Tax Tip of the Week
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4/20/09

Seven Facts about the New Sales Tax Deduction for Vehicle Purchases

Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009.

Here are seven things you should know about this new deduction:

  1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
  2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
  3. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
  4. This is an above-the-line deduction and can be taken regardless of whether or not you itemize other deductions on your tax return.
  5. Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.
  6. 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.
  7. The deduction may not be taken on 2008 tax returns.
    Consumers who are considering buying a new car may find that this tax incentive means there has never have been a better time to buy.

For more information about the sales and excise tax deduction for motor vehicle purchases visit the official IRS web site at IRS.gov.

4/15/09

What Happens After I File?

Most taxpayers have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.

Refund Information

You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:

What Records Should I Keep?

Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.

>p?Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.

You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.

Change of Address

If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.

What If I Made a Mistake?

Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:

If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.

Visit IRS.gov for more information and Frequently Asked Questions regarding refunds, record keeping, address changes and amended returns.

4/13/09

Top Ten Things You Need to Know About Making Federal Tax Payments

Will you be making a payment with your federal tax return this year? If so, here is what you need to know about making tax payments correctly.

  1. Never send cash!
  2. If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.
  3. You can pay by phone or online using a credit or debit card whether you file a paper return or electronically.
  4. Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.
  5. If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction. The deduction is subject to the 2 percent limit on Form 1040, Schedule A, Itemized Deductions.
  6. Enclose your payment with your return, but do not staple it to the form.
  7. If you pay by check or money order, make sure it is payable to the “United States Treasury.”
  8. Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.
  9. Complete and include Form 1040-V, Payment Voucher, when sending your payment and tax return to the IRS. This will help the IRS process your payment accurately and efficiently.
  10. For more information, call 800-829-4477 for TeleTax Topic 158, "Ensuring Proper Credit of Payments.” You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov.

4/08/09

Seven Things to Know About the Taxpayer Advocate Service

If you’re experiencing problems with the Internal Revenue Service, you may be able to get help from the Taxpayer Advocate Service. Here’s what every taxpayer should know about this independent organization within the IRS.

  1. The Taxpayer Advocate Service is your voice at the IRS.
  2. You may be eligible for TAS help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you think an IRS procedure just isn’t working as it should.
  3. TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation.
  4. TAS employees know the IRS and how to navigate it.
  5. TAS will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved.
  6. TAS has at least one local taxpayer advocate in each state, the District of Columbia, and Puerto Rico.
  7. To contact TAS you can call your local advocate, whose number is in your phone book, or call the toll-free case intake line at 1-877-ASK-TAS1. You can also visit TAS online at www.IRS.gov/advocate.

4/06>/09

Top Ten Tips about IRA Contributions

There is still time to make contributions to your traditional Individual Retirement Arrangement, better known as an IRA. Below are the top ten things you should know about money you put aside for retirement in an IRA.

  1. You may be able to deduct some or all of your contributions to your IRA and you also may be eligible for a tax credit equal to a percentage of your contribution.
  2. Contributions can be made to your traditional IRA at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means contributions for 2008 must be made by April 15, 2009.
  3. The amount of funds in your IRA are generally not taxed until you receive distributions from that IRA.
  4. To figure your deduction for IRA contributions, use the worksheets in the instructions for the form you are filing.
  5. For 2008, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,000 or the amount of your taxable compensation for the year. Taxpayers who are 50 or older can contribute up to $6,000.
  6. Use Form 8880, Credit for Qualified Retirement Savings Contributions, to determine whether you are also eligible for a tax credit.
  7. You cannot deduct an IRA contribution or claim the Credit for Qualified Retirement Saving Contributions on Form 1040EZ; you must use either Form 1040A or Form 1040.
  8. To contribute to a traditional IRA, you must be under age 70 1/2 at the end of the tax year.
  9. You must have taxable compensation, such as wages, salaries, commissions and tips. If you file a joint return, only one of you needs to have compensation.

Refer to IRS Publication 590, Individual Retirement Arrangements, for information on the amounts you will be eligible to contribute to your IRA account. Both Form 8880 and Publication 590 can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

4/03>/09

IRS Tips on Preparing for a Disaster

Planning what to do in case of a disaster is an important part of being prepared. The Internal Revenue Service encourages taxpayers to safeguard their records. Some simple steps can help taxpayers and businesses protect financial and tax records in case of disasters.

Listed below are tips for individuals and businesses on preparing for a disaster.

  1. Recordkeeping Take advantage of paperless recordkeeping for financial and tax records. Many people receive bank statements and documents by e-mail. This method is an outstanding way to secure financial records. Important tax records such as W-2s, tax returns and other paper documents can be scanned onto an electronic format. You can copy them onto a ‘key’ or ‘jump drive’ periodically and then keep the electronic records in a safe place.
  2. Document Valuables and Business Equipment The IRS has disaster loss workbooks for individuals and businesses that can help you compile a room-by-room list of your belongings or business equipment. This will help you recall and prove the market value of items for insurance and casualty loss claims.
  3. Check on Fiduciary Bonds Employers who use payroll service providers should ask the provider if they have a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.
  4. Continuity of Operations Planning for Businesses How quickly your company can get back to business after a disaster often depends on emergency planning done today. Start planning now to improve the likelihood that your company will survive and recover. Review your emergency plans annually. Just as your business changes over time, so do your preparedness needs. When you hire new employees or when there are changes in how your company functions, you should update your plans and inform your people.
  5. Update Emergency Plans Emergency plans should be reviewed annually. Individual taxpayers should make sure they are saving documents everybody should keep including such things as W-2s, home closing statements and insurance records. Make sure you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it. Make sure you know what you should do if threatening weather approaches.
  6. Count on the IRS In the event of a disaster, the IRS stands ready to help. The IRS has valuable information you can request if your records are destroyed. If you have been impacted by a federally declared disaster, you may receive copies or transcripts of previously filed tax returns free of charge by submitting Form 4506, Request for Copy of Tax Form, or Form 4506-T, Request for Transcript of Tax Return, clearly identified as a disaster related request.

4/01/09

Do You Barter?

Bartering is the trading of one product or service for another. Usually there is no exchange of cash. Barter may take place on an informal one-on-one basis between individuals and businesses, or it can take place on a third party basis through a modern barter exchange company.

Bartering is the most ancient form of commerce. While our ancestors may have exchanged eggs for corn, today you can barter computer services for auto repair.

Another example of a one-on-one, non-barter exchange transaction is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of the goods and services exchanged must be reported as income by both parties.

Here are a few things you should know about bartering:

  • Barter ExchangeA barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves. Whether this activity operates out of a physical office or is internet based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS.
  • Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.
  • Taxes Income from bartering is taxable in the year it is performed. You may be subject to liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss.
  • Reporting The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.

    • For more information type “Barter” in the search box on the IRS.gov homepage.

    3/30/09

    Ten Tips for Deducting Charitable Contributions

    When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize.

    Here are a few tips to ensure your contributions pay off on your tax return:

    1. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
    2. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
    3. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
    4. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles. >/li>
    5. Clothing and household items donated must generally be in good used condition or better to be deductible.
    6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
    7. To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document from the organization may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
    8. If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
    9. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
    10. Contributions made for relief efforts in a Midwest disaster area receive special benefits. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwest Disaster Areas.

