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Archive for November, 2010

Tax Break for Chinese Drywall

November 7, 2010 5 comments

Ahhhhhh. The sweet smell of sulfur in the air. Nothing could be more corrosive! Thousands of taxpayers are still dealing with the horrible mess of corrosive drywall~otherwise known as, “Chinese Drywall.” The issues began when the appearance of certain imported drywall hit the US marketplace between 2001-2008. Homeowners have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors. In November 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall and levels of hydrogen sulfide in those homes and corrosion of metals in those homes. Many taxpayers have had to move out of their homes because of health reasons due to the heavy sulfuric odor.

There is some good news though~ The IRS is giving a helping hand to those taxpayers who have suffered a loss due to corrosive drywall. The service is allowing those who have paid for repairs to their homes, due to corrosive drywall, to treat these costs as a casualty loss on their tax return. This will at least offer some relief to homeowners who have had this sulfuric headache!

Revenue Procedure 2010-36 provides the following relief:

  • Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.
  • Taxpayers who have already filed their income tax return for the year of payment generally have three years to file an amended return and claim the deduction.The amount of a loss that may be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through property insurance, litigation or otherwise.
  • In cases where a taxpayer does not have a pending claim for reimbursement, the taxpayer may claim as a loss all unreimbursed amounts paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances resulting from corrosive drywall.
  • If a taxpayer does have a pending claim (or intends to pursue reimbursement), a taxpayer may claim a loss for 75 percent of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.

If a taxpayer has received full reimbursement from their insurance company, then they are not eligible for this loss on their tax return.

If you or anyone you know has had this unfortunate experience with Chinese Drywall, please feel free to contact our office at http://www.efileflorida.com for guidance. You can also reach us by email at: info@efileflorida.com.

 

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).


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Tax Increases ARE Coming~Unless Congress Takes Action! (Part 7)


Tax Increases ARE Coming~Unless Congress Takes Action! (Part 7)
This is my final update on the scheduled tax breaks that are expected to expire by this year’s end unless congress does something to re-instate them. Now that the elections are over with, I’m hopeful that our Congress will take to the task of looking at these expiring tax breaks before they become extinct.
These “Sunset Rules” will impact all taxpayers~the rich, middle class and poor. All politics aside, I would suggest that you call your senators and urge them to re-consider enacting all or some of these tax breaks. Not doing so could place a heavier tax burden on the backs of  struggling americans. I think most of us would agree that times are already financially tough enough without taking on a heavier tax bill.
I will keep you updated on any changes made in Washington, but for now here are some more changes you can expect if the “Sunset Rules” are allowed to expire:
  • Health Savings Accounts – The penalty for a nonqualified distribution from an HSA has been increased from 10% to 20% and distribution for over-the-counter medication is no longer a qualified distribution.
  • Higher Education Interest Deduction – This deduction will phase-out for joint filing taxpayers beginning at an AGI of $60,000 (down from $120,000 in 2010). The phase-out for an unmarried taxpayer remains the same. In addition, the deduction is limited to interest paid on the first 60 months (was previously unlimited) in which interest payments are required. This will impact higher-income joint filers and taxpayers who have already exceeded the 60-month limitation.
  • Estate Tax – The estate tax, which was eliminated for 2010, returns in 2011 with an exemption of $1 million dollars (down from $3.5 million in 2009), and a maximum tax rate of 55%, up from 45%.
  • On top of all these changes, there are the Health Care provisions that are taking effect in 2013, including the following: increasing the medical deduction floor to 10% for most individuals (up from 7.5%), adding a 3.8% unearned income surtax to high-income taxpayers, and tacking on an additional .9% to the current 1.45% hospitalization insurance (HI) portions of the FICA withholding (or the SE tax in case of self-employed individuals). The surtax and additional HI withholding apply to incomes in excess of $250,000 for married joint filers, $125,000 for married individuals filing separately and $200,000 for others.
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.

Esther Hastings, EA
Esther Hastings, EA

www.efileflorida.com

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

Follow us on Twitter Find us on Facebook

 

IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).
Contact Us:

PH (954) 583-8534
Fax (954) 583-8557
Are you tired of being in DEBT? Click Here.

 

Categories: Strictly TAXES!

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 6)


Tax Cuts Are Scheduled To Sunset!

