Expanded Homebuyer Tax Credit

First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, get a tax credit for 10% of their purchase price, capped at a maximum of $8,000.
To qualify for the new tax credits, buyers must sign a purchase agreement by April 30, 2010, and close escrow on the deal by June 30, 2010. So the earlier deadline of closing before December 1, 2009 has been extended.

Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence, may also be eligible for up to a $6,500 tax credit.
To qualify for the new tax credits, buyers must sign a purchase agreement by April 30, 2010, and close escrow on the deal by June 30, 2010.
The information is not clear as to whether the homebuyer can convert the existing home to a second home, rental property or investment home....so we will have to wait for the fine print..

529 Plans Expanded

Generally expenses for computer technology are not qualified expenses for the American opportunity credit(Hope credit), lifetime learning credit or tuition and fees deduction.

However the Recovery Act has has included the cost to purchase computer technology equipment and Internet access as qualified education expense for distribution from Sec 529 plans for the tax year 2009 and 2010 if it is to be used by the student enrolled at an eligible institution.

Fight Recession - Save Every Bit...

Current recession seems to be never ending. Considering the current economic crunch – Everyone’s aim should be to save as much possible. Here are few tips that may help you in the right direction...
1. First of all set a budget and determine what cost can be controlled.
2. Avoid frequent dine outs. Dining at home would be healthy and cost effective.
3. Buy necessary items and stop stocking on items just because they are on deals….small expenses add to big bills…
4. Avoid memberships to clubs and other programs that you do not frequently visit.
5. Plan your trips in advance to finish all the chores simultaneously to save gas and time.
6. Save on some the costs such as maids for house cleaning, remodeling expenses for the house unless it is necessary.
7. Conserve electricity by switching off when not in use. Control the use of air conditioner or heater to the extent required.
8. Use Washer with full loads.
9. Car pool whenever and wherever possible.
10. Avoid expensive and long vacations. Take a trip close by.
11. Save on dry cleaning costs by avoiding frequent washing

Save Energy and Lower Your Tax Bill

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit. Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Note that these credits are not refundable and the credit either reduces the tax owed by the taxpayer or increases the refund of a taxpayer. An eligible taxpayer can claim these credits on Form 5695, regardless of whether he or she itemizes deductions on Schedule A.

• Nonbusiness Energy Property Credit
  This credit is available on a homeowners expense on eligible energy-saving improvements. Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only). The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.
  So an expense of $5,000 before the end of the year on eligible energy-saving improvements can save as much as $1,500 on a taxpayer's 2009 federal income tax return.
• Residential Energy Efficient Property Credit
  This credit is available on investment in alternative energy equipment. Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for the amount spent on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Ordering Tax Return Transcripts Made Simple

Taxpayers often need copies of their tax return information, especially when they are obtaining a new mortgage or when they are refinancing or modifying an existing mortgage. Taxpayers can use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge.
A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.
Form 4506T-EZ is a streamlined version of the Form 4506T, Request for Transcript of Tax Return. The Form 4506T-EZ is only for individuals who filed a Form 1040 series. Businesses, partnerships and individuals who need transcript information from other forms must still use the Form 4506T.

IRS 2009 IRPAC Report

The Information Reporting Program Advisory Committee (IRPAC) released the advisory group’s 2009 recommendations on a wide range of tax administration issues.
Key recommendation were -

• Creating a new form and modified rules on information reporting of payments made in settlement of payment card and third party network transactions.
• Providing guidance on tax information reporting and withholding.
• Reporting of customer’s basis in securities transactions.
• Creating online Form W-4 instructions for non-resident aliens.
• Withholding on certain payments made by government entities
• Providing additional guidance to government entities that must comply with the withholding provisions.
• Permitting payers to issue payee statements showing only the last four digits of a payee’s TIN.

Source: www.irs.gov

Voluntary Disclosure - Extended

Taxpayers with undisclosed foreign accounts or entities and unreported offshore income should make a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution.

The IRS announced a one-time extension of the September 23, 2009 deadline for special voluntary disclosures by taxpayers with unreported income from offshore accounts. Taxpayers now have until October 15, 2009. There will be no further extensions.

The September 23, 2009, deadline for certain FBAR filers and certain offshore-related information returns who have no unreported income is also extended to Oct. 15, 2009.