    For more information on charitable contributions, check out Publication 526, Charitable Contributions, which is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    3/27/09

    Seven Things you Should Know When Selling Your Home

    People who sell their home may be able to exclude the gain from their income. Here are seven things every homeowner should know if they sold, or plan to sell their house.

    1. Amount of exclusion. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income. For most taxpayers filing a joint return, the exclusion amount is $500,000.
    2. Ownership test. To claim the exclusion you must have owned the home for at least two years during the five year period ending on the date of the sale.
    3. Use test. You also must have lived in the house and used it as your main home for at least two years during the five year period ending on the date of the sale.
    4. When not to report. If you are able to exclude all of the gain from the sale of your home, you do not need to report the sale on your federal income tax return.
    5. Reporting taxable gain. If you have gain which cannot be excluded, it is taxable and must be reported on your tax return using Schedule D. <
    6. Deducting a loss. You cannot deduct a loss from the sale of your home.
    7. Rules for multiple homes. If you have more than one home, you may only exclude gain from the sale of your main home and must pay tax on the gain resulting from the sale of any other home. Your main home is generally the one you live in most of the time.

    For more information see IRS Publication 523, Selling Your Home, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    3/25/09

    Seven Important Points about Penalties

    Taxpayers who do not file their return and pay their tax by the due date may have to pay a penalty. Here are seven things you should know about failure-to-file and failure-to-pay penalties.

    1. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
    2. The penalty for filing late is usually 5 percent of the unpaid taxes for each month of part of a month that a return is late. This penalty will not exceed 25 percent of the taxpayer’s unpaid taxes.
    3. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
    4. You will not have to pay a failure-to-file penalty if you can show that you failed to file on time because of reasonable cause and not because of willful neglect.
    5. You will have to pay a failure-to-pay penalty of ? of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid.
    6. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty.
    7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

    3/23/09

    Standard or Itemized Deductions

    Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.

    The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2008, they are:

    These forms and instructions may be downloaded from the IRS.gov Web site or ordered by calling 800-TAX-FORM (800-829-3676).

    3/20/09

    Top Ten Facts About the Child and Dependent Care Credit

    If you paid someone to care for a child, spouse, or dependent, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. Below are the top ten things you need to know about claiming a credit for child and dependent care expenses.

    1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child under age 13. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
    2. The care must have been provided so you – and your spouse if you are married – could work or look for work.
    3. You – and your spouse if you are married – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
    4. The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who is under age 19, even if he or she is not your dependent. You must identify the care provider on your tax return.
    5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
    6. The qualifying person must have lived with you for more than half of 2008.
    7. The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
    8. For 2008, you may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.
    9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.
    10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.

    For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free publications from IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).

    3/18/09

    Can You Claim the Child Tax Credit?

    With the Child Tax Credit, you may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17.

    A qualifying child for this credit is someone who meets the following criteria:

    The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status:

    In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

    If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim some or all of the difference as an “Additional” Child Tax Credit. The Additional Child Tax Credit may give you a refund even if you do not owe any tax. The total amount of the Child Tax Credit and any Additional Child Tax Credit cannot exceed the maximum of $1,000 for each qualifying child.

    For more information see IRS Publication 972, Child Tax Credit, available from the IRS Web site at IRS.gov.

    3/13/09

    IRS Has $1.3 Billion for People Who Have Not Filed a 2005 Tax Return

    WASHINGTON — Unclaimed refunds totaling approximately $1.3 billion are awaiting over a million people who did not file a federal income tax return for 2005, the Internal Revenue Service announced today. However, to collect the money, a return for 2005 must be filed with the IRS no later than Tuesday, April 15, 2009.

    Especially in these tough economic times, people should not lose out on money that is rightfully theirs," said IRS Commissioner Doug Shulman. “People should check their records, especially if they had taxes withheld from their paychecks but were not required to file a tax return. They may be leaving money on the table, including valuable tax credits that can mean even more money in their pockets."

    The IRS estimates that half of those who could claim refunds for tax year 2005 would receive more than $581. Some individuals may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. For 2005 returns, the window closes on April 15, 2009. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

    The IRS reminds taxpayers seeking a 2005 refund that their checks will be held if they have not filed tax returns for 2006 or 2007. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

    By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2005. Many low-income workers may not have claimed the Earned Income Tax Credit (EITC). Generally, unmarried individuals qualified for the EITC if in 2005 they earned less than $35,263 and had more than one qualifying child living with them, earned less than $31,030 with one qualifying child, or earned less than $11,750 and had no qualifying child. Limits are slightly higher for married individuals filing jointly.

    Current and prior year tax forms and instructions are available on the Forms and Publications web page of IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676). Information about the Earned Income Tax Credit and how to claim it is also available on IRS.gov. Taxpayers who need help also can call the toll-free IRS help line at 1-800-829-1040.

    Individuals Who Did Not File a 2005 Return with an Estimated Refund
    Individuals Median
    Estimated
    Refunds     		Total
    Estimated
    Refund*
    ($000)*
    Alabama 21,400 $585 $18,167
    Alaska 6,100 $665 $6,925
    Arizona 36,900 $487 $31,234
    Arkansas 11,400 $547 $9,756
    California 154,500 $537 $144,580
    Colorado 23,700 $532 $20,676
    Connecticut 16,000 $659 $18,234
    Delaware 5,400 $592 $5,117
    Dist of Columbia 5,300 $564 $5,518
    Florida 99,300 $609 $108,162
    Georgia 44,400 $538 $39,381
    Hawaii 9,400 $639 $11,108
    Idaho 5,300 $464 $4,113
    Illinois 50,400 $640 $53,166
    Indiana 26,600 $624 $24,041
    Iowa 11,800 $587 $9,367
    Kansas 12,900 $555 $10,804
    Kentucky 14,600 $588 $12,506
    Louisiana 24,900 $594 $24,388
    Maine 4,900 $532 $3,928
    Maryland 30,600 $584 $29,967
    Massachusetts 29,600 $638 $31,942
    Michigan 45,100 $609 $42,390
    Minnesota 19,700 $531 $17,085
    Mississippi 12,200 $533 $10,311
    Missouri 26,000 $550 $21,237
    Montana 3,700 $509 $3,125
    Nebraska 5,900 $548 $5,091
    Nevada 18,300 $551 $17,588
    New Hampshire 5,500 $667 $5,759
    New Jersey 41,100 $646 $43,761
    New Mexico 9,400 $532 $7,724
    New York 76,800 $639 $82,994
    North Carolina 37,300 $515 $29,645
    North Dakota 2,000 $553 $1,647
    Ohio 44,600 $571 $37,290
    Oklahoma 17,000 $546 $14,541
    Oregon 21,000 $467 $16,138
    Pennsylvania 47,800 $623 $43,958
    Rhode Island 4,500 $610 $4,332
    South Carolina 16,000 $506 $13,240
    South Dakota 2,400 $602 $2,046
    Tennessee 21,900 $586 $19,917
    Texas 103,000 $624 $105,241
    Utah 8,300 $496 $8,334
    Vermont 2,300 $550 $1,730
    Virginia 40,200 $576 $40,657
    Washington 35,600 $624 $39,414
    West Virginia 4,900 $627 $4,389
    Wisconsin 16,900 $535 $13,825
    Wyoming 2,800 $649 $2,785
    Armed Forces 5,500 $800 $4,540
    US Possessions/Territories 200 $754 $320
    Total 1,343,000 $581,284,133
    *Excluding the Earned Income Credit and other taxes.

