Don't miss out on your stimulus payment

Don't miss out on your stimulus payment

Don't miss out on your stimulus payment


IRS TAX TIP 2008-Special Edition

Are you wondering what to do to ensure that you receive your economic stimulus payment which the IRS will begin to send out this May? In most cases you will not have to do anything extra. If you are eligible for a payment, all you have to do is file a 2007 tax return and the IRS will do the rest.

However, recipients of Social Security, certain Veterans' and Railroad Retirement benefits and low-income workers who don’t normally need to file may have to take steps to insure receipt of the stimulus payment.

If you are in this group and normally would not be required to file a tax return, you need to file a 2007 tax return this year to receive an economic stimulus payment. The return must show at least $3000 in qualifying income.

Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. While these people may not be normally required to file a tax return because they do not meet the filing requirement, the IRS emphasizes they must file a 2007 return in order to receive a payment.

The IRS has released a sample version of a Form 1040A that highlights the simple, specific sections of the return that can be filled out by people in these categories to qualify for a stimulus payment.

For more information see IRS Fact Sheet FS 2008-16 Stimulus Payments: Instructions for Low-Income Workers and Recipients of Social Security and Certain Veterans’ Benefits available on www.irs.gov.

Be aware that identity thieves are already pushing scams involving the stimulus payments. At least one telephone scam is making the rounds using the proposed rebates as bait. IRS news release IR-2008-11,”IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting,” has more details.

Remember that for 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.

Links:

Economic Stimulus Payments Information Center

Tax Credit Reporting Service for Students

ACS :: 1098T

TCRS For Students


Tax Credit Reporting Service for Students

Welcome to the Tax Credit Reporting Service (TCRS) Student/Taxpayer web site. This site provides useful information on the Taxpayer Relief Act of 1997, which provides education tax incentives for eligible taxpayers. These benefits, called the Hope Scholarship Credit and Lifetime Learning Credit, allow taxpayers to reduce their federal income tax based upon qualified tuition and fees paid, assuming the taxpayer meets all TRA’97 requirements.

This site also contains information on the Tuition and Fees Deduction for Higher Education Expenses. This tax deduction permits taxpayers to take an "above the line" deduction for qualified higher education expenses paid by the taxpayer during a taxable year. Additional information can be found by selecting the The Deduction for Higher Education Expenses link under TRA’97 Information menu option.

For more information regarding student loan interest paid and 1098-E year-end tax statement click the following link www.acs-education.com.

If TCRS provides tax credit reporting services for your school,
proceed to Access My Record and follow the instructions to obtain secure access
to your student-specific data.

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Best And Worst Cities For Renters

In Pictures: Least Expensive Cities For Renters - Forbes.com


Real Estate
Best And Worst Cities For Renters
Matt Woolsey, 01.07.08,
6:00 PM ET

Writing a monthly rent check often feels like lighting money on
fire. You'll never again see that cash, you build no equity and there
are no tax benefits.

But renting makes sense to those unwilling
or unable to buy a home in an uncertain housing market. The number of
such Americans seems to be growing; last month mortgage applications
fell to their lowest level in a year.

That's good news for landlords--especially those in New York City and San Francisco. In these cities, tenants pay the highest rents in the country by a significant margin.

Read the full article at:
http://www.forbes.com/2008/01/07/rentals-US-expensive-forbeslife-cx_mw_0107realestate.html

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Even babysitters get the blues...

Here is a form to have completed by your child care provider and bring with you to The Tax Man. Having accurate and verified information at the tax desk will help a lot.

Moreover, the Child and Dependent Care Credit allows lower income taxpayers with children and/or disabled adult dependents up to $6,000 ($3,000 per dependent), 20% of which will be fully refunded to you in your pocket on your IRS federal return, then about 40% of that refundable credit is additionally refunded to you in your pocket on your California State tax return.

Yes, well worth getting in touch with your provider and confirming the dates and numbers!

