Owe money to the IRS, consider these tax payment options.

E-options?
These options offer taxpayers the easiest and fastest way to make a full or partial payments. You can either pay by phone, online or using your credit card.
A short-term extension gives a taxpayer up to 120 days to pay without processing fee, but the late payment penalty and interest still apply.
A monthly payment plan or installment agreement gives the taxpayer more time to pay. Under this method the interest still apply but the late payment penalty is cut in half to 0.25 percent for any month an installment agreement is in effect.
Penalties for filing or paying taxes late.
Filing late. You must pay a failure- to-file penalty. The penalty is usually 5% per month for each month that a return is late, not to exceed 25%. The penalty is based on the tax not paid by the due date.
Paying tax late. The penalty is 0.5% of your unpaid taxes for each month that the tax is due. This could increase to 1 percent per month after a notice of deficiency is received.
Combined Penalties. The penalty for filing late is reduced by the penalty for paying late for that month, unless the minimum penalty for filing late is charged.
Accuracy related penalties. If due to understatement could reach 20 percent. (Source: IRS)

RS Speeds Lien Relief for Homeowners Trying to Refinance, Sell

The Internal Revenue Service an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. (Source: IRS)

IRS Speeds Lien Relief for Homeowners

The Internal Revenue Service an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. (Source: IRS)

Interest Rates Drop for the First Quarter of 2009

WASHINGTON – The Internal Revenue Service today announced in Revenue Ruling 2008-54 that interest rates for the calendar quarter beginning Jan. 1, 2009 will drop by one percentage point. The new rates will be:

• Five (5) percent for overpayments [four (4) percent in the case of a corporation];
• Five (5) percent for underpayments;
• Seven (7) percent for large corporate underpayments; and

Two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.
(Source: IRS)

Facts to know regarding the First-Time Homebuyer Credit

Here are the some of the provisions you should know:

1. You must entered into a binding contract to buy a principal residence on or before April 30, 2010. It got extended to 2010!
2. If you meet provision number 1, above; then, you must close on or before June 30, 2010.
3. For purchases made in 2010, you had the choice to claim the deduction in either 2009 or 2010.
4. You qualify for a reduced long time credit if you have lived in the same principal residence for five of the last eight years that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
5. The max credit for long time credit is $6,500. However, for MFS is $3,250.
6. The income limits for purchases after November 6, 2009 is $125,000 for singles and $225,000 for MFJ.
7. No credit is available if the purchase price of the home exceeds $800,000.
8. You must be 18 years old on the date of purchase; only one spouse must meet this requirement.
9. Dependents are not elegible for this credit.
Source: IRS

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Can you reduce the amount you owe to the IRS to zero by filing an Offer in Compromise?

The IRS (IR-2004-17 dated on Feb. 3, 2004)issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.

Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances, not all circumstances.

The OIC program serves an important purpose for a select group of taxpayers, if you meet the program’s requirements. The IRS is urging taxpayers not to be duped by high-priced promises to eliminate IRS tax liabilities.

The OIC may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements, that must be explored before an OIC can be submitted.

Taxpayers should consult with a regulated professional (e.g., CPA, EA, or a Tax attorney) or go to the IRS website for more detail information.

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To prepare for this tax season you need to:

-Find and get all your paperwork and documents ready.

-Collect and review all your check books, brokerage statements, and bank statements.

-Collect and review your W-2, 1098, and 1099 forms for accuracy and completeness.

-Give your accountant a copy of your last year tax return, and review for items that carry forward.

-Contact the document originators if you find any mistake.

-Contact your Accountant and set up a preliminary appointment.

-Find all your sales tax receipts for the year and add it all up.

-If you move, buy or sell your residence, or a second residence, let your accountant know.

-Do not forget the documentation if any of your children is attending college.

-Get all IRA or 401K distributions received.

-Gain custody of your child and/or provided support to a child, even if not leaving with you.

-Purchase any energy efficient equipment/appliance for your home.

-Purchase or sold an automobile during the year.


If you own a business:

-Close your books or hire an accountant to close your books.

-Complete your mileage log and make sure you had log all your miles by year.

-Add all car expenditures you incurred pertaining to your business.

-Complete your cell phone log entries.

-If you organize a business that is not currently in operations.

-If you cannot file your tax return by the due date, get an extension.

-Pay your quarterly estimated taxes when they are due.

-Be prepare to sit down with your accountant to review all your documents and make sure you take all deductions you are entitled too.

Money spent on an accounting professional is always well expend.