    3/11/09

    Free Tax Assistance for Members of the Military

    If you or your spouse are a member of the military, you may be eligible to receive free tax return preparation assistance. The U.S. Armed Forces participates in the Volunteer Income Tax Assistance program and provides free tax advice, tax preparation, return filing and other tax assistance to military members and their families.

    The Armed Forces Tax Council oversees the operation of the military tax programs worldwide, conducting outreach with the IRS to military personnel and their families. The AFTC consists of tax program coordinators for the Marine Corps, Air Force, Army, Navy and Coast Guard.

    Volunteer assistors at Military-based VITA sites are trained to address military-specific tax issues, such as combat zone tax benefits and the new Earned Income Tax Credit guidelines.

    To receive this free assistance, you should bring the following records to your military VITA site:

    If your filing status is Married Filing Jointly and you wish to file your tax return electronically, both you and your spouse should be present to sign the required forms. If it isn’t possible for both to be present, a valid power of attorney that allows tax preparation can be used to sign and file the return.

    There is a special exception to using a power of attorney for spouses in combat zones that permits the filing spouse to e-file a joint return with only a written statement setting forth that the other spouse is in a combat zone and is unable to sign.

    For more information, review IRS Publication 3, Armed Forces’ Tax Guide, available on the IRS Web site at IRS.gov or order a free copy by calling 800-TAX-FORM (800-829-3676).

    3/09/09

    Checking the Status of Your Federal Tax Refund is Easy

    If you already filed your federal tax return and are due a refund, you can check the status of your refund online, in English or Spanish.

    Where’s My Refund? and ¿Dónde está mi reembolso? are interactive tools on the IRS Web site at IRS.gov. Whether you split your refund among several accounts, opted for direct deposit into one account, or asked the IRS to mail you a check, Where’s My Refund? and ¿Dónde está mi reembolso? give you online access to your refund information nearly 24 hours a day, 7 days a week.

    If you e-file, you can get refund information 72 hours after IRS acknowledges receipt of your return. If you file a paper return, refund information will be available within three to four weeks. When checking the status of your refund, have your federal tax return handy. To get your personalized refund information you must enter:

    Once you enter your personal information, you could get several responses, including:

    Where’s My Refund? also includes links to customized information based on your specific situation. The links guide you through the steps to resolve any issues affecting your refund. For example, if you do not get the refund within 28 days from the original IRS mailing date shown on Where’s My Refund?, you can start a refund trace online.

    Where’s My Refund? is also accessible to visually impaired taxpayers who use the Job Access with Speech screen reader used with a Braille display and is compatible with different JAWS modes.

    If you do not have internet access, you can check the status of your refund by calling the IRS TeleTax System at 800-829-4477 or the IRS Refund Hotline at 800-829-1954. When calling, you must provide your or your spouse’s Social Security number, your filing status and the exact refund amount shown on your return.

    Refunds are sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, wait until the next week before checking back.

    3/06/09

    What Every Parent Should Know about Child’s Investment Income

    Children with investment income may have part or all of this income taxed at their parent’s tax rate rather than at the child’s rate. Investment income includes interest, dividends, capital gains and other unearned income

    This rule applies to children who have investment income of more than $1800 and meet one of three age requirements for 2008:

    To figure the child's tax using this method, fill out Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,800, and attach it to the child's federal income tax return.

    When certain conditions are met, a parent may be able to avoid having to file a tax return for the child by including the child’s income on the parent’s tax return. In this situation, the parent would file Form 8814, Parents' Election To Report Child's Interest and Dividends.

    More information can be found in IRS Publication 929, Tax Rules for Children and Dependents. This publication and Forms 8615 and 8814 are available on the IRS Web site at IRS.gov in the Forms and Publications section. You may also order them by calling the IRS at 800-TAX-FORM (800-829-3676).

    3/04/09

    Top Ten Facts about Taking Early Distributions from Retirement Plans

    If you took an early distribution from your retirement plan, here are some things you need to know:

    1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions.
    2. Early distributions are usually subject to an additional 10 percent tax.
    3. Early distributions must also be reported to the IRS.
    4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.
    5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.
    6. If you made nondeductible contributions to an IRA and later take early distributions from that same IRA, the portion of the distribution attributable to those contributions is not taxed.
    7. If you received an early distribution from a Roth IRA the distribution attributable to contributions is not taxed.
    8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.
    9. There are several exceptions to the additional 10 percent early distribution, such as when the distributions are used for purchase of a first home, certain medical and educational expenses or if you become disabled. Other exceptions can be found in IRS Publication 590, Individual Retirement Arrangements (IRAs).
    10. More information about early distributions from retirement plans and the additional 10 percent tax can be found in IRS Publication 575, Pension and Annuity Income and Publication 590, Individual Retirement Arrangements (IRAs). Both publications are available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    3/02/09

    Tax Facts About Capital Gains and Losses

    Do you have questions about reporting gains and losses on your tax return? Here are some facts from the IRS.

    1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.
    2. When you sell a capital asset, the difference between the amount you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss.
    3. You must report all capital gains.
    4. You may deduct capital losses only on investment property, not on property held for personal use.
    5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
    6. Net capital gain is the amount by which your net long-term capital gain is more than your net short-term capital loss.
    7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income and are called the maximum capital gains rates. For 2008, the maximum capital gains rates are 0%, 15%, 25% or 28%.
    8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).
    9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
    10. Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.

    For more information about reporting capital gains and losses, get Publication 17, Your Federal Income Tax, and Publication 550, Investment Income and Expenses, available on the IRS Web site at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    2/27/09

    Gambling Winnings Are Always Taxable Income

    Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.

    Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.

    Here are some general guidelines on gambling income and losses:

    For more information see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income, both available on the IRS Web site, IRS.gov, or by calling 800-TAX-FORM (800-829-3676).

    2/25/09

    Seven Facts to Help You Understand the Alternative Minimum Tax

    1. Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses. These benefits can drastically reduce some taxpayers’ tax obligations. The Alternative Minimum Tax attempts to ensure that anyone who benefits from these tax advantages pays at least a minimum amount of tax.
    2. Congress created the AMT in 1969, targeting a small number of high-income taxpayers who could claim so many deductions they owed little or no income tax.
    3. Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT.
    4. You may have to pay the AMT if your taxable income for regular tax purposes plus any adjustments and preference items that apply to you are more than the AMT exemption amount.
    5. The AMT exemption amounts are set by law for each filing status.
    6. For tax-year 2008, Congress raised the alternative minimum tax exemption to the following levels:
      • $69,950 for a married couple filing a joint return and qualifying widows and widowers
      • $46,200 for singles and heads of household
      • $34,975 for a married person filing separately
    7. Taxpayers may find more information about the Alternative Minimum Tax and how it impacts them by referring to IRS Form 6251, Alternative Minimum Tax —Individuals, available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    2/23/09

    Are Your Social Security Benefits Taxable?

