Tuesday, November 10, 2009

Home Buyer Credit Update

The President signed into law the extension of the first time home buyer credit effective on November 7, 2009. Along with the extension, there has been some additional provisions provided to not only first time homebuyers but also for homebuyers looking to move up to a larger home.

The new $6500 credit applies to a homebuyer that has lived in their personal residence for a consecutive period of 5 years out of the last 8 years. The limit is on homes that are $800,000 or less in the purchase price. If you go over that amount, the credit will be disallowed.

The income limitations apply to both first time homebuyer as well as the new 5 year homebuyer - single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 — may receive the maximum tax credit. These limits have increased from the previous provisions of the first time homebuyer credit.

To see if you qualify, please check with your tax advisor or check out the IRS website .

Wednesday, October 28, 2009

Year End Tax Reminders

Our office was putting together a year end reminder newsletter and I thought I would share the thoughts I put together here on my blog:

Defer Income: If you are employed, review your retirement plan contributions and increase your contribution amount if possible. If you are retired, take advantage of the repeal of Required Minimum Distribution for 2009 (if you are age 70 1/2, you generally are required to withdrawal from your retirement accounts, Congress passed a law to allow retirees to fore go that requirement for the year 2009).

Capital Gains/Losses: If you have capital losses that carried over from 2008 to 2009, review your investments to see if you have any capital gains that you can realize with little or no tax implications. Perhaps you want to realize a loss to offset your other income, if you sell stock, mutual funds or other investment items any losses can offset first other capital gains and then second other ordinary income up to $3,000 per year. Don't generate more of a loss than you can benefit from.

Increase Deductions: If you itemize deductions, check to see if you can benefit from paying extra charitable contributions, property taxes, medical expenses to decrease your taxable income. But be careful if you are subject to Alternative Minimum Tax some of these items may not be beneficial.

Arizona Tax Credits: If you are an Arizona resident, don't forget to take advantage of the state credits (available as of the authoring of this article in late October) for Donation to School Tuition Organizations ($500 for single, $1,000 for Married Filing Joint), Fees paid to Public Schools ($200 for single, $400 for Married Filing Joint), Donations to Charities that Provide Assistance to the Working Poor ($200 for single, $400 for Married Filing Joint) and the Arizona Military Family Relief Fund ($200 for single, $400 for Married Filing Joint). Additional information on the first 3 credits can be found here: http://www.azdor.gov/TaxCredits.aspx and the Military Family credit can be found here: http://www.azdvs.gov/mfrf.htm

Just a few quick simple reminders to help you minimize your tax liability this year.


Thursday, June 18, 2009

International Tax Issues

I hadn't realized how global I have become until the last few days. I have had clients that have immigrated to the United States from around the world, but generally the same tax rules apply once you are considered a resident of the U.S. for tax purposes.

But yesterday and today, I had discussions with clients that have international ties still that make consider the situations and ponder what affect their situation might have for other folks.

Today I spoke with someone that moved to the US in the past 10 years or so. He had a parent pass away in the last year or two and the siblings had purchased the old home from the parents. Recently the siblings sold the home that they all owned and paid tax on the sale in that country. Now I find myself attempting to explain that you have to report the sale on the United States tax return but because tax was paid on the sale, that tax that was paid will be allowed as a credit against the US taxes on that same sale amount.

Yesterday I had a phone conference with an advisor located in Canada to discuss a client that is overseas. This is truly exciting since the client is working overseas and qualifies for the Foreign Earned Income Exclusion. This exclusion allows wage earners as well as self-employed individuals to exclude a good amount of their income from tax in the United States, legally. There are certain requirements that you should discuss with your tax advisor if this might be applicable, to see how to qualify for exclusion of the income you earn overseas. This could shelter as much as $87,600 for 2008 (and the amount is adjusted for inflation).

As I review the issues I deal with the background of the clients affected, it reminds me that our world is getting smaller all the time. Do you know how international issues might affect you?

Monday, May 18, 2009

Arizona State Tax Credits

Are you a resident of Arizona? Do you have Arizona taxable income? If you answered YES to either of those 2 questions, you may want to consider utilizing the currently available Arizona income tax credits. There are several to consider: credit for solar energy property, credit for fees paid to public schools, credit for contributing to the Arizona Military Family Relief Fund, credit for donations to Private School Tuition Organizations and even a credit for Contributions to Charities that assist the working poor.

Each of these credits have different criteria as to qualifications, dollar limits and potential phase outs for application. This discussion is limited to introducing the availabitily of these credits to those who may be qualified to take advantage but you should consult with your own tax advisor to see if these are beneficial.

Gaylor Tax Services recommends that it's clients take advantage of these credits if they are of interest to you and if they would help reduce your overall tax burden.

Thursday, May 14, 2009

IRS Wants to Capture All Sources of Income

There was legislation that was passed in the last year that will require banks, credit card processors and vendors like PayPal to report the dollars processed via card payments. The thought process is that these types of payments go unreported by taxpayers, in particularly the payments processed through PayPal for items like Ebay sales.

You will want to talk with your tax professional if you have been running a side business about the potential implications for accepting payment via credit card or bank cards. Are you in business? Is this a hobby that may have potential reporting consequences? Your tax advisor should be consented to find out for sure.

Wednesday, May 6, 2009

Arizona Payroll Withholding Changes

Recent changes to Arizona Withholding have been announced for employers and employees in Arizona:

• For income tax withheld on or after May 1, 2009 through December 31, 2009, the percentages will be increased to 11.5%, 21.9%, 26.5%, 28.8%, 35.7% or 42.6%. To review or download the new form use this link: Arizona Form A-4

• For income tax withheld on or after January 1, 2010 through June 30, 2010, the percentages will be decreased to 10.7%, 20.3%, 24.5%, 26.7%, 33.1% or 39.5%.

• For income tax withheld on or after July 1, 2010, the amount withheld will no longer be a percentage of federal withholding. The amounts withheld must be based on tables prescribed by the department. For more information about this withholding law change, visit the Arizona Department of Revenue website at http://www.azdor.gov/

California Mandatory E-Pay Requirement

Received the following message from the California Franchise Tax Board (FTB):

Mandatory e-Pay Message

Know that FTB has begun mailing notices (
FTB 4106 MEO) to taxpayers who meet the mandatory e-pay threshold.

The new mandatory e-pay law requires certain taxpayers to remit their payments electronically. The first payment that would trigger the mandatory e-pay requirement is the 2009 taxable year first quarter estimate that was due April 15th, 2009. This first payment did not have to be made electronically, but all future payments should be made electronically.

For the 2009 calendar year we will not impose the mandatory e-pay penalty (1% of the amount paid) to allow taxpayers and practitioners additional time to implement practices and procedures to comply with the requirement.

This requirement is only for taxpayers when their extension payments or estimated tax payments are over $20,000 or their total tax liability is over $80,000. There are a couple of ways to pay electronically: Web Pay or pay by Credit Card. To see other payment options available to California tax payers visit: http://www.ftb.ca.gov/online/payment_choices.shtml Other states offer similar type payment arrangements and make it more convenient and secure. Arizona offers a credit card option as well as a web payment (check out http://www.aztaxes.gov for this payment option).

Tuesday, May 5, 2009

Tax Filing Deadline Passes

With the passing of April 15th, another due date for individual, partnership and fiduciary tax returns (for calendar year end organizations) has come and gone. For the firm's clients, extensions have been filed for clients that have been clients in the past.

One new item in 2009, partnerships and fiduciary no longer have a 6 month extension, instead now the extension is for 5 months. These tax returns are now due by September 15th instead of October 15th as the extended due date.