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2009 TAX CHANGES

Part of your unemployment compensation can be exclude from gross income.
The standard miles rate for the cost of operating your car for business use is 55 cents per mile. Also, the Medical and Moving miles rates went up, but the charitable standard mile rates remained the same.
The standard deduction amount for people who do not itemize their deductions increased from 2008.
You can deduct the state or local sales imposed on the purchase of a qualified motor vehicle after February 16, 2009, and before Jan., 2010.
If you claimed a casualty or theft loss deduction and in a later year you received more reimbursement than you expected, you do not need re-compute the tax for the year in which you claimed the deduction.
If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive.
Non-business energy property credit. This credit, which expired after 2007, has been reinstated. You may be able to claim a non-business energy property credit of 30% of the cost of certain energy-efficient property or improvements you placed in service in 2009.
The monthly exclusion for commuter highway vehicle transportation and transit passes increased to $120 and the monthly exclusion for qualified parking increased to $230. Beginning March 1, 2009, the monthly exclusion for commuter highway vehicle transportation and transit passes increased to $230.
You may be reimbursed for reasonable expenses of qualified bicycle commuting. Reasonable expenses include the purchase of a bicycle and bicycle improvements, repair, and storage.
The amount you can deduct for each exemption has increased to $3,650 for 2009.
Revocation of release of claim to an exemption. New rules apply to allow the custodial parent to revoke a release of claim to exemption that was previously released to the non-custodial parent.
If you or your spouse is an employee, enrolled volunteer, or volunteer leader of the Peace Corps, you may be able to exclude from income a gain from selling your main home, exceptions apply.
If you are a first-time homebuyer, you may be able to claim a one-time tax credit equal to the lesser of: $7,500 ($8,000 if you purchased your home in 2009), or 10% of the purchase price of your home.
The Emergency Economic Stabilization Act of 2008 extended the exclusion from gross income for the discharge of qualified principal residence indebtedness by an additional 3 years. The exclusion now applies to debt discharged after 2006 and before 2013.
Increase in Deductible Limit for Long-Term Care Premiums is based on age. $320 for age 40 and under; and for 71+ is $3, 980. (deduction varies by age.)
There is a new Schedule L, Standard Deduction for Certain Filers– include disaster loss deductions, real property tax deduction, and motor vehicle sales tax deductions.

Source IRS

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You must check your employee elegibility to work in the US

Employers’ must verify that each new employee is legally eligible to work in the United States. Have the employees you hire fill out Form I-9. You are required to get each employee's name and Social Security Number (SSN) and to enter them on Form W-2. (This requirement also applies to resident and nonresident alien employees.)

You should ask your employee to show you his or her social security card. Do not accept an ITIN if your employee have a SSN.
(Source: IRS)

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Gambling winnings and losses.

Are they reportable items? Yes, they are.

Generally gambling winnings are considered reportable events regardless of their type (i.e., rafles, lotto, pocker, cassinos, and trips, etc. ). The payer ussually gives you a W-2G with the amouts reportable as income. These winnings are reported in line 21, of your 1040, and losses gets reported on schedule A. You must keep your tickets, receipts and any other statements to proff all winnings and losses reported.

Job Seekers tax breaks.

Looking for job? Well, you may get some tax breaks from the IRS.

1. Expenses related to job serach are deductible if you are seeking employment in the same occupation, but not on another job field.
2. If you pay someone (agency fee) to help you find a job, these are deductible expenses, provided you did not get reimburse by your employer.
3. First time job seekers gets no tax breaks.
4. What expenses are deductible? mostly those to gain you employment (e.g., typing resumes, stationary, travel expenses and qualify incidentals, etc.)
Source: IRS

Starting a new business? Please consider these...

1. Selection of the business entity or form of organization will determine the taxes you will pay and the paperwork to file with the IRS.

2. Generally some business entities requires to have an EIN.

3. You may choose your tax year: fiscal or calendar year. Most people choose a calendar year, but is that the only available choice?

4. Do you have time to do your own books or have your books be prepared by a professional. You may want to figure out the time it would take away from running your business and what records to keep.

5. Have you figure out what method of accounting is best for you? You have the choice of preparing your books under the cash, accrual or hybrid method.

6. Can you run your business from your home? Not all business can be run in hour principal residence.

7. How do you know when you need financing?

(Source: IRS)

Tax rates on qualified dividends

Do you know that your taxable income thresholds will determine if your qualified dividends are taxed at a 0% tax rate.  Yes, that is not a typo, no tax at all.  

Source IRS.

Credit available for first time homebuyers

Are you a first-time homebuyer?... You could qualify!  You must not own a main home during the prior three years.  The credit could go up to $7,500.  However, you must have bought your home by the applicabe date to qualify, even if you purchase your home in in the first part of 2009. 

Source IRS.

Recovery Rebate credit

The economic stimulus payment we receive last year is tax free and should not be reported on the 2008 tax return.  However, this rebate could affect your Revovery Rebate Credit.  How so?  A tax payer may qualify for the credit if he/she did not get a stimulus payment or had a child last year.