    How much, if any, of your social security benefits are taxable depends on your total income and marital status. Generally, if social security benefits were your only income for 2008, your benefits are not taxable and you probably do not need to file a federal income tax return.

    If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status. Your taxable benefits and modified adjusted gross income are figured in a worksheet in the Form 1040A or Form 1040 Instruction booklet.

    Before you go to the instruction book, do the following quick computation to determine whether some of your benefits may be taxable:

    The 2008 base amounts are:

    For additional information on the taxability of social security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Publication 915 is available on the IRS Web site at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

    2/20/09

    Offset Education Costs

    Education tax credits can help offset the costs of higher education for yourself or a dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. Because they are credits rather than deductions, you may be able to subtract them in full, dollar for dollar, from your federal income tax.

    The Hope Credit

  • The credit applies for the first two years of post-secondary education, such as college or vocational school. It does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional-level programs.
  • It can be worth up to $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student, per year.
  • You're allowed a credit of 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area).
  • Each student must be enrolled at least half-time for at least one academic period which began during the year.
  • The student must be free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.

    • The Lifetime Learning Credit

    These credits are phased out for Modified Adjusted Gross Income over $48,000 ($96,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $58,000 or more ($116,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.

    For more information, see Publication 970, Tax Benefits for Education, which can be obtained online at IRS.gov or by calling the IRS at 800-TAX-FORM (800-829-3676).

    2/18/09

    What to Do If You Are Missing a W-2

    Did you get your W-2? These documents are essential to filling out most individual tax returns. You should receive a Form W-2, Wage and Tax Statement, from each of your employers each year. Employers have until February 2, 2009 to provide or send you a 2008 W-2 earnings statement either electronically or in paper form. If you haven’t received your W-2, follow these steps:

    1. Contact your employer. If you have not received your Form W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2, say, ten days to two weeks.
    2. Contact the IRS. If you still do not receive your W-2 by February 17th or after your two week request, whichever is later, contact the IRS for assistance at 800-829-1040. When you call, have the following information:
      • Employer's name, address, city, and state, including zip code;
      • Your name, address, city and state, including zip code, and Social Security number; and
      • An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.
    3. File your return. You still must file your tax return on time even if you do not receive your Form W-2. If you have not received your Form W-2 by February 17th, and have completed steps 1 and 2 above, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
    4. File a Form 1040X. On occasion, you may receive your missing documents at a later date and some may have conflicting information. You may receive a Form W-2 or W-2C (corrected form) after you filed your return using Form 4852, and the information differs from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

    Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676). If you prefer, I can assist you with this process.

    2/16/09

    What Income is Taxable?

    While most income you receive is generally considered taxable, there are some situations when certain types of income are partially taxed or not taxed at all.

    Some common examples of items that are not included in your income are:

  • Adoption Expense Reimbursements for qualifying expenses
  • Child support payments
  • Gifts, bequests and inheritances
  • Workers' compensation benefits
  • Meals and Lodging for the convenience of your employer
  • Compensatory Damages awarded for physical injury or physical sickness
  • Welfare Benefits
  • Cash Rebates from a dealer or manufacturer
  • Economic Stimulus Payment received in 2008

    • Some income may be taxable under certain circumstance, but not taxable in other situations.

    Examples of items that may or may not be included in your income are:

    Taxable income may be in a form other than cash. One example of this is bartering, which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.

    These examples are not all-inclusive. For more information, visit the IRS Web site at IRS.gov to view or download Publication 525, Taxable and Nontaxable Income from the Forms and Publications section.

    2/13/09

    Five Important Changes for Taxpayers

    Here are a few tax law changes you may want to note before filing your 2008 federal tax return:

    1. Expiring Tax Breaks Renewed
      The following popular tax breaks were renewed for tax-years 2008 and 2009:
      • Deduction for state and local sales taxes on Form 1040 Schedule A, Line 5
      • Educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
      • Tuition and fees deduction on Form 8917

      In addition, the residential energy-efficient property credit is extended through 2016. In general, solar electric, solar water heating and fuel cell property qualify for this credit. Starting in 2008, small wind energy and geothermal heat pump property also qualify.
    2. Standard Deduction Increased for Most Taxpayers
      The 2008 basic standard deductions all increased. They are:
      • $10,900 for married couples filing a joint return and qualifying widows and widowers
      • $5,450 for singles and married individuals filing separate returns
        • $8,000 for heads of household

      Beginning this year, taxpayers can claim an additional standard deduction based on the state or local real-estate taxes paid in 2008. Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster.
    3. Contribution Limits Rise for IRAs and Other Retirement Plans
      This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $53,000 and $63,000. For married couples filing jointly, the income phase-out range is $85,000 to $105,000.
    4. Standard Mileage Rates Adjusted for 2008
      The standard mileage rates for business use of a vehicle:
      • 50.5 cents per mile from Jan. 1 to June 30, 2008
      • 58.5 cents per mile driven during the rest of 2008

      The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:
      • 19 cents per mile Jan. 1 to June 30, 2008
      • 27 cents from July 1 to Dec. 31, 2008
      • The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents a mile. Special rates apply to the Midwest disaster area.

    5. Kiddie Tax Revised
      The tax on a child's investment income previously only applied to children younger than age 18. It now applies if the child has investment income greater than $1,800 and is:
      • Younger than 18
      • 18 years of age and had earned income that was equal to or less than half of his or her total support in 2008
      • Older than 18 and younger than 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

    2/11/09

    Special Charitable Contributions for Certain IRA Owners

    As an alternative method for donating to a charity, certain taxpayers may transfer funds from their IRA to an eligible charitable organization. Here are ten things taxpayers who are thinking about making such a donation will need to know.

    1. The IRA owner must be age 70 ? or older.
    2. The donor must directly transfer the money tax-free to an eligible organization.
      3. The maximum amount that an IRA owner may transfer annually tax-free is $100,000 to an eligible organization.
    3. This option, created in 2006 and recently extended through 2009, is available to eligible IRA owners, regardless of whether they itemize their deductions.
    4. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension plans – commonly referred to as SEP Plans – are not eligible.
    5. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity.
    6. Amounts transferred are not taxable and no deduction is available for the amount given to the charity unless nondeductible contributions are transferred.
    7. Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.
    8. Transferred amounts are counted in determining whether the owner has met the IRA’s required minimum distribution rules. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. If nondeductible contributions are transferred to an eligible organization, a charitable contribution deduction may be allowed if itemizing deductions.
    9. More information about qualified charitable distributions can be found in Publication 590, Individual Retirement Arrangements.

    2/09/09

    IRS Answers the "What If" Tax Questions of an Economic Downturn

    What if I lose my job? Is my unemployment check taxable? Can I afford to take money out of my retirement account? These are just a few of the "What If" questions people are dealing with these days.

