The recently enacted “American Recovery and Reinvestment Act of 2009″ (2009 Economic Stimulus Act) includes a wide-range of tax incentives, many of which are retroactive to the beginning of the year. This week I’ll share the changes impacting individuals. Then, be sure to look for email next week when I share the changes impacting businesses. Here’s What Individual Taxpayers Need to Know about the New Tax Law: Expanded First-Time Credit for First-Time Home Buyers Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10% of the purchase of a home (up to $75,000) by first-time home buyers. It applied to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit were required to repay any amount received under this law back to the government over 15 years in equal installments or earlier if the home was sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The new tax law enhances the credit by eliminating the repayment obligation for taxpayers that purchase homes on or after January 1, 2009. It also extends the credit through the end of November 2009, and bumps up the maximum value of the credit from $7,500 to $8,000. Expanded and Revised Higher Education Tax Credit The new law creates a $2,500 higher education tax credit that is available for the first four years of college. The credit is based on 100% of the first $2,000 of tuition and related expenses, including books, paid during the tax year and 25% of the next $2,000 of tuition and related expenses paid during the tax year. The credit is subject to a phase-out for AGI in excess of $80,000 ($160,000 for married couples filing jointly). Forty percent of the credit is refundable. This new credit temporarily replaces the Hope credit. Computers as an Education Expense The new law permits computers and computer technology, including internet access, to qualify as qualified education expenses in 529 education plans for tax years beginning in 2009 and 2010. Tax Break for New Car Purchasers The new law allows taxpayers to deduct state and local sales taxes paid on the purchase of a new automobile, including light trucks, SUVs, motorcycles, and motor homes. The tax break phases out starting with taxpayers earning $125,000 per year ($250,000 for joint returns). The deduction is allowed to both those who itemize their deductions as well as to those who do not. The deduction cannot be taken by a taxpayer who elects to deduct state and local sales taxes in lieu of state and local income taxes. Alternative Minimum Tax(AMT)Patch To hold the number of taxpayers subject to the AMT at bay, the new law increases the AMT exemption amounts for 2009 to $46,700 for individuals and $70,950 for joint returns, and allows the personal credits against the AMT. Making Work Pay Credit The new law provides an individual tax credit in the amount of 6.2 percent of earned income not to exceed $400 for single returns and $800 for joint returns in 2009 and 2010. The credit is phased out at adjusted gross income (AGI) in excess of $75,000 ($150,000 for married couples filing jointly). The credit can be claimed as a reduction in the amount of income tax that is withheld from a paycheck, or through a credit on a tax return. Under the credit, workers can expect to see perhaps $13 a week less withheld from their paychecks starting around June. Next year, the extra take-home pay will go down to around $9 per week Economic Recovery Payment The new law provides for a one-time payment of $250 to retirees, disabled individuals and Social Security beneficiaries and SSI recipients receiving benefits from the Social Security Administration and Railroad Retirement beneficiaries, and to veterans receiving disability compensation and pension benefits from the U.S. Department of Veterans’ Affairs. The one-time payment is a reduction to any allowable Making Work Pay credit. Refundable Credit for Certain Federal and State Pensioners The new law provides a one-time refundable tax credit of $250 in 2009 to certain government retirees who are not eligible for Social Security benefits. This one-time credit is a reduction to any allowable Making Work Pay credit. Unemployment Compensation Exclusion The new tax law temporarily suspends federal income tax on the first $2,400 of unemployment benefits received by a recipient in 2009. Expanded Earned Income Tax Credit The new law provides tax relief to families with three or more children and increases marriage penalty relief. The changes apply for 2009 and 2010. Expanded Child Tax Credit The new tax law increases the refundable portion of the child tax credit for 2009 and 2010 by lowering the income threshold to $3,000 (from $8,500 in 2008). Qualified Transportation Fringe Benefits Qualified transportation fringe benefits, such as transit passes, qualified parking and van pooling are not included in an employee’s income up to a specified dollar amount. The new tax law increases the monthly amount to $230 per month from $120 per month starting in March 2009 and continuing through 2010. Energy Incentives The new tax law enhances several energy tax incentives that reward taxpayers for installing energy-efficient property and alternative sources of energy in their homes.

