Taxes (TAX)

[ypsiCPA]

First, congratulations!

What does the pop-up say? Is it relating to the sale, or did you request a distribution from the Roth IRA?

[bkc46]

Could someone please explain if there is a $1MM stock sale transaction threshhold that is taxed automatically? Even in a Roth Account? Etrade has a pop-up that is flagging my attention for some reason!!! Many thanks.

[Seminole Red]

oh thank you kind sir....the website answers all my questions....good trading to ya.

[ypsiCPA]

50K of short-term gains are entirely offset by your long-term losses. 3K limitation applies after that offset (you can't deduct more than 3K a year).

[Seminole Red]

no state taxes here...

i recently changed around some of my core holdings to take advantage of higher divvies and have about 200k in long term losses can those be used to offset short term gains or only a percentage of them...

just curious.

[ypsiCPA]

2009 tax rate schedules are at http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm

If you don't have offsetting losses, multiply your short-term gain by your tax rate. Also consider state taxes.

[Seminole Red]

ok then....lets say you make 50 grand one month flipping stocks in a margin account....

appx how much of that can i spend with out going in debt to the tax man...

roughly....

[ypsiCPA]

No. Gainskeeper will generate a report that you can give to your accountant. Stock trades are only a portion of your tax return; Gainskeeper has no way to know your entire tax situation.

[General Grievous]

yes i have ameritrade, im loooking at gain/loss tax reports...is therfe somewhere it just does the calculation for you of how much you owe the irs

[cintrix]

Oh, wash sales are what u were talking about? lol What it means in layman's terms is that you can't sell something, take the tax loss for it, and then buy it right back again. They have the wash rule so you don't do that. If you buy the stock within 30 days before or after the sell (Steve, correct me on that if I am wrong), u can't take the loss on your tax return. What they do allow is for you to use the loss and add it to your cost basis on the new purchase - this way if say you sell the new holding, your profit on paper is lower because your cost basis has been adjusted. I think u mentioned u have TD Ameritrade. If you do, then u really don't have to worry about calculating wash sales because Ameritrade gives free Gainskeeper sch D's. Gainskeeper calculates wash sales for you so that u don't have to worry about it. One of the few things I did like about Ameritrade when I used them.

[ypsiCPA]

More than you ever wanted to know about wash sales

http://www.fairmark.com/capgain/wash/ws101.htm

[General Grievous]

wow thats heavy for me...i dont understand.."your loss will be disallowed under the Wash Sale Rule. The loss is not gone forever, however. The disallowed is added to your cost basis in the new stock position."
...this is very confusing

[loniee]

This is what I was refering to..you have it under controle it seems..GL

Wash Sale Rules
The capital loss on a single investment transaction may be disallowed under the Wash Sale Rules.

If you buy the same stock within one month of selling that stock for a loss, your loss will be disallowed under the Wash Sale Rule. The loss is not gone forever, however. The disallowed is added to your cost basis in the new stock position.

[cintrix]

I don't know who lonie is, nor have I ever heard of anything like that and I am trading for 13 years, that is why I questioned it.

[General Grievous]

hey dont ask me ask lonie, he wasnt sure about that though..dont know why...i already told my cousin ill need him for tax time come next year heh..feels good to need an accountant!! yes! life is good! love this job!

[cintrix]

Steve, u shouldn't be pushing turbo tax - you should be telling everyone how it is better to get an accountant. Let's keep you in business! lol

[cintrix]

also lonie told me how i can pick one loss per 90 days to get a refund on.

Huh? What r u talking about?

im with tda dont they tell you how much you owe when its time?


No broker tells u how much u owe. They will just tell you how much u made by showing the cost basis and the gross proceeds and whatever that difference is between them. You have to either get an accountant to do it or use a tax software and it is based on your tax bracket.

[ypsiCPA]

Yes you can do that with turbotax

[General Grievous]

ok once i have that then what? is this something i can do on my own with turbotax?

[ypsiCPA]

Hi General,

In TDA next January, go to Accounts | Gain/Loss. Realized Sell Activity (Detailed) for 2009 will give you everything you need for your taxes. You can print, or download an Excel spreadsheet.

[General Grievous]

hey i was told you could advise me on taxes...i've never had an income had a couple jobs didnt last long...im 23...i started in april with 5k ..im now approaching 30grand..my cousin was an accountant could he help me?

also lonie told me how i can pick one loss per 90 days to get a refund on. do i just print out all my trade history for next year or something? im with tda dont they tell you how much you owe when its time?

[ypsiCPA]

Tax credit for home purchase could rise

By Stephanie Armour, USA TODAY

Lawmakers and businesses are calling for expansion of a tax credit for first-time home buyers that has helped spark home sales in an otherwise dismal real estate market.

With the tax credit scheduled to expire in fall, some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home.

First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.

The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package. The proposals may face headwinds amid growing public criticism of government spending to rescue the economy and the widening budget deficit.

Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

"I'm fairly confident that (Congress) will extend the tax credit, because it is so important that housing come back," says Bernard Baumohl, an economist at the Economic Outlook Group. "But raising the tax credit will be difficult because it reduces taxes even more."

The White House had no immediate comment Sunday.

Current proposals:

•A Senate bill to expand the tax credit to $15,000 for any home buyer regardless of income was introduced this month by Sen. Johnny Isakson, R-Ga. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn.

"It would go a long way toward inducing trade-up buyers into the market," says Lawrence Yun, chief economist at the NAR.

•A House bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance.

•Another bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.

The Business Roundtable, a consortium of CEOs from large companies, urged Congress this month to expand the tax credit to $15,000 and make all home buyers eligible.

"The issue is how do we stimulate the move-up market, and that's essential for the economy," says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker, Sotheby's International Realty and ERA.

"I think it's going to be a bipartisan effort," Smith says. "The issue is how to pay for it."

The current tax credit does not apply to singles earning more than $95,000 a year and couples who earn more than $170,000. Some business leaders want the income caps eliminated.

Buyers do not have to repay the tax credit if they occupy the home for three years or more.

"A lot of people are taking advantage of it," says David Thomas, a Realtor in Washington, D.C., who adds that expanding the credit would boost the market. "That would be a fantastic idea, to enhance and expand the incentives."

http://www.usatoday.com/money/economy/housing/2009-06-22-homebuyer-credit-may-be-extended_N.htm

[ypsiCPA]

The intersection of Death and Taxes

[ypsiCPA]

Probe of questionable tax shelters brings 7 indictments

By Kevin McCoy, USA TODAY
NEW YORK — The former CEO of tax-consulting firm BDO Seidman and an ex-tax adviser at the former Dallas law firm of Jenkens & Gilchrist were among seven defendants indicted Tuesday for allegedly marketing phony tax shelters to wealthy clients trying to duck the IRS.

A federal grand jury voted criminal conspiracy and tax-evasion charges against Denis Field, 51, former head of BDO's national tax practice, and Paul Daugerdas, 58, a former head of Jenkins & Gilchrist's Chicago office, federal prosecutors said.

Also charged were Erwin Mayer, 45, and Donna Guerin, 48, attorneys formerly of the Jenkens firm's Chicago office; and Robert Greisman, 48, a former BDO tax partner in Chicago. The indictment also accused Raymond Brubaker, 53, and David Parse, 47, former investment representatives at the New York office of an unnamed foreign bank, where the scheme was allegedly structured and implemented.

The 27-count indictment accused the seven and others of participating in a scheme to defraud the IRS from 1994 through 2004. Prosecutors charged the group created financial documents to maximize the appearance that the shelters were used to generate profits — and minimize the chances the IRS would discover the deals were actually designed to generate unwarranted tax losses and deductions.

Prosecutors said one of the improper transactions, known as "Homer," generated more than $400 million in false and fraudulent tax losses for at least 36 wealthy individuals when it was marketed and sold in 2001.

"Dishonest and fraudulent tax professionals ... should stand up and take note" of the charges, said John DiCicco, acting assistant attorney general of the Justice Department's tax division.

Field's lawyer could not immediately be located for comment. Daugerdas "believes that the tax advice provided to his clients was well within the scope of then-existing federal tax law," and will "vigorously defend himself," according to a statement by his legal team.

Greisman's attorney, Sheldon Zenner, declined to comment. Lawyers for the other defendants said their clients had done nothing wrong and would be cleared.

The charges stem from an investigation that earlier produced guilty verdicts against former Ernst & Young executives and a guilty plea by an ex-BDO official.

http://www.usatoday.com/money/perfi/taxes/2009-06-09-tax-shelter-indictments_N.htm

[ypsiCPA]

IRS Weighs New Rules on Tax Preparers

WASHINGTON – The Internal Revenue Service is working on new rules that could require paid tax preparers to be licensed to improve tax compliance and reduce fraud, IRS Commissioner Doug Shulman said Thursday.

Eighty percent of taxpayers get help with their returns, either from paid preparers or computer programs, Mr. Shulman told a congressional subcommittee. Tax preparers currently don't have to be licensed, unless they represent clients in proceedings before the IRS.

Mr. Shulman said he wants better leverage to make sure tax preparers act ethically, not only to improve enforcement, but also to ensure that taxpayers get quality help in preparing their returns.

"Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid,'' Mr. Shulman told the House Ways and Means Subcommittee on Oversight.

Mr. Shulman said the IRS will submit recommendations by the end of the year to U.S. Treasury Secretary Timothy Geithner, which could include regulatory or legislative changes.

The changes could affect chain tax-preparation companies, including H&R Block Inc., Jackson Hewitt Tax Service Inc. and Liberty Tax Service.

In addition to enrolled agents, lawyers and accountants—who are licensed to represent taxpayers before the IRS--the recommendations would cover a growing category of unlicensed tax preparers, according to an IRS news release.