    The IRS recognizes that many people are going through difficult times financially. Often, there is a tax impact to events such as job loss, debt forgiveness or dipping into a retirement account. If your income has decreased, you may even be eligible for certain tax credits, such as the Earned Income Tax Credit, which can mean money in your pocket.

    Most importantly, if you believe you may have trouble paying your tax bill, contact the IRS immediately. There are steps the IRS can take to help. To avoid additional penalties, you should always file your tax return on time even if you are unable pay your tax bill.

    Here are some “What if” questions that are answered on the official IRS Web site. Simply go to IRS.gov and type the keywords "What If" in the “Search” box at the top of the page.

    Job Related
    What if I lose my job?
    What if my income declines?
    What if I withdraw money from my IRA?
    What if my 401(k) drops in value
    Debt Related
    What if I lose my home through foreclosure?
    What if I sell my home for a loss?
    What if my debt is forgiven?
    Tax Related
    What if I can’t pay my taxes?
    What if I can’t pay my installment agreement?
    What if I can’t resolve my tax problem with the IRS?
    What if I need legal representation to help with my tax problem but can’t afford it?

    Remember. to access the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

    2/06/09

    Things You May Not Know About the Earned Income Tax Credit

    The Earned Income Tax Credit is for people who work, but have lower incomes. Here are some things you may not know about the EITC.

    1. A quarter of all taxpayers that qualify don’t claim the credit. The Earned Income Tax Credit is money you can use to make a difference in your life. Just because you didn’t qualify last year, doesn’t mean you won’t this year. As your financial situation changes from year-to-year you should review the EITC eligibility rules to determine if you qualify.
    2. If you qualify, it could be worth up to $4,800 this year. If you qualify, you could pay less federal tax or even get a refund. The EITC is based on the amount of your earned income and whether or not there are qualifying children in your household.
    3. Your filing status cannot be Married Filing Separately. Your filing status must be married filing jointly, head of household, qualifying widow or single.
    4. You must have a valid Social Security Number. You, your spouse (if filing a joint return) and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.
    5. You must have earned income. This credit is called the “earned income” tax credit because you must work and have earned income to qualify. You have earned income if you work for someone who pays you wages or you are self-employed.
    6. Married couples and single people without kids may qualify. If you do not have qualifying children, you must also meet the age and residency requirements as well as dependency rules.
    7. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make the election, the combat pay remains nontaxable, but you must include in earned income all nontaxable combat pay you received.

    For more information about the EITC see IRS Publication 596, Earned Income Credit. This publication (available in both English and Spanish) can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

    We automatically check all returns for the Earned Income Tax Credit.

    2/04/09

    Direct Deposit Puts Your Money In Your Pocket...Faster

    Don’t wait around for a paper check. Have your federal tax refund deposited directly into your bank account. Choosing Direct Deposit is a secure and convenient way to get your money in your pocket faster.

    Here are the main reasons 66 million taxpayers chose Direct Deposit in 2008:

    1. Direct Deposit is secure. There is no chance for a check to get lost in the mail. Thousands of checks are returned to the IRS by the US Post Office every year as undeliverable mail. Direct Deposit eliminates the possibility you won’t receive your check and prevents your refund from being stolen. Don't forget it is your responsibility to make sure the account number on your tax return is correct, not the tax preparer.
    2. Direct Deposit is convenient. The money goes directly into your bank account. You won’t have to make a special trip to the bank to deposit the money yourself.
    3. Direct Deposit is easy. When you’re preparing your return, simply follow the instructions for “refund” on your return. Just make sure you entered the correct bank account and bank routing numbers on your tax form and you’ll receive your refund quicker than ever.
    4. Direct Deposit offers options. You can also electronically direct your refund to multiple accounts. With the "split refund" option, taxpayers can divide their refunds among as many as three checking or savings accounts and three different U.S. financial institutions. A word of caution — some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted.

    This and other helpful tips are available in IRS Publication 17, Your Federal Income Tax. To get a copy, visit the Forms and Publications section of the IRS Web site, IRS.gov, or call 800-TAX-FORM (800-829-3676).

    02/02/09

    Tips for Recently Married or Divorced Taxpayers

    If you were married or divorced recently, there are a couple of things you’ll want to do to ensure the name on your tax return matches the name registered with the Social Security Administration.

    If a taxpayer takes their spouse’s last name or if both spouses hyphenate their last names, they may run into complications if they don’t notify the SSA. If the newlyweds file a tax return using their new last names, IRS computers would not be able to match the new name with their Social Security Number.

    After a divorce, taxpayers who change back to their previous last name also need to notify the SSA of the change.

    Informing the SSA of a name change is quite simple. File a Form SS-5 at your local SSA office. The form is available on SSA’s Web site at www.socialsecurity.gov, by calling 800-772-1213 or at local offices. It usually takes about two weeks to have the change verified.

    Taxpayers who adopt their spouse’s child after getting married will want to make sure the children have an SSN. Taxpayers must provide SSNs for each dependent claimed on a tax return. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number – or ATIN – by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. The W-7A is available on the IRS Web site, IRS.gov, or by calling 800-TAX-FORM (800-829-3676).

    01/30/09

    Tips for Taxpayers Making a Move

    If you changed your home or business address, you’ll want to remember these six tips to ensure you receive any refunds or correspondence from the IRS.

    You can change your address on file with the IRS in several ways:

    1. Correct the address legibly on the mailing label that comes with you tax package.
      Write the new address in the appropriate boxes on your tax return;
      • Use Form 8822, Change of Address, to submit an address or name change any time during the year
      • Give the IRS written notification of your new address by writing to the IRS center where you file your return. Include your full name, old and new addresses, Social Security Number or Employer Identification Number and signature. If you filed a joint return, be sure to include the information for both taxpayers. If you filed a joint return and have since established separate residences, both taxpayers should notify the IRS of your new addresses
      • Should an IRS employee contact you about your account, you may be able to verbally provide a change of address
    2. Be sure to also notify your employer of your new address so you get your W-2 forms on time.
    3. If you change your address after you’ve filed your return, don’t forget to notify the post office at your old address so your mail can be forwarded.
    4. Taxpayers who make estimated payments throughout the year should mail a completed Form 8822, Change of Address, or write the IRS center where you file your return. You may continue to use your old pre-printed payment vouchers until the IRS sends you new ones with your new address. However, do not correct the address on the old voucher.
    5. The IRS does use the Postal Service’s change of address files to update taxpayer addresses, but it’s still a good idea to notify the IRS directly.
    6. Visit IRS.gov for more information about changing your address. You can find the address of the IRS center where you file your tax return or download Form 8822, Change of Address. The form is also available by calling 800-TAX-FORM (800-829-3676). I can help you with this process, if you would like.

    01/28/09

    Getting a Free Transcript of My Tax Return Information - Actual Copies $57 Each

    There are two easy and convenient options for obtaining free copies of your federal tax return information — tax return transcripts and tax account transcripts — by phone or by mail.

    A tax return transcript shows most line items from the tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules. It does not reflect any changes you, your representative or the IRS made after the return was filed. In many cases, a return transcript will meet the requirements of lending institutions such as those offering mortgages and student loans. You should receive your tax return transcript within 10 working days from the time the IRS receives your request.

