20 Şubat 2013 Çarşamba
MinistryCPA Special Topic: Year-End Giving Statement Wording
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Haveyou looked at your ministry’s contribution report recently? Does it include therequired IRS statement, “No goods or services were provided in exchange foryour contribution”? IRScode Sec. 170(f)(8) provides that,to be deductible, a money contribution of $250 or more must be substantiated bya contemporaneous written acknowledgment by the donee organization thatindicates the amount and whether the organization provided any goods orservices in consideration for the contribution and, if so, a good-faithestimate of their value. In2012, a couple’s charitable contribution of more than $22,000 was disalloweddue to the omission of the statement, “No goods or services were provided inexchange for your contribution.” Although canceled checks and the churchcontribution report were produced during audit, the lack of the key phraseresulted in disallowance of the deduction and a higher tax bill for the couple. Ifyour ministry has already distributed incorrect contribution statements, newstatements should be made available as soon as possible. Corrected contributionstatements will meet the requirements if they are produced before the earlier of the tax returndue date or the date the taxpayer files his return.
Fringe Benefit to Teachers of Christian Schools: Children's Education
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Question:
A church has a school affiliated with it and part of the compensationfor the teachers is free tuition for their children. Is this a taxable fringebenefit? If yes, is the school required to pay FICA tax on the value of the tuition?
Answer:
According to the IRS's Taxable Fringe Benefit Guide,
"Free or reduced tuition for employees of educational institutions may be excludable to employees. The term "qualified tuition reduction" means a tax-free reduction in tuition provided by an eligible educational institution. At the undergraduate level, the education need not be at the same institution where the employee works. Whether a tuition reduction is a qualified tuition reduction, and therefore excludable from income, depends on whether it is for education below or at the graduate level. The qualified tuition reduction must not represent payment for services." (An important point that we will address below).
Further, "a qualified educational organization is one which:
According to the IRS, "generally, a qualified tuition reduction cannot discriminate in favor of highly-compensated employees (for 2012, employees with total compensation exceeding $115,000)."
Also, "a fringe benefit is a form of pay (including property, services, cash or cash equivalent) in addition to (ouremphasis) stated pay for the performance of services."
Should a school provide tuition-free education as the only source of compensation for services or as a benefit on a discriminatory basis, it will be in violation of IRS rules unless it treats the fair market value as both income taxable and FICA tax wages.
A church has a school affiliated with it and part of the compensationfor the teachers is free tuition for their children. Is this a taxable fringebenefit? If yes, is the school required to pay FICA tax on the value of the tuition?
Answer:
According to the IRS's Taxable Fringe Benefit Guide,
"Free or reduced tuition for employees of educational institutions may be excludable to employees. The term "qualified tuition reduction" means a tax-free reduction in tuition provided by an eligible educational institution. At the undergraduate level, the education need not be at the same institution where the employee works. Whether a tuition reduction is a qualified tuition reduction, and therefore excludable from income, depends on whether it is for education below or at the graduate level. The qualified tuition reduction must not represent payment for services." (An important point that we will address below).
Further, "a qualified educational organization is one which:
- Maintains a faculty and curriculum, and
- Normally has a regularly enrolled student body on site."
According to the IRS, "generally, a qualified tuition reduction cannot discriminate in favor of highly-compensated employees (for 2012, employees with total compensation exceeding $115,000)."
Also, "a fringe benefit is a form of pay (including property, services, cash or cash equivalent) in addition to (ouremphasis) stated pay for the performance of services."
Should a school provide tuition-free education as the only source of compensation for services or as a benefit on a discriminatory basis, it will be in violation of IRS rules unless it treats the fair market value as both income taxable and FICA tax wages.
Form 1099-MISC Erroneously Issued for Benevolent Gift
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Question:
A church issued a Form 1099-Misc for a $5,000 gift given to an individual that suffered a life threatening accident to help her with therapycosts. Is this correct? Should this gift be taxable at a regular rate?
Answer:
Form 1099-MISC is used to report compensation to individuals not under the employ of the issuing organization. If no services are or will be required for the $5,000 benevolence gift listed in the question above, then this amount should not be reported on Form 1099-MISC and will not be reported as taxable income by the recipient. According to IRS Publication 525, gifts to individuals not in the employ of the donor are non-taxable. A corrected Form 1099-MISC should be prepared immediately.