(Part 6)

I wish that I could tell you that this is my last post on the subject, but the truth is that there are still more tax breaks that are scheduled to expire this year unless our congress re-instates them before year’s end.
If these “Sunset Rules” are allowed to become extinct, we can ALL expect to pay more in taxes to our federal government~Plain and Simple.
Here are some of the changes we can expect if nothing is done:
  • Coverdell Accounts – The contribution limit to Coverdell education savings accounts will be reduced from $2,000 per year to $500, tax-free distributions will no longer be allowed for elementary and secondary education (only post-secondary education), education credits will not be allowed in the same year as a Coverdell distribution, and contributions cannot be made to a Coverdell account and a Sec 529 plan in the same year.
  • Home Energy Improvement Credit – The $1,500 credit for making improvements that increase the energy efficiency of a taxpayer’s home expires after 2010.
  • Hybrid & Lean Burn Credits – Most manufacturers have reached the 60,000 unit maximum after which the credit is reduced or no longer allowed. As a result, this credit will have very limited application in 2011.
  • Making Work Pay Credit – Expires after 2010. This refundable credit of $800 for joint filers and $400 for unmarried individuals phases out for higher-income taxpayers so the loss of the credit impacts middle- to low-income taxpayers.
As you can see, these tax credits affect many middle and lower income taxpayers. It’s my hope that congress will act SOON!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).
Esther Hastings, EA
Esther Hastings, EA

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

Follow us on Twitter Find us on Facebook

 

Contact Us:
PH (954) 583-8534
Fax (954) 583-8557
Are you tired of being in DEBT? Click Here.
(I HIGHLY recommend this “get out of debt” program!)

 

Categories: Strictly TAXES!

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 5)


Tax Cuts Are Scheduled To Sunset! 

(Part 5)

In continuing with my efforts on informing you about the coming changes in our tax code, this 5th installment on the “Sunset Rules” speaks specifically to the average working class taxpayer~You and Me! I’ve been talking to you over the past several mailings about the expiring tax credits that are set to take effect if our Congress does not reinstate them before the end of this year. Simply put, they will expire and we will ALL Pay More Taxes! 

In this issue I want to address married taxpayers who typically file “Married Filing Joint” on their tax return. As you will read, if you are married you will be penalized, unless congress acts soon to reinstate this expiring rule. I will also touch on “personal exemptions” and the “phase out rules” for higher income taxpayers.
Okay. Here we go:
  • Standard Deduction – In 2010, the standard deduction of taxpayers filing married joint status is twice the amount of someone filing under the single status. Beginning in 2011, the so-called marriage penalty is back: joint filers’ standard deduction will be only 167% (instead of 200%) of the single amount. For a married couple in the 28% bracket, the result is additional tax of about $525.
  • Phase-Out of Personal Exemptions – For years before 2006, the personal exemptions were phased out for high-income taxpayers. Then, in 2006 through 2010, that phase-out was gradually reduced to where there is no phase-out in 2010. However, the reduction will no longer apply after 2010, and, in 2011, the phase-out reverts to the rules in effect before 2006. This only impacts high-income taxpayers. Although the phase-out threshold income amounts for 2011 are not currently available, they will be approximately $250,000 for a married couple, $210,000 for head of household and $170,000 for single individuals. The loss of each exemption for a high-income taxpayer in the 36% tax bracket will result in an additional tax of approximately $1,300. Thus, a family of four would see an increase of $5,200.
  • Phase-Out of Itemized Deductions – At the same time that the exemption phase-out was being reduced (see immediately preceding item), the phase-out of itemized deductions for high-income taxpayers was also being reduced. Thus, for 2011, the high-income taxpayer’s itemized deduction phase-out returns. The phase-out impacts all deductions other than medical, investment interest, casualty and gambling losses. The deductions are phased out by an amount equal to 3% of the taxpayer’s AGI in excess of the AGI phase-out threshold, but not more than 80% of the deductions can be phased out. The phase-out threshold for most individuals will be approximately $170,000, which is significantly less than the exemption phase-out amount for married joint or head of household filers. The tax impact on an affected taxpayer will be 28% to 39.6% of the lost deductions.
Many of you have Health Savings Accounts (HSA’s) and Educational Savings Account. In my next installment of the Expiring Sunset Rules, I’m going to talk about the changes coming your way in regards to these types of accounts. I’ll also touch on the Home Energy Improvement Credit. Please stay tuned!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).
 

