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This Saturday the IRS will host more than 180 open houses nationwide to help people prepare and file their 2009 tax returns. The branch offices will be open from 9 a.m. to 2 p.m. and a list of the locations can be found at this link on the IRS website. IRS tax professionals will be available to answer questions and get help with current tax deductions available through the American Recovery and Reinvestment Act as well as to discuss and financial hardships or other situations involving difficulty paying taxes. If there is a location near you and you need help, we strongly encourage you to attend one of these open houses. There will be two more events held in the spring and summer, according to the IRS website. For more information on this and other tax assistance programs, visit the website or call 1-800-906-9887.
April 15 is just around the corner, and many Americans who are already struggling financially are dreading having to come up with the money to pay their taxes. The IRS understands that times are difficult for many people, and they have instituted some new measures designed to help ease the burden. According to yesterday’s press release on the IRS website, the efforts that began a year ago have been expanded to include more flexibility and more information. IRS agents have more flexibility to work out compromises to settle debt for less than the original amount owed, especially for recently unemployed taxpayers. One way they are helping people is instead of considering past income the IRS will consider the taxpayer’s future ability to earn income and possibility of paying more when they are gainfully employed when coming up with a compromise.
Additionally, the IRS is hosting hundreds of Saturday Open Houses around the country to allow people to meet face to face with IRS agents and to work one on one to solve problems. These meetings will include detailed information on tax breaks and deductions available this year and will help people through the process of completing and filing their returns. Also, a new page on the IRS website was designed specifically for unemployed taxpayers with lots of helpful links and information.
And if you need additional help navigating the system, there is a Taxpayer Advocate Service in every state – call 1-877-777-4778 to locate your advocate’s office, or visit Contact Your Advocate online. Despite the difficulties that all large bureaucratic entities face, the IRS does want to help people get through tax season relatively unscathed.
It may seem surprising, but a recent survey found that 43% of Americans have less than $10,000 in retirement savings. The lack of preparation means that more Americans will have to continue to work into their retirement years, creating more competition in an already difficult job market. The US government wants to encourage people to save more, and two new policy ideas have been proposed to do that. One is that the administration wants to promote the availability of annuities in 401K and other plans – only about 22% of such plans have them now. This would allow people to turn some of their savings into guaranteed income. The second idea proposed in a Senate bill is to require 401K plans and other retirement savings plans to inform people of what their monthly income at retirement would be based on their current level of savings.
These are good ideas, but they all revolve around people who already have a savings account of some kind – giving them more options and providing more information. But how do we encourage the millions of Americans who have no savings at all to open some kind of retirement account? There needs to be some kind of nationwide education and promotion program to tell about the importance of retirement savings and how to get started. We need to especially target younger workers who have time to build up savings. For older workers nearing retirement, we need education to help them figure out how much income they will need monthly and where they stand with any savings or other sources of retirement income they do have.
There are some helpful resources available on the internet – retirement income calculators and other planners – that anyone can use no matter how close to or far from retirement they are. Of course, a personal accountant can be really helpful in analyzing your situation and devising a plan that fits you and your family best. The sooner you start and the more information you gather, the more prepared you will be to live the kind of life you want in retirement.
It’s that time of year – time to clean up your numbers and make sure your books are ready for the end of the year reports and the upcoming tax season. If you own a small business, or even if you’ll just be dealing with your own personal finances, the more organized you are at the end of year, the easier tax time will be for you. Here are some basic tips for things you can do now to organize and prepare in the next month or so:
1. Review last year’s tax form and compare it this year’s expenses and income. Note any extreme discrepancies and look into them.
2. Enter all outstanding invoices, payments, and receipts and reconcile all accounts – if you don’t have a bookkeeping software system, seriously consider one – spreadsheets won’t cut it for most people.
3. Go after outstanding accounts – try ot get paid before you write off any bad debt. You might want to consider enlisting the help of a collection agency if you have attempted to get payment for more than 3 months.
4. Organize receipts for expenses to be itemized on your tax return – categories such as utilities, supplies, contract labor, rent, etc.
5. If you have employees, be sure to order your W2 or 1099 MISC forms so you can prepare those as soon as possible in the new year. Make sure you have up-to-date employee records and know the total that was paid to each employee through the year.
6. Review your budget in comparison with actual expenses to determine how to budget for next year more effectively.
7. Talk to your bookkeeper or accountant about what additional information you need to complete your tax forms and prepare year-end reports. If you don’t have a bookkeeper or accountant, then contact our office so we can help you wrap up 2009 and get on the right track for 2010.
So now it’s November and tax time is creeping up on us quickly. Before you know it, it will be January, all those forms will be coming in, and you be up to your neck in tax time stress. Don’t worry! Over the next two months we will posting new information from the IRS about tax filing, tax breaks and credits, and other developing news that can help you prepare for and get through tax time as easily and painlessly as possible. We’ll also give you tips and advice on future financial planning that can help you face coming tax years with confidence. So let’s get started today with some recent reminders from the IRS about new tax benefits that are available.
1. Winterize Your Home, Save Energy and Get a Tax Credit – just in time for the fall and winter seasons, the IRS is reminding folks that the American Recovery and Reinvestment Act, passed earlier this year, expanded two home energy tax credits, non-business energy property credit and the residential energy-efficient property credit.
- The non-business energy property credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. Energy saving improvements can include efficient heating and air conditioning systems, energy efficient windows and doors, qualifying insulation and roofs, water heaters and stoves that burn biomass, and some labors costs involved in installing some of the improvements. You could spend as little as $5000 before the end of year, reap the cost benefits in saving energy, and get a $1500 tax credit in 2010!
- The residential energy-efficient property credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Property that qualifies should have an IRS certification that you will receive at the time of purchase. Some labor costs involved in installation can also be included.
2. Ordering Tax Transcripts Easier – need to order a transcript of past tax returns for a mortgage application in order to qualify for that new home buyers credit before the end of the year? As part of the Making Homes Affordable Program, the IRS announced recently that a new form in available online that will allow you to order a 1040 transcript free of charge. This transcript includes most of the lines from the original 1040 and usually has all of information needed for an application. To access the form, visit Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript.
For more information on these and other IRS updates, visit the IRS website and this blog frequently as updates will be added often during the coming months.
Looking for something to watch tonight on TV? A special titled “Un-Broke – What You Need to Know About Money” airs tonight on ABC, 9 p.m Eastern, 8 p.m. Central. Celebrities like Will Smith, the Jonas Brothers, characters from Sesame Street, and more will “make people laugh as they learn” about the stock market, smart mortgages, credit cards, 401K plans, and more. Although I’m not sure exactly what celebrities have to say to the average American about money, it should prove interesting if not entertaining. The ABC website does not mention anything about taxes being discussed on the show – a topic that obviously the rich and famous don’t know anything about either.
So if you aren’t busy tonight and you want to see what Hollywood considers financial education, tune in to “Un-Broke”. And let me know how it is – I’ve got better things to do.
