Tax Tips Newsletter - November 2009

Tax Tips & Calculators  Past Newsletters  Tax Tips Newsletter - November 2009

Welcome to Our Tax Tips Newsletter:

Continuing our effort to provide you with valuable, practical tax information, we will periodically update this page with useful income tax tips and income tax advice from the best sources -- information on issues that you commonly deal with. Be sure to check our newsletter from time to time to stay on top on of the latest and most effective tax strategies.

CompleteTax will provide income tax tips that will help you save money when it's time to file your tax returns. It's a good idea to use a well planned strategy so that you aren't surprised in April. Using CompleteTax Income Tax Preparation Software and keeping good records could mean the difference between paying a large chunk of money in April and receiving a big refund check. Use our income tax tips as part of your ongoing preparation.

New Form Makes Requesting Your Tax Return Information Easy

Have you ever been told while in the midst of a financial transaction that you have to make your federal tax return information available before you can close? When seeking a new home mortgage or trying to refinance an existing one, or when scrambling for a loan for your small business, delays can result if you don't have your federal tax return information close at hand. New Form 4506T-EZ simplifies the process to request your tax return information from the IRS.

To aid taxpayers who are faced with such demands, the Internal Revenue Service has issued a new form with which you can request your own tax return information. It is intended to simplify and expedite the process. Taxpayers can now use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order any Form 1040 series tax return transcript free of charge.

One reason for the new form is to aid the processing of mortgage applications under the Home Affordable Modification Program that is part of the Making Home Affordable Program. The new form will make it simpler for homeowners who are trying to modify or refinance their mortgages to order copies of their tax return transcripts.

A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.

The Form 4506T-EZ is only for individuals who filed a Form 1040 series return. Businesses, partnerships and individuals who need transcript information from other forms must use the Form 4506T.

Transcripts ordered using Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields on the form, especially the fields for the tax years requested, before signing and dating the form.

Taxpayers can obtain Form 4506T-EZ on the IRS website. It is a "fillable" form, so it can be completed online and a copy can be printed. The form can be mailed or faxed to the addresses and numbers listed in the instructions. The IRS generally takes 10 days to process the request.

For more details on the use of this new form, see the full story in New Form Makes Requesting Your Tax Return Information Easy.

Income Tax Tips from the 2012 Tax Guide

Reducing Taxable Income
As you near the end of your tax year, you may want to focus a little bit more on ways that you can reduce your taxable income. Certain types of expenditures made before December 31 (even some made after December 31) can reduce your taxable income for the year.   To learn more about your strategies for minimizing taxable income, please read Reducing Taxable Income.

Interest Income
Interest income is a routine source of revenue for most taxpayers. If you have any savings or investments at all, you are likely to interest income that must be reported on your income tax return. Some forms of interest are taxable income, and others are not.   To learn more about keeping track of your interest income and properly reporting it on your tax return, go to Interest Income.

Self-Employment Taxes
In economic circumstances like the ones we are in today, many individuals are entering into small business. Some are doing it to supplement stagnant or diminishing employment compensation. Others are pursuing a new means of earning a living after losing their employment. Yet others are simply pursuing their entrepreneurial spirit regardless of the economic circumstances. In any event, brand-new business owners are sometimes surprised to find out that in addition to their federal income taxes, they must also pay a significant percentage of their income to the government in the form of SECA taxes.   For more information on what your SECA tax obligations are, take a look at Self-Employment Taxes.

The AMT
In a twisted plot to take back the tax breaks it provides, Congress created the alternative minimum tax (AMT). Initially, the AMT was intended to prevent higher-income taxpayers from substantially reducing or eliminating their tax liabilities through incentives offered by the tax code. In practice, however, the AMT affects even middle-income taxpayers. As a result, many taxpayers are required to compute their income tax liability twice: once under the regular method and once again under the AMT method. An individual will be subject to the AMT if his or her AMT liability is more than the regular tax liability for the year.   To gain some understanding of how the AMT can affect you, please review The AMT.

Tax News

Save Taxes on Energy-Efficient Home Improvements
A tax credit for energy-efficient improvements to homes is available for homeowners who add insulation, energy-efficient exterior windows, or energy-efficient heating or air conditioning systems to their homes. The credit is 30 percent of qualifying improvement costs up to $1,500 for 2009 and 2010.    To learn more about the credit, please read Save Taxes on Energy-Efficient Home Improvements.

IRS Trying to Pay $123 Million in Undeliverable Refunds
Have you been waiting and wondering why you haven't received a tax refund that you have been expecting? Well, it could be that the IRS just can't find you. The IRS is looking for taxpayers who are due to receive a combined $123.5 million. A total of 107,831 refund checks have been returned by the U.S. Postal Service due to mailing address errors.    To find out more, and to learn how you can check on your refund, read IRS Trying to Pay $123 Million in Undeliverable Refunds.

Congress Extends Greater Generosity to Homebuyers
You can ignore the warnings that you've been hearing recently that the first-time homebuyer tax credit is about to expire. The credit is alive and well--in fact, better than ever! Congress has enacted a law not only to extend the expiration date of the homebuyer tax credit through April 2010, but to expand its availability to a whole new set of potential homebuyers — current homeowners.    For more on the new law extending the tax credit, read Congress Extends Greater Generosity to Homebuyers.

Congress Acts to Extend Unemployment Benefits
For an estimated cost of $2.4 billion, additional emergency unemployment compensation (EUC) benefits will be provided pursuant to legislation just enacted by Congress. Up to 14 additional weeks of EUC benefits will be paid to all unemployed workers throughout the country who exhaust their other unemployment benefits. In addition to the 14 weeks, up to 6 more weeks of EUC benefits will go to unemployed workers in high unemployment states.   To see more on the extension of benefits and the related extension of the FUTA surtax, go to Congress Acts to Extend Unemployment Benefits.