You are new to the tax preparation field. You have your degree in accounting, maybe even a masters degree. You have been prepped on the most current tax laws, may even have passed a state-required certification process to prepare taxes, and are ready to open your own practice. Now the real question: What software should I use for my tax preparation?
In a competitive world, a hand-prepared return is not only passive, it is downright non-productive. Tax software increases the speed and ability to process returns while increasing accuracy at the same time.
Nevertheless, the differences are strong and numerous in the type of software that can be purchased over the counter at your local store, and the type sold at society and industry trade shows and in their respective trade journals. In addition, unbelievably, some ‘professional’ preparers start their practice with these low-end, over-the-counter software products.
Some long-standing, brand name programs are available at many supermarkets and office supply stores with a price range from $30 to $50. BE AWARE: these products are designed for simple returns, have limited, or no flexibility, and are designed for the average person who does not need hand holding. In short, they are not made for professionals who work with complex situations.
Professional packages may run the gamut of a limited use product to unlimited 1040 system use, to business and state programs, and will run from $400 to $10,000 per year. Is the high price worth it?
I recall talking to a CPA a few years ago who said her neighbor brought over the family’s tax return that they’d prepared on a store boxed product, then wondered if she might simply check it for errors before they submitted it to the IRS. The CPA ran the return scenario through her own, more professional program and proudly noted she had calculated an extra $3,000 for refund this family was planning to receive.
Why the big difference? Over-the-counter programs are progressively getting better at finding and alerting the user to available credits and benefits. However, these programs do not have the empirical wisdom of human expertise and evaluation, nor do they have the depth of utilities available in professional software. YOU, the professional, have the advantage.
You are in an industry that intimidates the average soul. In addition, this may be one area where the old adage: You get what you pay for, hits the bull’s eye. Professional programs can easily spot non-claimed credits, errors, or obstacles that simply are not programmed into the low-end, store boxed products.
Moreover, a professional program is packed with utilities to do just that ‘ assist the tax practitioner with increasingly complex computations. Most professional packages include:
* An integrated Asset Manager. Some even perform like-kind exchanges, partial dispositions, and have management tools to track basis, depreciation, and a host of related information.
* More sophisticated Audits. This more intensive audit programming can suggest alternatives to even the most confusing issues.
* Tax Practice Management. This critical program can categorize and analyze the various types of returns processed, amounts of income invoiced, help create client organizers, and track client trends and pertinent return information.
* A Scheduler program; which helps the practitioner maintain the tight schedule necessary during the short 1040 individual filing season.
* Comprehensive Libraries; which may include Zip Code directories, and customized employer directories which auto-fill to specific forms and schedules.
* The ability to key in Overrides. A viable part of the professional package; making overrides in program entry fields may be needed when alternative calculations become necessary.
* Toll-free support. Usually these free services come with the purchase of the professional program.
* Detail statements. These statements usually comprise more detailed information regarding a line item entry. Such statements may break out the total into multiple items, or can provide information that might otherwise raise an eyebrow or two at the IRS without such an explanation.
Of late, another member has been muscling into the domain of professional practitioners; online tax prep. Though these too are gaining in popularity, the issue of return access, re-access, or amending is something to consider. As with the over-the-counter programs, these online products may also be limited in the scope and complexity of returns they can handle.
One question that often comes from those not familiar with professional software however is “Why do I need an EFIN (electronic filer identification number) from the IRS to file returns electronically?” My store bought package did not require one.
Since the over-the-counter programs limit the user, input and do not allow overrides, the vendors (software manufacturers) takes responsibility and liability for the accuracy of the return. The IRS allows purchasers of store bought products to file up to five returns with this software without having an IRS assigned EFIN.
Because of the flexibility of professional software in overrides, detail statements, and overall user knowledge of the tax law allowed to manipulate the program, the IRS requires the user to apply for their own EFIN (submission of IRS form 8633).
Simply put, if you ARE a paid professional tax practitioner using an over-the-counter program, you are not only harming the accuracy of your client’s return, you may be harming your own reputation. The costs are certainly higher, but putting out the extra bucks will pay for itself in the number of clients you obtain and retain.

