sec. 25A

  CCH Reference - 2009FED ¶3830.25

 
Code Sec. 25B

  CCH Reference - 2009FED ¶3838.10

 
Code Sec. 32

  CCH Reference - 2009FED ¶4082.11

  CCH Reference - 2009FED ¶4082.12

  CCH Reference - 2009FED ¶4082.18

  CCH Reference - 2009FED ¶4082.35

 
Code Sec. 36

  CCH Reference - 2009FED ¶4190.01

  CCH Reference - 2009FED ¶4190.03

 
Code Sec. 55

  CCH Reference - 2009FED ¶5101.035

 
Code Sec. 63

  CCH Reference - 2009FED ¶6023.035

 
Code Sec. 108

  CCH Reference - 2009FED ¶7010.048

 
Code Sec. 274

  CCH Reference - 2009FED ¶14,417.50

 
Code Sec. 402

  CCH Reference - 2009FED ¶18,221.10

  CCH Reference - 2009FED ¶18,221.022

 
Code Sec. 408

  CCH Reference - 2009FED ¶18,922.0264

 
Code Sec. 457

  CCH Reference - 2009FED ¶21,536.035

 
Code Sec. 6011

  CCH Reference - 2009FED ¶35,141.47

 
Code Sec. 6061

  CCH Reference - 2009FED ¶35,605.16

 
Code Sec. 6402

  CCH Reference - 2009FED ¶38,519.37

 
Code Sec. 6343

  CCH Reference - 2009FED ¶38,274.015

 
Code Sec. 6428

  CCH Reference - 2009FED ¶38,869.021

  CCH Reference - 2009FED ¶38,869.60

 
Code Sec. 7122

  CCH Reference - 2009FED ¶41,130.45

 
Code Sec. 7206

  CCH Reference - 2009FED ¶41,333.10

  CCH Reference - 2009FED ¶41,333.210

 
Code Sec. 7804

  CCH Reference - 2009FED ¶43,266.336

  CCH Reference - 2009FED ¶43,266.386

  CCH Reference - 2009FED ¶43,266.49

  CCH Reference -
2009FED¶43,266.87

  Tax Research Consultant

  CCH Reference - TRC IRS: 3,058

  CCH Reference - TRC IRS: 6,050

  CCH Reference - TRC IRS: 6,072

  CCH Reference - TRC IRS: 6,250

  CCH Reference - TRC IRS: 33,254

  CCH Reference - TRC IRS: 42,158

  CCH Reference - TRC IRS: 51,050

  CCH Reference - TRC IRS: 66,304

  CCH Reference - TRC INDIV: 45,102

  CCH Reference - TRC INDIV: 57,050

  CCH Reference - TRC INDIV: 57,056.10

  CCH Reference - TRC INDIV: 57,250

  CCH Reference - TRC INDIV: 57,252

  CCH Reference - TRC INDIV: 57,450

  CCH Reference - TRC INDIV: 57,452

  CCH Reference - TRC INDIV: 57,454

  CCH Reference - TRC INDIV: 57,550

  CCH Reference - TRC INDIV: 57,552

  CCH Reference - TRC INDIV: 57,900

  CCH Reference - TRC INDIV: 57,950

  CCH Reference - TRC INDIV: 60,150

  CCH Reference - TRC FILEBUS: 12,306

  CCH Reference - TRC FILEBUS: 12,308.15

  CCH Reference - TRC FILEBUS: 12,308.25