    A tax account transcript shows any later adjustments either you or the IRS made after the tax return was filed. This transcript shows basic data, including marital status, type of return filed, adjusted gross income and taxable income. The IRS does not charge a fee for transcripts, which are available for the current and past three years. Allow 30 calendar days for delivery of a tax account transcript.

    To request either transcript:

    If you still need an actual copy of a previously processed tax return, it will cost $57 per tax year and take much longer. Complete Form 4506, Request for Copy of Tax Form, and mail it to the IRS address listed on the form for your area. Please allow 60 days for actual copies of your return. Copies are generally available for the current and past six years.

    Forms 4506-T and 4506 can be found on the IRS Web site at or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676). Of course, if I prepared your tax return, I will be happy to provide you another copy for any year I still have archived at no charge.

    01/26/09

    Ten Things the IRS Wants You to Know About Identity Theft

    1. If you receive a letter or notice from the IRS which leads you to believe someone may have fraudulently used your Social Security Number, respond immediately to the name and address or phone number printed on the IRS notice.
    2. If you receive a letter from the IRS that indicates more than one tax return was filed for you, this may be a sign that your SSN was used fraudulently.
    3. Another sign that you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.
    4. The IRS has a department which deals specifically with identity theft issues. The IRS Identity Protection Specialized Unit is available if you have been in contact with the IRS about an identity theft issue and have not achieved a resolution.
    5. You can contact the IRS Identity Protection Specialized Unit by calling the Identity Theft Hotline at 800-908-4490 Monday through Friday from 8:00 am to 8:00 pm local time (Alaska and Hawaii follow Pacific Standard Time).
    6. The IRS Identity Protection Specialized Unit is also available if you believe your identity may be at risk of being stolen due to a lost or stolen purse or wallet or due to questionable activity on your credit card or your credit report.
    7. The IRS never initiates communication with taxpayers about their tax account through emails. If you receive an e-mail or find a Web site you think is pretending to be the IRS, forward the e-mail or Web site URL to the IRS at phishing@irs.gov.
    8. The IRS has many more resources available to help inform taxpayers about identity theft on the IRS Web site at IRS.gov. On IRS.gov you can access information on how to report scams and bogus IRS Web sites. You can also visit the IRS Identity Theft Resource Page, which you can find by typing Identity Theft Resource Page in the search box on the IRS.gov home page.
    9. The Federal Trade Commission is also available to assist taxpayers with identity theft issues. You can reach them at 877-ID-THEFT (877-438-4338).
    10. Visit OnGuardOnline.gov for protection tips from the federal government and the technology industry.

      11. 01/19/09

      What Tax Records to Keep

      You probably already keep records in your daily routine. This includes keeping receipts for purchases and recording information in your checkbook. Keeping these and other records will help you avoid headaches at tax time. Good recordkeeping will help you remember the various transactions you made during the year, which in turn may make filing your return a less taxing experience.

      Records help you document the deductions you’ve claimed on your return. You’ll need this documentation should the IRS select your return for examination. Normally, 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.

      In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return:

      Good recordkeeping throughout the year saves you time and effort at tax time when organizing and completing your return.

      For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). Please feel free to contact me with any specific question you may have.

      01/16/09

      Be Aware of Suspicious E-Mails

      Be aware of e-mail scams that fraudulently use the IRS name or Logo as a lure. The goal of the scam is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft and steal your money.

      The IRS does not send unsolicited e-mails about a person’s tax account or ask for detailed personal and financial information. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

      If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site,

      You can help shut down these schemes and prevent others from being victimized. If you receive a suspicious e-mail that claims to come from the IRS, you can forward that e-mail to a special IRS mailbox, phishing@irs.gov The e-mail must be forwarded using special instructions at IRS.gov, or it loses the encoding needed to track it to its source. The IRS can use the information, URLs and links in the suspicious e-mails you forward to trace the hosting Web site and alert authorities to help shut down the fraudulent sites. After you forward the e-mail to the IRS, delete the message.

      Remember that all of the web page addresses for the official IRS website, IRS.gov, begin with http://www.irs.gov. Don' t be confused or misled by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

      01/14/09

      Top Five Facts about Dependents and Exemptions

        Dependents may be required to file their own tax return. Even though you are a dependent on someone else’s tax return, you may still have to file your own tax return. Whether or not you must file a return depends on several factors, including: the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Credit payments you received.
      1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,500 on your 2008 tax return. Exemptions amounts are reduced for taxpayers whose adjusted gross income is above certain levels, which is determined by your filing status.
      2. Dependents may not claim an exemption. If you claim someone as a dependent, such as your child, that dependent may not claim a personal exemption on their own tax return.
      3. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return and were not the dependent of another taxpayer.
      4. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

      For more information on dependents and exemptions, including whether or not you or your dependent needs to file a tax return, see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information or contact me via e-mail.

      01/12/09

      The Five Filing Status Possibilities

      Everyone who files a federal tax return must determine which filing status applies to them. It’s important you choose your correct filing status as it determines your standard deduction, the amount of tax you owe and ultimately, any refund owed to you.

      There are two things to consider when determining your filing status:

      First, your marital status on the last day of the year determines your filing status for the entire year. Secondly, if more than one filing status applies to you, choose the one that gives you the lowest tax obligation.

      Here are the five filing status options:

      1. Single. This will generally apply to anyone who is unmarried, divorced or legally separated according to your state law. (The Federal DOMA does not recognize any marriage between same gendered individuals for income tax filing purposes.)
      2. Married Filing Jointly. A married couple may file a joint return together. If your spouse died during the year, you may still file a joint return with that spouse for the year of death. (Assuming you have not remarried prior to the end of the year.)
      3. Married Filing Separately. A married couple may elect to file their returns separately.
      4. This generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
      5. Qualifying Widow(er) with Dependent Child. You may be able to choose this filing status if your spouse died during 2006 or 2007, you have a dependent child and you meet certain other conditions.

      There’s much more information about determining your filing status in Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available on the IRS Web site at IRS.gov or you may contact me.

      01/09/09

      First-Time Homebuyer credit

      First-time homebuyers should begin planning now to take advantage of a new tax credit. Available for a limited time, the credit:

      Only the purchase of a main home located in the United States qualifies. Vacation homes and rental property are not eligible. For a home that you construct, the purchase date is the first date you occupy the home.

      Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.

      If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. If you make an eligible purchase in 2009, you can choose to claim the credit on either your original or amended 2008 return, or on your 2009 return.

      The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the maximum credit will be available for homes costing $75,000 or more. The credit normally must be repaid over a 15-year period starting the second year after the year the credit is claimed.

      The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income. In general, for a married couple filing a joint return the phase-out begins at $150,000 and is completely phased out at $170,000. For other taxpayers, the phase-out range is between $75,000 and $95,000.

      Not everyone will qualify for the credit. There are other rules that may impact your eligibility and decision to claim the First-Time Homebuyer Credit. Get all the information at IRS.gov or send me an e-mail with your question.