IRS.gov Search Results

Form W-10 (Rev. August 1996) PDF
Dependent Care Provider's Identification and Certification
Form W-10 (Rev. August 1996) Form W-10 (Rev. August 1996) Dependent Care Provider’s Identification and Certification Department of the Treasury Internal Revenue Service Dependent Care Provider’s Identification (See ...
http://www.irs.gov/pub/irs-pdf/fw10.pdf - 35.0KB

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Is the Assistance we get for our adopted children taxable?

NACAC | Adoption Subsidy

Tax Issues Related to Adoption Assistance and Adoption

Adoptive parents often ask whether adoption assistance (adoption subsidy) payments are taxable. Many also wonder about claiming their child as a dependent and using the child tax credit. NACAC reviewed related IRS publications, and below we offer our interpretation of these issues. Please know that NACAC is not a tax expert, and these opinions should not be considered legal or financial advice. You should consult your own tax advisor before filing.

Adoption Assistance Payments as Taxable Income

Since 1974, the IRS has ruled that adoptive parents do not normally need to include adoption assistance benefits in their taxable income (see box below for specific IRS language).

IRS Publication 17: Your Federal Income Tax

Publication 17 has made two references related to the taxability of adoption assistance:

* Chapter 12: Other Income—Welfare and Other Public Assistance states “do not include in income the benefit payments from a public welfare fund” (p. 84). In 1974, the IRS ruled that adoption assistance benefits were public welfare payments and thus exempt from taxation under this clause.
* In a previous version of Publication 17, the IRS specifically stated “do not include in your income payments from a state agency to help you care for your adopted child” (p. 67 of the 1986 Publication 17).

However, the IRS also says that adoption assistance benefits may be taxable if they exceed the amount an adoptive family spends to support the child. This situation might occur if adoption assistance was a family’s sole source of income. In cases such as this, some of the adoption assistance funds are used to meet the needs of the parent(s), so not all funds are being spent to support

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Why It Might Pay to Go Solo

Wells Fargo

Why It Might Pay to Go Solo

If you’re looking for a good retirement plan, especially one that can help you maximize tax-deductible retirement contributions, it might pay to look at a solo 401(k). Typically, if you’re self-employed or own a small business and have no other full-time employees (with the exception of the owner’s spouse), the first plans to consider have been simplified employee pensions (SEPs) and savings incentive match plans for employees (SIMPLE) IRA plans. They’re both solid plans because they’re fairly simple and don’t cost much to administer.

But depending on your goals, a 401(k) plan may offer a better combination of benefits. A solo 401(k) plan is a standard 401(k) plan combined with a profit-sharing plan. (It’s not a different kind of 401(k) plan, but one that takes advantage of the relaxed rules that apply when the only people who participate in the plan are the owner and his or her spouse.) If you have full-time employees age 21 or older (other than your spouse) or part-time employees who work more than 1,000 hours a year, you’re not eligible for a solo 401(k).

A solo 401(k) also offers the same flexibility as a standard 401(k), as you can choose to invest pre-tax money or go for a Roth plan, which allows you to invest after-tax dollars.

In terms of maximizing contributions to your solo 401(k), you can invest as much as $15,500 as an employee for 2007. As an owner, you’re allowed to contribute an additional 25% of your compensation, up to a total of $45,000. And there is no minimum contribution, so you don’t have to worry about not adding to the fund during lean years. So if you and your spouse are both in the solo 401(k), you could save up to $90,000 per year. If you’re age 50 or older, you can add another $5,000 each in catch-up contributions this year.

With a standard 401(k), you can only invest up to the $15,500 limit and the catch-up contribution. In the case of a SEP IRA, you can invest only 25% of your business income up to $45,000. That may seem to compare favorably to a solo 401(k), unless 25% of your business income doesn’t get you to the $45,000 maximum, at which point, you truly miss the benefit of the $15,500 employee contribution. In addition, there is no $5,000 catch-up contribution opportunity.

Solo 401(k)s mean more paperwork than SEP IRAs and once your account reaches $100,000 or more, you need to file a special tax return, but those disadvantages are small compared with the potential benefits.

Talk to your accountant or financial advisor before entering into any retirement plan. To find out more about solo and other 401(k)s, check out 401khelpcenter.com and, for information about plans in general, read IRS Publication 560 (2006), Retirement Plans for Small Business.
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