Esther Hastings, EA
Esther Hastings, EA

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

Follow us on Twitter Find us on Facebook
Contact Us:
PH (954) 583-8534
Fax (954) 583-8557
Are you tired of being in DEBT? Click Here.
(I HIGHLY recommend this “get out of debt” program!)
Categories: Strictly TAXES!

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 4)


Tax Cuts Are Scheduled To Sunset! 

(Part 4)

If you’ve been reading my posts over the past few weeks (I hope you have!), you know that we, as american taxpayers, are scheduled to experience an increase in our tax bill to Uncle Sam over the next few years~beginning with this upcoming tax season. There are numerous tax cuts that are set to expire unless congress reinstates them before the end of this year. If they are allowed to “Sunset”, we will all pay more tax!
In my previous writings to you, I’ve outlined some of the changes that will take place if nothing is done. Today, I want to explain a few of these changes that will affect anybody that has a dependent child(ren) under 17, anyone who may be attending college and those taxpayers that traditionally qualify for the earned income credit. These particular changes are scheduled to take effect for the 2011 tax return. (Not this upcoming tax season~but next.)
Here they are:
  • Earned Income Credit – This refundable credit currently has four categories of low-income working taxpayers, with the credit increasing as the number of children increase, up to three or more. In 2011, the “three or more children” category will go away, and taxpayers with three or more children will have to use the two or more category. This can reduce the credit for low-income taxpayers with three or more children by up to about $600.
  • Child Credit – The tax law provides a tax credit for each of a taxpayer’s children under the age of 17. This credit will drop to $500 (was $1,000 in 2010) per child. Since this credit phases out for higher-income taxpayers, it will generally impact lower-income taxpayers.
  • American Opportunity Education Credit (AOEC) – This credit took the place of the Hope Education credit in 2009 and 2010. Where the Hope Credit is non-refundable (can only offset one’s income tax liability), the AOEC was 40% refundable, and where the Hope Credit is for only the first two years of post-secondary education expenses, the AOEC allowed a credit for the first four years of post-secondary education expenses. In addition, prior to 2009, the Hope credit was limited to a maximum of $1,800 per student but the AOEC maximum was $2,500 per student. If the AOEC is not extended, low-income taxpayers will lose out on the refundable feature of the AOEC and those students in their third and fourth year of post-secondary education. Middle-income taxpayers will also be affected, because the point at which the credit phases out due to income limitations was 60% higher under the AOEC than under the Hope credit rules. Higher-income taxpayers are generally not affected since both credits are phased out for higher-income taxpayers.
As you can see, some of these tax cuts are really beginning to hit close to home, as they affect the average american, working class taxpayer. I’m not here to make any political statements, but these are the facts concerning the increases that we will all experience if our congress does nothing before the end of the year.
I’m not done with highlighting all the changes! There is still more to come. Stay Tuned!!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).
Esther Hastings, EA

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

www.efileflorida.comFollow us on Twitter Find us on Facebook

 

(I HIGHLY recommend this “get out of debt” program!)Are you tired of being in DEBT? Click Here.

 

Categories: Strictly TAXES!

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 3)


Tax Cuts Are Scheduled To Sunset! 

(Part 3)