IRS OFFER IN COMPROMISE - IRS TAX SETTLEMENT - IRS TAX RELIEF

An IRS Offer in Compromise ( also known as an OIC ) is an excellent way to settle your IRS Tax Debt with the IRS for much LESS money than what you currently owe. This Settlement of IRS Taxes?has been commonly known as “pennies on the dollar”.

An? IRS Offer in Compromise ( IRS Tax Settlement ) should be considered by all taxpayers who cannot pay the IRS in?a lump sum. It is for those who do not have enough assets to sell or liquidate to satisfy their back Tax Debt. It is for those who will not have the future earnings to satisfy the amount of Tax due (IRS Penalties and Interest included).

At least one of three conditions must be met to qualify a taxpayer for consideration of an IRS Offer in Compromise (OIC) Tax Settlement:

Doubt as to Liability

Doubt as to Collectibility

Effective Tax Administration

An IRS Offer in Compromise (OIC) will have no effect upon a IRS Tax Lien. The IRS Tax Lien will remain in effect until the IRS Offer in Compromise is accepted by the IRS and the full amount of the?Offer in Compromise (OIC) has been paid in full.

 

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Once the IRS decides that an?IRS Offer in Compromise (OIC) is processable and that the IRS Offer in Compromise?includes all the paperwork and forms properly filled out, the IRS must stop IRS Wage Garnishment / IRS Wage Levy / IRS Bank Levy actions under ?6331.

All the more reason to have highly skilled Tax Attorneys represent you.

In the last published IRS statistics, the IRS reports that the average discount on an accepted Offer in Compromise?was 88% (only 12 cents on the dollar was paid by Americans with an accepted Offer in Compromise (OIC), and that the average acceptance rate was 47.6%. Given the savings possibilities on accepted Offer in Compromise (OIC), the determined and diligent team of Tax Attorneys at DWK TAX GROUP specializes in the Offer in Compromise program and works very hard to see if our clients qualify for an Offer in Compromise (OIC).

It is important to emphasize, for example, the fact that the Congress told the IRS to have a liberal acceptance policy in processing?IRS Offer in Compromise?cases. Our legal memorandum also cites the Congressional tax policy to settle your IRS Tax liability to give taxpayers a fresh start.

What are you waiting for? Stop “thinking about it”. Be Pro-Active. Save yourself from the stress.

You must be eligible and qualified.

DWK TAX FEE FOR AN IRS OFFER in COMPROMISE:? $1,200.00.

Senior Discounts Available. AARP Discounts Available.

Affordable Payment Plans Available to You.

To find out more, (CALL 1-866-226-6102)

