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.

The IRS has decided to be generous with its interpretation of the expanded new homebuyer's credit enacted as part of the new stimulus bill. People who qualify for the credit and who buy a new home this year before December 1 will be able to knock as much as $8,000 off their 2008 taxes, if they choose.

The credit for new homebuyers first came to life last year, providing a credit of 10 percent of the purchase price of a home, up to $7,500, for purchases made between April 9, 2008 and June 30, 2009. The law allowed anyone purchasing a home in 2009 the option of treating the purchase as having taken place on December 31, 2008, thus permitting them to use the credit to reduce either their 2008 or 2009 tax liability.

"One important restriction on this credit was that it was really a no-interest loan," said Mark Luscombe, JD, LLM, CPA and TaxEdge principal federal tax analyst. TaxEdge is a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services. "You could use it to reduce your taxes now, but you had to repay it on your income tax over 15 years, beginning two years after the purchase."

Stimulus Bill Liberalized Credit

The stimulus bill liberalized the credit in several ways, extending the cutoff date for qualifying purchases to November 30, 2009, increasing the maximum credit amount to $8,000 and, most significantly, eliminating the repayment requirement as long as the purchaser stayed in the home for at least three years.

"The one oddity in the way the law was written had to do with the provision that you could count a 2009 purchase as having taken place in 2008," Luscombe said. "Under a strict reading of the law, if you did that, you still didn't have to repay the credit and you could take it against your 2008 taxes, but it seemed the maximum allowable credit would be reduced to the old, $7,500 amount."

Now, the IRS has announced that it will allow the new, $8,000 amount to be used, even when a 2009 purchase is treated as having taken place in 2008.

"This doesn't help people who actually bought homes in the 2008 qualifying period, and who are limited to a $7,500 credit that must be repaid, but it looks as though only further legislation can help them," Luscombe said.

Income Tax Tips from the 2010 Tax Guide

Writing Off Assets in the First Year
New laws allow for increased expensing of depreciable assets in the year they are purchased and put into service.   To learn how to claim these higher deductions to reduce taxable income, please read Writing Off Assets in the First Year.

Tax Breaks for Education
If you have children in college, or if you are in college yourself, don't forget the credits and deductions available for costs related to tuition and fees. These tax breaks for education get even bigger and better in 2009.   For more on this topic, please review Tax Breaks for Education.

Contributing to Your IRA (Individual Retirement Account)
It's not too late to make a contribution to your IRA for the 2008 tax year. Consider a contribution before April 15 to potentially lower your tax bill and save for retirement, too.   For more on this subject, please review Individual Retirement Accounts (IRAs).

How Do You Report an NOL (Net Operating Loss)
If the economic downturn of 2008 resulted in a net operating loss for your business, you need to know how to possibly carryback your NOL to prior years in order to receive tax refunds.   To learn more about the requirements for NOL carrybacks and carryforwards, please read How Do You Report an NOL.

Tax News

Small Gains for Small Business in 2009 Stimulus Package
There has been a lot of hoopla about the stimulating effects on the economy resulting from The American Recovery and Reinvestment Act of 2009 (the ARRA). Let's look together at the tax reduction provisions of the ARRA that relate to small business, and you can judge just how stimulating it will be for your business in the coming year.    For more details, please read Small Gains for Small Business in 2009 Stimulus Package.

IRS Issues New COBRA Information
Employers required to provide COBRA coverage for terminated employees now must subsidize 65% of the cost during the first nine months thanks to the American Recovery and Reinvestment Act of 2009. IRS recently instructed businesses how to claim a tax credit for the subsidy payments they make for monthly COBRA premiums.    Please read IRS Issues New COBRA Information.

Time for a New Pair of Pants?
Over the past several years, Congress has sewn so many patches on to the alternative minimum tax law, it now seems to have more patches than it does original cloth, just like a well-used pair of pants. Congress, in the past five months, sewed on two more patches for 2008 and 2009. While it's really time to stop patching and get a new pair of pants, you can at least check out the style of these new patches.    Please read Time for a New Pair of Pants?

Implementing "Making Work Pay" Tax Credit Is No April Fool's Joke
The Making Work Pay tax credit served as centerpiece of the tax reduction provisions of the American Recovery and Reinvestment Act of 2009, and, by April 1, 2009, businesses must implement the provision by adjusting the tax withholding on wages paid to all their employees. The annual tax credit in 2009 and 2010 is a maximum credit of $400 for an individual ($800 if married filing jointly).    For more on the implementation of this credit, please read Implementing "Making Work Pay" Tax Credit Is No April Fool's Joke.