      11/20/08

      2008 year-end tax tips

      This is a year to pay careful attention to tax preparation. Congress passed several acts to stimulate the economy, provide disaster relief and modify or extend certain tax provisions. Tax advantages generally fall into three categories — reductions, deductions and credits; here are just a few.

      1. Reductions
        • Maximize personal deferrals to an employer’s retirement plan, such as a 403(b) or 401(k) plan. The general limit for 2008 is $15,500 (an additional $5,000 for those age 50 or better). Despite the volatility of the market, contributing toward retirement is still a prudent strategy for many taxpayers.
        • Use all flexible spending account funds. There is time to gather receipts and file for reimbursement — even for procrastinators. Schedule needed checkups as soon as possible. About this time of the year, many providers (dentists and eye doctors) send reminders on using flex dollars. Those who respond sooner are likely to get the best appointment times.
      2. Deductions
        • Make a contribution to a traditional IRA. If both spouses are employed and aren’t active participants in certain employer retirement plans, the deduction is up to the lesser of $5,000 ($6,000 if age 50 or better) or 100% of the compensation that's includible in gross income. Don’t forget that non-employed spouses generally are eligible to contribute to a spousal IRA. Deduction eligibility also depends on adjusted gross income.
        • Make use of the job search deduction. The unemployment rate grew significantly this year. Certain job-search activities may be deductible for taxpayers that itemize. Eligible job search expenses must exceed 2% of adjusted gross income. The job search must be in the same field at the same level as the job left. Expenses are deductible even if not hired.
        • Charitable contributions are deductible if the taxpayer itemizes. A contribution of cash, check or monetary gift (regardless of amount) must be supported by either a bank record or a written communication from the qualified organization. Special rules apply to noncash contributions of more than $500.
        • Qualified Charitable Distribution deduction was extended two years, thanks to the Emergency Economic Stabilization Act of 2008. This provision permits IRA owners, age 70? or better, to make tax-free charitable gifts from their IRAs directly to eligible charities. An overall limit, generally $100,000, per IRA owner applies.
      3. Credits
        • The Saver’s Credit helps low- and moderate-income taxpayers that make voluntary contributions to an employer retirement plan or to an IRA. This credit applies to married individuals filing separately and single with incomes up to $26,500; married couples, filing jointly, with incomes up to $53,000; and head of household with incomes up to $39,750.
        • The Earned Income Credit is a refundable federal income tax credit for low-income working individuals and families. To qualify, taxpayers must meet certain requirements and file a tax return, even if earnings are below the filing threshold. Earned income and adjusted gross income limits apply and maximum credit is $4,824 with two or more qualifying children; $2,917 with one qualifying child; and $438 with no qualifying children.
        • First-time Home Buyers Credit, part of the Housing and Economic Act of 2008, is a new tax credit that applies to homes purchased after April 8, 2008 and before July 1, 2009. The credit is available even if the eligible taxpayer has no tax liability.

      According to the IRS, nearly 4.1 million people fail to claim education tax benefits, such as the Hope Credit, Lifetime Learning Credit, Tuition and Fees Deduction, Student Loan interest deduction and the Exclusion for Savings Bond Interest. Eligible taxpayers have up to 3 years to file an amended return to claim these missed deductions.

      Finally, the IRS reports that 279,000 economic stimulus checks and 104,000 regular refund checks, totaling $266 million, were undeliverable due to address errors. This underscores the importance of preparation and proofing. The IRS Web site provides a list of common filing mistakes. Among the most common, in addition to incorrect addresses, are missing or incorrect Social Security numbers, unsigned returns, math errors and failure to include all applicable schedules. Even tax preparation software cannot guard against some of these common errors. Preparation and careful proofing are perhaps the most vital of all tax tips.

      09/15/08

      Tax Scams - The Last Thing You Need

      Life is complex enough without con artists trying to separate you from your hard earned dollars. It can be very costly if you become a victim of a scam that trades on the image or the mission of the IRS. Everyone should be vigilant in protecting personal, financial and tax information.

      The IRS has these tips to avoid falling prey to con artists.

      Watch your personal and financial information very closely, particularly during electronic transactions. The IRS is among a growing group of government agencies and corporations whose names and Web sites are being copied by imposters posing as employees conducting official business and seeking your personal information. Be aware that the IRS does not use e-mail to initiate contact with taxpayers about their accounts. Do not open links in unsolicited messages claiming to come from the IRS.

      Not all scams come by way of the Internet or email. The telephone is a low-tech source of scams. Do not give away personal information to callers claiming to be from the IRS unless you have verified the caller’s identity. You can confirm an IRS contact by calling 800-829-1040.

      Thieves can use stolen personal data to access your financial accounts, run up charges on credit cards or apply for new loans. With a stolen identity a con-artist might try to use your Social Security Number to intercept your refund or falsify employment records, leaving the IRS with the impression that you did not report all of your income.

      Some con artists earn their living by preparing false, and illegal, tax returns. Make certain that all of the information on your tax return is accurate since you are responsible for its content regardless of who prepares your return.

      Dishonest return preparers, promising unreasonably large refunds, can cause many headaches for you. Such preparers attract new clients by promising large refunds while skimming a portion of the inflated refunds and charging high fees for preparation services. As the saying goes, if it sounds too good to be true, it probably is.

      In contrast to shady tax preparers, some con artists openly tell you that you do not have to pay taxes. Be wary of anyone who encourages you to side-step your responsibility to file an income tax return or to pay the proper amount of tax due.

      Some promoters make outlandish claims that taxes are not legal, that wages are not income, that a voluntary tax system means you can choose not to file or pay and that income tax returns violate your protection against self-incrimination or the right to privacy. Often these promoters will use techniques that are strikingly similar to any other con-artist to charge a high fee to share their “secrets” with you. Such arguments are false and have been repeatedly rejected by the courts. You may end up paying for this mistake twice, first when you pay for the bad advice and second when you are faced with a higher tax bill plus penalties and interest.

      9/08/08

      Selling Your Home

      During summer months, many people sell their home and move to a new location. Many of those individuals will make a profit on the sale and still will not have to pay a single dime of additional income tax to the IRS.

      Generally, you have made a profit if the selling price of your home is greater than the price you paid to purchase the home. That profit, considered a capital gain, is usually subject to income tax. However, under certain circumstances the law allows you to exclude all or part of that gain from your income – that is, you may not have to pay tax on the profit.

      Individuals may be able to exclude up to $250,000 of capital gain on the sale of their home, and married taxpayers filing joint returns may be able to exclude up to $500,000. The exclusion may be claimed each time that you sell your main home, but generally no more often than once every two years.

      To qualify, you must meet both the ownership and use tests.

      • Ownership Test: During the 5-year period ending on the date of the sale, you must have owned the home for at least 2 years.
      • Use Test: During the 5-year period ending on the date of the sale, you must have lived in the home as your main home at least 2 years.
      • If you and your spouse file a joint return and both meet the use test, you normally will be able to claim the exclusion for married couples even if only one of you meets the ownership test.

      If you do not meet these tests, you may still be allowed to exclude a reduced amount of the gain realized on the sale of your home. But you must have sold the home for other specific reasons such as serious health issues, a change in your place of employment, or certain unforeseen circumstances such as a divorce or legal separation, natural or man-made disasters resulting in a casualty to your home, or an involuntary conversion of your home.