The recently enacted “American Recovery and Reinvestment Act of 2009″ (2009 Economic Stimulus Act) includes a wide-range of tax incentives. Extension of Bonus Depreciation Last year, Congress temporarily allowed businesses to recover the costs of capital expenditures made in 2008 faster than the ordinary depreciation schedule would allow by permitting these businesses to immediately write off 50% of the cost of depreciable property acquired in 2008 for use in the United States. The new law extends this temporary benefit for qualifying property purchased and placed into service in 2009. Extension of Section 179 In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers may elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Last year, Congress temporarily increased the amount that small businesses could write off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The new law extends these temporary increases for capital expenditures incurred in 2009. Expanded Carryback of Net Operating Losses Prior to the new law, net operating losses (NOLs) could be carried back to the two years before the year of the loss and carried forward for the succeeding twenty years. For 2008, the new law extends the maximum NOL carryback period from two years to five years for small businesses with gross receipts of $15 million or less. Incentives to Hire Unemployed Veterans and Disconnected Youth Businesses are allowed to claim a work opportunity tax credit equal to 40% of the first $6,000 of wages paid to employees of one of nine targeted groups. The new law expands the work opportunity tax credit to include two new targeted groups: (1) unemployed veterans; and (2) disconnected youth. Individuals qualify as unemployed veterans if they were discharged or released from active duty from the Armed Forces during 2008, 2009 or 2010 and received unemployment compensation for more than four weeks during the year before being hired. Individuals qualify as disconnected youths if they are between the ages of 16 and 25 and have not been regularly employed or attended school in the past 6 months. Accumulated AMT and R&D Credits The new law extends the provision contained in the Foreclosure Prevention Act of 2008 and allows AMT and loss taxpayers in 2009 to receive 20% of the value of their old AMT or research and development (R&D) credits to the extent such taxpayers invest in assets that qualify for bonus depreciation. Delayed Recognition of Cancellation of Debt Income To benefit certain businesses that buy their own debt at a discount, the new law lets the businesses recognize cancellation of debt income over 10 years for specified types of business debt repurchased by the business in 2009 or 2010. Qualified Small Business Stock The new law increases the exclusion for gain from the sale of certain small business stock held for more than five years from 50% to 75% for stock issued after the enactment date and before 2011. S Corporation Holding Period The new law temporarily shortens the holding period of assets subject to the built-in gains tax from 10 years to 7 years. Estimated Taxes The new law decreases required estimated tax payments for individuals whose incomes primarily come from a small business in 2009. Rather than being required to make quarterly estimated tax payments based on 100% of their 2008 returns, the new law allows computation based on 90%. To qualify, the individual’s adjusted gross income must be less than $500,000 and he or she must certify that more than 50% of the gross income shown on his or her return for the prior tax year was income from a small business. Income from a small business generally means income from a trade or business with an average number of employees of 500 or fewer.

It is unfortunate but true, that many people do not even consider consulting a tax attorney until they open their mailboxes one day and there is that dreaded letter from the IRS. A tax attorney is a lawyer that specializes in all areas of taxes. The tax attorney is required to attend law school for one to three more years, after regular law school, to receive their Masters in taxation.

The IRS has its own group of experienced tax attorneys, so if there is ever a time when you need to face the IRS for any reason, it is imperative that you have your own tax attorney with you. A tax attorney has all the tools and means necessary to handle any tax matters that come up during any tax disputes or issues.

If you have been contacted by the IRS and are looking to retain the services of a tax attorney, there are certain things to keep in mind when looking for the right one.

First, you need to choose a tax attorney that has extensive knowledge and experience in all areas of taxation. This means your chosen tax attorney should be up to date on all tax regulations, laws, recent and past tax court cases, recent and past tax rulings, appeal procedures, audit procedures, tax litigation and collection.

You should also look for business knowledge when considering a tax attorney. Your tax attorney should have a good deal of knowledge when it comes to business accounting. He or she should have the experience and training in financial areas in order to understand your case fully. Your tax attorney should also have a working knowledge of many other legal areas, such as bankruptcy, agency law and contract law. Your tax attorney should have a good deal of legal knowledge in order to recognize any issues that could be deemed criminal in nature.

Finally, you need a tax attorney that has skills in negotiation and litigation as well. If you need to take on the IRS, you will need a tax attorney that can negotiate settlements and be at your side if you do need to go to Tax Court, if the IRS accuses you of a of tax crime. Dealing with the IRS can be a long, hard and demeaning process. It is imperative that you have a reputable, knowledgeable tax attorney at your side during the ordeal.

Your tax attorney will have full working knowledge about all aspects of the tax laws and what the IRS legally can and cannot do during the process. He or she can advise you on your rights if the IRS happens to break the law during any part of your dealings with that agency.

Disclaimer: The information presented here should not be interpreted as legal or tax advice. If you need legal or tax advice, please seek professional advice from a qualified tax attorney for your best options.