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.

It's just plain heart-warming when the tax collector exhibits to us taxpayers its sense of fair play. The Internal Revenue Service showed true sportsmanship when it issued a mid-year reminder to encourage us to take advantage of numerous tax breaks made available earlier this year as part of the American Recovery and Reinvestment Act (ARRA). The IRS notice highlights that the ARRA provides tax incentives for people purchasing new cars, first-time homebuyers, homeowners interested in making their homes more energy efficient, and parents and students paying for college. All of these incentives are temporary, so taxpayers must take advantage of them during a limited window of opportunity. Here are some of the tax breaks to consider.

From now until the end of the year, qualifying taxpayers can deduct the state and local sales and excise taxes paid on purchases of new cars, light trucks, motor homes and motorcycles.

Qualifying taxpayers who haven't owned a principal residence during the past three years are eligible to receive a first-time homebuyer tax credit of up to $8,000 if they purchase a home prior to December 1, 2009.

Homeowners who make qualified energy-efficient improvements to their homes prior to January 1, 2011 can earn a tax credit equal to 30 percent of the cost of all qualifying improvements to a maximum credit limit of $1,500. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

The American opportunity tax credit (a modification of the pre-existing Hope education credit) is designed to help parents and students pay part of the cost of the first four years of college. Tuition, related fees, books and other required course materials generally qualify for the credit. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. It is available through 2010.

For more details on these tax breaks and more, see the full, heart-warming story on IRS' gracious reminder to take advantage of temporary tax breaks under the ARRA.

Income Tax Tips from the 2010 Tax Guide

Controlling the Due Date for Taxes
In its "Top Seven Tips for Taxpayers Starting a New Business," the IRS noted that a person starting a new business must make choices about entity type, tax year and accounting methods that will have an impact on the timing for recognition of income for tax purposes. Lawfully delaying recognition of taxable income is usually a good thing.   To learn more about managing the flow of taxable income and tax deductible expenses, please read Controlling the Due Date for Taxes.

Writing Off Assets in the First Year
If you operate a business, one of the ways you can defer income tax relates to the purchase of business assets. Normally, the cost of long-term assets is depreciated over a number of years. However, using Section 179 special expensing, you may be able to deduct all of the costs in the year of acquisition, thereby deferring tax liability to future years.   To learn how you can take advantage of this accelerated expensing, go to Writing Off Assets in the First Year.

How Long Must Your Records Be Kept
Your business records and your personal financial records must be retained for as long as they may be relevant for any tax purpose. Generally, you will need to keep all records that support items on your tax return for at least four years, since the IRS may challenge your return for up to three years after its due date. If the IRS suspects fraud, it can challenge even older returns.   For more information on record-keeping requirements, take a look at How Long Must Your Records Be Kept?

Income From Estates and Trusts
If you were a beneficiary of an estate or trust in 2008, the estate or trust will have to file its own income tax return on Form 1041. Then, each beneficiary's share of income, deductions, credits and other tax items is reported to him or her on a Schedule K-1. One copy of each K-1 is filed with the estate or trust's income tax return, and each beneficiary receives a copy of his or her own K-1.   To understand what to do with the information you receive on your K-1, please review Income From Estates and Trusts.

Tax News

Employers Can Support Employees' Educational Pursuits
People in business today are often eager to expand their knowledge and enhance their professional value by pursuing higher education while working at their career. The most fortunate ones have an employer eager to support with their academic pursuits. An employer's educational assistance program can pay up to $5,250 for educational expenses tax-free to an employee.    For more on educational assistance programs, read Employers Can Support Employees' Educational Pursuits.

IRS Tips for Starting a New Business
Are you getting ready to take the entrepreneurial plunge? The Internal Revenue Service has issued its "Top Seven Tips for Taxpayers Starting a New Business" for those who are ready to pursue their dreams of starting a small business. The IRS seeks to enhance the awareness of new business persons regarding their federal tax responsibilities.    To look over the tax tips, please read IRS Tips for Starting a New Business.

State Tax Holidays Offer Back-to-School Relief
Back-to-school shopping will be tax-free on various dates this July and August in 15 states and the District of Columbia. During these "tax holidays," back-to-school items such as clothing, footwear, school supplies, computers and, in a few states, many other items may be purchased free of state sales tax. The current economic 'hard times' may be seen as a justification for these holidays, both as 'relief' for hard-pressed consumers and 'stimulus' for hard-pressed retailers.    To find out the state-by-state details, read State Tax Holidays Offer Back-to-School Relief.

Health Care Reform: A Closer Look
You know the old saying "you can't see the trees for the forest." Well, today, in the midst of all the political rhetoric, health care reform has become the forest that blocks our view of the trees. It is so big, and so complex, it's easy to get lost in the big picture, so that the significant details end up ignored. In the name of health care reform, Congress is likely to impose mandatory insurance requirements on both individuals and employers, and to impose substantial tax penalties on those who don't comply. New taxes, such as a surtax on income tax or a tax on employer-provided health benefits, are also being considered.    To get an overview of several facets of the legislative proposals, please read Health Care Reform: A Closer Look.