      For sales after 2007, the maximum exclusion on the sale of a main home by an unmarried surviving spouse is $500,000 if the sale occurs no later than 2 years after the date of the other spouse's death. However, this rule applies only if the requirements for joint filers relating to ownership and use were met immediately before the date of death, and during the 2-year period ending on the date of death, there was no sale or exchange of a main home by either spouse which qualified for the exclusion.

      If you were on qualified official extended duty in the U.S. Armed Services, the Foreign Service, or the intelligence community, you may suspend the five-year test period for up to 10 years. You are on qualified extended duty when, for more than 90 days or for an indefinite period, you are:

      • At a duty station that is at least 50 miles from your main home, or
      • Residing under government orders in government housing.
      • Intelligence community members must serve on extended duty at a duty station that is located outside the United States.

      If you are entitled to exclude the entire gain from the sale of your home, you do not need to report the gain on your federal tax return. However, if you are not entitled to exclude the entire amount of the gain, use Schedule D, Capital Gains and Losses, and Form 1040 to report the total gain, the portion that can be excluded, and the portion that is subject to capital gains tax.

      For more information see IRS Publication 523, Selling Your Home, available at IRS.gov, by calling 800-TAX-FORM (800-829-3676) or contacting me.

      9/01/08

      It's Not Too Late to Claim Your Economic Stimulus Payment

      It is not too late to file a return to claim your economic stimulus payment.

      You must file a return by October 15 to receive a payment prior to year's end. It can take up to eight weeks for the IRS to process the return and issue the check.

      People who have no tax filing requirement but have at least $3,000 in qualifying income should file a simple Form 1040A to claim the minimum payment of $300 ($600 for married couples) plus the $300 payment for each qualifying child younger than 17 as of Dec. 31, 2007. Qualifying income includes any combination of earned income, nontaxable combat pay as well as certain payments from the Social Security Administration, Department of Veterans’ Affairs and the Railroad Retirement Board.

      For taxpayers who are required to file an income tax return, the IRS will use their 2007 tax return information to determine eligibility for economic stimulus payments of up to $600 ($1,200 for married couples) plus the $300 payment per each qualifying child.

      Social Security benefits considered qualifying income include retirement, disability and survivor payments; Supplemental Security Income, known as SSI, is not qualifying income. Veterans Affairs benefits considered qualifying income include disability compensation, disability pension and survivor payments. Qualifying Railroad Retirement payments include the social security equivalent portion of Tier 1 benefits.

      Taxpayers must have a valid Social Security Number to qualify for the payment; this includes both spouses filing a joint return and any dependents. Married members of the military may receive economic stimulus payments this fall, even if their spouses or children don’t have social security numbers, following the newly-enacted Heroes Earnings Assistance and Relief Tax Act of 2008. Also, people cannot be claimed or be eligible to be claimed as a dependent on another person’s tax return.

      For more information about the Economic Stimulus payments visit the IRS Web site at IRS.gov.

      8/25/08

      Moving Expenses Related to a New Job May Be Tax Deductible

      Did you recently move to another city for a new job or because your old job is now at a new location? A tax break may be coming your way.

      How far you moved and the amount of time you spend on the job will have a major impact on whether you qualify for the tax break. Moves that are only short hops and jobs that are short-term or part-time generally do not qualify. However, if you can satisfy the distance and time tests then job-related moving expenses that you incur may be tax deductible.

      You will meet the distance test if your new workplace is at least 50 miles further from your former home than your previous workplace was from that home. For example, if your old job was 5 miles from your former home, your new job must be at least 55 miles from that home.

      The time test requires you work full-time for at least 39 weeks during the 12 months immediately after your move. If you are self-employed, the time test requires you to work full-time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after your move. You can deduct your moving expenses on your tax return even though you have not met the time test by the date your return is due if you expect to meet the 39-week or the 78-week test as required.

      Members of the armed forces do not have to meet these tests if the move was due to a permanent change of station.

      Reasonable moving expenses are deductible and include the costs of moving your household goods and personal effects to your new home. You can also deduct the expenses of traveling to your new home, including lodging costs.

      Meals eaten while in transit between your old and new homes are not deductible as moving expenses. No part of the purchase price of your new home may be deducted as a moving expense. You cannot claim a moving expense deduction for expenses covered by reimbursements excluded from income

      Additional information on moving expenses, including an extensive list of deductible and non-deductible expenses, can be found in Publication 521, Moving Expenses, on the IRS Web site at IRS.gov, by calling 800-TAX-FORM (800-829-3676) or by contacting me.

      8/18/03

      Charitable Contributions

      Did you make a cash contribution to your favorite charity? Have you recently spent a weekend cleaning stuff out of your garage or basement that you then donated to a local charity?

      Charitable contributions can be tax deductible, but you must have the proper records to support your deduction. Due to the Pension Protection Act of 2006 the rules on recordkeeping for charitable contributions became a little more strict beginning in January 2007.

      To deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Acceptable bank records would include canceled checks or bank or credit union statements containing the name of the charity, the date and the amount of the contribution.

      Under the previous rules, records such as personal bank registers, diaries or notes made around the time of the donation could often be used as evidence of cash donations. Personal records like this are no longer sufficient.

      Here are some additional tips to help you deduct your charitable contributions on your 2008 federal tax return.

      • Charitable contributions are deductible only if you itemize deductions using Form 1040.
      • Contributions must be made to a qualified organization.
      • Used clothing and household items such as furniture, linens and appliances must be in good used condition.
      • Vehicle donations are subject to special rules.
      • To deduct charitable contributions of items valued at $250 or more you must have a written acknowledgment from the qualified organization.
      • To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return.

      More information is available on the IRS Web site at IRS.gov. A good resource is IRS Publication 526, Charitable Contributions, found on the web site, by calling 800-TAX-FORM (800-829-3676), or by contacting me.

      8/11/08

      Mortgage Workouts, Tax-Free for Many Homeowners

      There is now tax relief for struggling homeowners. If your mortgage debt is partly or entirely forgiven during 2007, 2008 or 2009 you may be able to claim special tax relief.

      Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

      Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

      Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available.

      If your debt is reduced or eliminated you will receive a year-end statement (Form 1099-C) from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

      The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).

      For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit the IRS Web site at IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. This publication and Form 982 can be downloaded from IRS.gov,by calling 800-TAX-FORM (800-829-3676) or contacting me.>

      8/04/08

      Keeping Good Tax Records

      In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax."

      Fortunately, you don’t have to keep all tax records around forever. Normally, 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.

      If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.

      If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.

      Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.

      Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.

      These publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

      Actually, there is a wealth of free tax information on the IRS Web site, IRS.gov. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.

      In addition to the latest news coming from the IRS, the homepage can lead you to statistics, news releases and tax tips, local IRS offices, the Taxpayer Advocate Service, and thousands of IRS forms and publications. Frequently asked questions and answers are available or you can use two separate search icons: one by keyword and one by answering “I need to . . .”

      Of course, you can always e-mail me and I will help in any way that I can.