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 newletter from time to time to stay on top on of the latest and most effective tax strategies.

TaxEdge 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 TaxEdge 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.

Year-End Tax Saving Tips

It's that time of year again. We're in December, nearing the end of 2009. In most cases, if we are going to do anything to reduce the 2009 tax bill, we need to do it by December 31. Following are some different ways that you can save on your tax bill. Sadly, most of them involve spending money. But if you are intending to spend the money relatively soon anyway, then doing it in December will allow you to take immediate advantage of it for tax purposes.

If you buy a new vehicle before the end of 2009, you may be able to deduct the state and local sales tax you pay on the purchase price. In some states, the deduction could exceed $4,000. This tax break expires at the end of the year.

In addition to the sales tax deduction described above, you may be able to claim a substantial tax credit if you "go green" with your new vehicle purchase. If you purchase the right vehicle, you may be eligible for an "alternative motor vehicle" credit of up to $4,000 or a "plug-in electric drive motor vehicle" credit ranging from $2,500 up to $7,500, or a "plug-in electric vehicle credit" of up to $2,500.

If you make energy-efficient home improvements before the end of the year, you may be eligible for either the "nonbusiness energy property" credit worth up to $1,500 or the unlimited "residential energy efficient property" credit equal to 30 percent of your qualifying costs.

If you can qualify as a first-time homebuyer (which recently got much easier to do), then you may be able to claim up to an $8,000 tax credit on the purchase of a new home. If you enter a contract by April 30, 2010, and close the purchase by June 30, 2010, you can claim a credit of 10 percent of the purchase price (up to $8,000) on your 2009 tax return.

You can deduct as much as $5,000 ($6,000 if you are age 50 or above) from your 2009 tax bill for contributions to an individual retirement account (IRA). In addition, you may qualify for up to a $1,000 "retirement savings contributions" tax credit.

For more details on these and other tax saving measures you can take before year-end, see Year-End Tax Saving Tips.

Income Tax Tips from the 2010 Tax Guide

Special Expense Deduction Rules
In many cases, if you don't have records of a particular business expense, but it's obvious that you must have incurred it, in an audit situation the IRS will estimate the amount of your expenses and allow you to deduct them. However, certain types of expenses the IRS believes are particularly susceptible to cheating are subject to special documentation rules; if you have no records, the deduction will be completely disallowed.   To learn more about the deductions that must be documented, please read Special Expense Deduction Rules.

Which Tax Form Should You Use?
When it comes to federal income tax forms, there are three versions available to individuals: Form 1040EZ, Form 1040A and Form 1040. There are rules for each of these forms regarding the taxpayers who can or must use it. Although anyone can use Form 1040, the general idea is that you should always use the simplest tax form that is available to you.   To determine quickly which form to use when you file your tax return, go to Which Tax Form Should You Use.

Business Startup Expenses
Investigating the potential for a new business and getting it started can be an expensive proposition. However, under the general rules for business deductions you can't deduct these expenses, because only expenses for an existing trade or business can be deducted. By definition, you incur your startup expenses prior to the time that your business is born. Fortunately, if your startup expenditures actually result in starting up a business, you can elect to amortize the costs you incurred over several years.   For more information on what startup expenses are and how you account for them, take a look at Business Startup Expenses.

Payroll Taxes on Household Employees
If you are a working parent, or if you have needs for household help, and you hire a maid, babysitter, caregiver for an elderly relative, or some other kind of domestic help, it may come as a surprise to discover that you'll be required to pay significant amounts in employment taxes.   To gain some understanding of your obligations to account for payroll taxes for household employees, please review Payroll Taxes on Household Employees.

Tax News

Don't Add Tax Headache to Job Loss Heartache
The challenge of job loss has grown to near epidemic proportions in 2009, with 15.7 million unemployed at the end of October, and 500,000 joining the unemployment rolls monthly. Many of us have faced it ourselves. We must be alert to the tax considerations that come into play when job loss occurs. We must handle issues related to severance, unemployment benefits, COBRA coverage, rollover or withdrawal of retirement funds, and issues related to the search for new work.    To learn more about the tax implications of job loss, please read Don't Add Tax Headache to Job Loss Heartache.

Last Chance Tax Savings on Car Purchases
Maybe you're kicking yourself now for missing the Cash for Clunkers $4,500 giveaway that took place earlier this year. Maybe you think you've missed your best opportunity to buy a new car. Don't fret. Purchasing a new car, light truck, motor home, or motorcycle before the end of the year could qualify you for a special deduction on your 2009 tax return for the state and local sales taxes you pay on the purchase. Be aware that use of this tax break is either now or never--it expires at the end of 2009.    To find out more on claiming the deduction of sales tax on a new vehicle purchase, read Last Chance Tax Savings on Car Purchases.

Five Year NOL Carryback for Businesses Big and Small
Congress enacted a new law containing expanded net operating loss carryback provisions for businesses small and large. The bill was enacted with strong, bipartisan support. The new law allows a business with a net operating loss (NOL) to elect to carry back the NOL for up to five years instead of only two years. Practically speaking, the extended carryback period may allow a business to claim a larger refund for prior years' taxes, which can then be invested in the ongoing business operations.    For more on the new law extending the carryback, read Five Year NOL Carryback for Businesses Big and Small.

Tip Income Reporting Program Extended
A tip income reporting program that has proven beneficial to employers and employees alike in the food and beverage industry has been extended for two additional years by the IRS. The Attributed Tip Income Program (ATIP), designed to enhance tax compliance among tipped employees through voluntary agreements with employers instead of traditional audit techniques, was set to expire at the end of 2009.    To learn more about how ATIP simplifies tip reporting, go to Tip Income Reporting Program Extended.