In my previous postings, I’ve been talking about the tax cuts that are set to expire if they are not re-instated by congress before the end of this year. If these tax cuts are allowed to “Sunset”, they will have an impact on just about every taxpayer in the country. The result will simply be that we will all pay MORE TAX!
In this writing, I’m going to highlight some of the changes that will affect taxpayers for  tax year 2011. Although you won’t feel the effects of these changes for this year, you WILL feel them for the 2011 tax return.
Here we go:
  • Tax Rates – As part of the Bush era tax cuts, the marginal tax rates (they increase with taxable income) were reduced to 10, 15, 25, 28 and 33 percent. These rates are set to return to their original levels of 15, 28, 31, 36 and 39.6 percent. The 10% and 15% brackets will be replaced with a single 15% bracket. This results in an increase for everyone! Those in the previously lowest bracket (10%) will see a tax increase of approximately 5%, while others will see increases ranging approximately from 2% to 6%. In addition, an expanded 15% bracket for a married couple filing a joint return has applied for several years as relief for the “marriage penalty.” This will not apply as of 2011. Instead, the top of the 15% bracket for joint returns will be about 167% of the end point for single returns rather than the 200% it has been.
  • Capital Gains Rates – Also, as part of the Bush era cuts, the capital gains rates were substantially reduced, but will return to their old levels of 10% for anyone in the 15% regular tax bracket and 20% for all others. That is up from 0% and 15% in 2010. This will impact investors, business owners and home owners when they sell a capital asset.
  • Qualified Dividends – Generally, qualified dividend income is dividend income from stock held for 60 days or longer before the ex-dividend date. These dividends, for a number of years, have been taxed at capital gains rates (0% – 15%). However, the law providing these beneficial rates expires at the end of 2010 and all dividend income will be taxed at ordinary income rates (15% to 39.6%). This will generally impact investors holding income stocks and mutual funds. These individuals will see an overall tax increase greater than just the general 2% to 6% rise noted above.
These tax cuts that I’ve mentioned are just the beginning. In my next writing to you, I will highlight a few changes that will impact anyone who has dependent children under 17, has a member of the family who attends college or anyone who may qualify for the Earned Income Credit.
Stay tuned!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).
www.efileflorida.comFollow us on Twitter Find us on Facebook
Contact Us: 

PH (954) 583-8534
Fax (954) 583-8557
Are you tired of being in DEBT? Click Here.  

(I HIGHLY recommend this “get out of debt” program!)

 

 

Categories: Strictly TAXES!

Tax Increases ARE Coming~Unless Congress Takes Action! (Part 2)


Tax Cuts Are Scheduled To Sunset! 

(Part 2)

In my last writing to you, I highlighted two of the tax cuts that are scheduled to expire for 2010 that will affect many taxpayers for this upcoming tax season. Just to re-cap, here they are again:
  • Non-Itemizers Real Property Tax Deduction – The $500 ($1,000 for joint filers) property tax deduction for non-itemizers expired after 2009. This most likely will impact lower-income taxpayers, or those whose homes are mortgage-free and have no home interest expense, and who are unable to itemize their deductions. For taxpayers in the 15% tax bracket, this equates to a $75 tax increase (or $150 for joint filers).
  • Sales Tax in Lieu of State Income Tax – The option to deduct sales tax in lieu of state income tax as an itemized deduction on a taxpayer’s Schedule A expired after 2009. Although this will impact taxpayers with low state income taxes and those that purchased vehicles, boats or airplanes, it will have the greatest impact on taxpayers in states where there is no state income tax and thus no state income tax deduction to take in place of the expiring sales tax deduction.
If congress fails to act to re-instate these provisions in the tax code by the end of this year, the tax savings for millions of taxpayers will go off into the “Sunset.”
Here are a few more that are scheduled to expire that may directly affect your tax refund/bill for this upcoming tax season:
  • Alternative Minimum Tax – Way back in 2001, Congress increased the AMT exemption to keep middle-class taxpayers from being caught up in this punitive tax and have been inflation adjusting and extending it on an annual basis in recent years. However, they seem reluctant to adjust it for 2010. If they do not, the exemption will return to $45,000 for joint filers (down from $70,950 in 2009) and $33,750 (down from $46,700 in 2009) for unmarried individuals. This will generally snare middle-income taxpayers, and the tax bite can range upwards to several thousand dollars.
  • Teacher’s Classroom Supplies Deduction – The $250 above-the-line deduction for teacher classroom supplies expired after 2009.
  • Above-the-Line Education Deduction – The up-to-$4,000 above-the-line deduction for education expenses (tuition and fees) expired after 2009.
In my next writing, I will highlight some of the tax deductions that are set to expire that will affect many of us for the 2011 tax return. Stay Tuned!
E-File Florida is very happy to help you with questions regarding these “Sunset Rules”. Feel free to contact our office by calling 954-583-8534 or by email at info@efileflorida.com. You can also visit us on the Internet at http://www.efileflorida.com for more great tax tips and articles.
Esther Hastings, EA
E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!
www.efileflorida.comFollow us on Twitter Find us on Facebook
 

IRS CIRCULAR 230 Required Notice – IRS regulations require that we inform you as follows: Any Federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction as tax related matter(s).

Contact Us: 

PH (954) 583-8534
Fax (954) 583-8557

 

Are you tired of being in DEBT? Click Here.  

(I HIGHLY recommend this “get out of debt” program!)

Categories: Strictly TAXES!
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