For more blog posts on benevolence gifts, readers should follow the links provided below:
http://ministrycpa.blogspot.com/2010/01/form-1099-misc-for-benevolent-gifts.html
http://ministrycpa.blogspot.com/2009/10/benevolent-gift-rules-review.html
http://ministrycpa.blogspot.com/2012/04/benevolence-not-reportable-on-form-1099.html
A church issued a Form 1099-Misc for a $5,000 gift given to an individual that suffered a life threatening accident to help her with therapycosts. Is this correct? Should this gift be taxable at a regular rate?
Answer:
Form 1099-MISC is used to report compensation to individuals not under the employ of the issuing organization. If no services are or will be required for the $5,000 benevolence gift listed in the question above, then this amount should not be reported on Form 1099-MISC and will not be reported as taxable income by the recipient. According to IRS Publication 525, gifts to individuals not in the employ of the donor are non-taxable. A corrected Form 1099-MISC should be prepared immediately.
For more blog posts on benevolence gifts, readers should follow the links provided below:
http://ministrycpa.blogspot.com/2010/01/form-1099-misc-for-benevolent-gifts.html
http://ministrycpa.blogspot.com/2009/10/benevolent-gift-rules-review.html
http://ministrycpa.blogspot.com/2012/04/benevolence-not-reportable-on-form-1099.html
What's New for 2009
To contact us Click HERE
This article contains information that effects your 2009 tax return.
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
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Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
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What's New for 2010
To contact us Click HERE
This article contains information that effects your 2010 tax return.
Due date of return.
File individual taxpayers the due date for 2010 tax return is April 18, 2011 instead of April 15, 2011.
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Standard mileage rates.
For 2010, the standard mileage rate for the cost of operating your car for business use is 50 cents a mile, for medical reasons is 16½ cents a mile for the cost of operating your car for determining moving expenses is 16½ cents a mile.
Limits on personal exemptions and overall itemized deductions ended.
For 2010, you do not lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income (AGI).
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. Use Form 8863 Education Credit.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Self-employed health insurance deduction.
Effective March 30, 2010, if you were self-employed and paid for health insurance, you may be able to include in your self-employed health insurance deduction any premiums you paid to cover your child who was under age 27 at the end of 2010, even if the child was not your dependent.
First-time homebuyer credit.
You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010. Also, certain members of the Armed Forces and certain other taxpayers have additional time to buy a home and take the credit.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay Credit
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
Roth IRAs
Beginning in 2010, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your modified AGI.Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
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Due date of return.
File individual taxpayers the due date for 2010 tax return is April 18, 2011 instead of April 15, 2011.
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Standard mileage rates.
For 2010, the standard mileage rate for the cost of operating your car for business use is 50 cents a mile, for medical reasons is 16½ cents a mile for the cost of operating your car for determining moving expenses is 16½ cents a mile.
Limits on personal exemptions and overall itemized deductions ended.
For 2010, you do not lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income (AGI).
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. Use Form 8863 Education Credit.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Self-employed health insurance deduction.
Effective March 30, 2010, if you were self-employed and paid for health insurance, you may be able to include in your self-employed health insurance deduction any premiums you paid to cover your child who was under age 27 at the end of 2010, even if the child was not your dependent.
First-time homebuyer credit.
You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010. Also, certain members of the Armed Forces and certain other taxpayers have additional time to buy a home and take the credit.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay Credit
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
Roth IRAs
Beginning in 2010, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your modified AGI.Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
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19 Şubat 2013 Salı
Update of the Driscolls' Two Houses
To contact us Click HERE
On February 8th, the 11th Circuit Court of Appeals slammed the door on the ability to use housing allowances for multiple homes. In a short but definitive ruling, the court states, in essence, that "a" means "one" and that it should not be construed to be able to mean "more than one". The court relies on the consistent use of the term "home" as holding a singular connotation within the statute. Therefore, if a minister was planning on utilizing his or her housing allowance for more than one "home", it is time to make the appropriate adjustments to the 2012 tax estimates.
What's New for 2009
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This article contains information that effects your 2009 tax return.
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
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