While the IRS will consider the role of tax-software providers, human preparers are the focus of the effort to craft stricter standards, Mr. Shulman told reporters in a conference call. "In most states, anyone can charge to prepare tax returns, regardless of training, education, experience, skill, licensing or registration," he said.

Registering tax preparers and requiring a minimum competency makes sense, said Paul Cinquemani, director of government relations for the National Association of Tax Professionals.

"As complex as the tax law is, believe me it doesn't hurt to raise the bar,'' Mr. Cinquemani told the Associated Press. "I don't understand how anyone operates without getting education to stay on top of tax law. It's very complex.''

"I applaud the IRS in their efforts to require tax-preparer certification," said John Hewitt, chief executive of Liberty Tax Services, the third-largest U.S. tax-preparation firm. "It certainly hasn't hindered us in Oregon and California," he said of two states that regulate tax preparers.

H&R Block, the largest tax-preparation firm, also said it welcomed the IRS announcement.

Scott Schneeberger, an analyst with investment firm Oppenheimer & Co. Inc., wrote in a Thursday research note that the IRS initiative is "significantly positive" for the big tax-preparation firms.

"As the larger preparers are already more closely monitored than the large, highly fragmented population of mom & pop preparers, the larger companies have been seeking increased regulation and oversight of the broader industry," Mr. Schneeberger wrote.

Rep. John Lewis (D., Ga.) said low-income taxpayers are often taken advantage of by "fly-by-night'' tax preparers who set up shop in storefronts, only to go out of business after tax season. "If they have problems, they cannot be located,'' said Mr. Lewis, who is chairman of the oversight subcommittee. "We're going to find a way to deal with it.''

In 2006, the Government Accountability Office found errors in an investigation of chain tax preparers. Out of 19 visits where GAO investigators posed as taxpayers, five preparers' work resulted in incorrect refunds of about $2,000, while errors in two cases cost the taxpayers $1,500.

From 2006 through 2008, the IRS initiated more than 600 investigations of fraud among tax preparers. During that time, 356 tax preparers were convicted, with more than 80% of them sentenced to prison, home confinement or electronic monitoring.

But when the IRS detects a fraudulent return, it's the taxpayer--not the tax preparer--who must pay the additional taxes, interest and any penalties, according to the IRS.

http://online.wsj.com/article/SB124413351661785565.html

[ypsiCPA]

The Lord Justice Hath Ruled: Pringles Are Potato Chips

By ADAM COHEN
Published: May 31, 2009

Britain’s Supreme Court of Judicature has answered a question that has long puzzled late-night dorm-room snackers: What, exactly, is a Pringle? With citations ranging from Baroness Hale of Richmond to Oliver Wendell Holmes, Lord Justice Robin Jacob concluded that, legally, it is a potato chip.

The decision is bad news for Procter & Gamble U.K., which now owes $160 million in taxes. It is good news for Her Majesty’s Revenue and Customs — and for fans of no-nonsense legal opinions. It is also a reminder, as conservatives begin attacking Judge Sonia Sotomayor for not being a “strict constructionist,” of the pointlessness of labels like that.

In Britain, most foods are exempt from the value-added tax, but potato chips — known as crisps — and “similar products made from the potato, or from potato flour,” are taxable. Procter & Gamble, in what could be considered a plea for strict construction, argued that Pringles — which are about 40 percent potato flour, but also contain corn, rice and wheat — should not be considered potato chips or “similar products.” Rather, they are “savory snacks.”

The VAT and Duties Tribunal disagreed, ruling that Pringles — which have been marketed in the United States as “potato chips” — are taxable. “There are other ingredients,” the tribunal said, but a Pringle is “made from potato flour in the sense that one cannot say that it is not made from potato flour, and the proportion of potato flour is significant being over 40 percent.”

An appeals court reversed, in a convoluted opinion that considered four interpretations of the law before ultimately rejecting three of them. In the end, it decided that Pringles are exempt from the tax, mainly because they have less potato content than a potato chip.

The Supreme Court of Judicature reversed again, in an eloquent decision. Lord Justice Jacob, in an apparent swipe at the midlevel court, insisted the question was “not one calling for or justifying overelaborate, almost mind-numbing legal analysis.”

The VAT and Duties Tribunal took an eminently practical approach, he said. It considered Pringles’ appearance, taste, ingredients, process of manufacture, marketing and packaging, and concluded that “while in many respects” they “are different from potato crisps and so they are near the borderline, they are sufficiently similar to satisfy that test.”

The tribunal was not obliged, he said, “to go on and spell out item by item how each was weighed as if it were using a real scientist’s balance.” It came down to “a matter of overall impression.”

The Supreme Court of Judicature had little patience with Procter & Gamble’s lawyerly attempts to break out of the potato chip category. The company argued that to be “made of potato” Pringles would have to be all potato, or nearly so. If so, Lord Justice Jacob noted, “a marmalade made using both oranges and grapefruit would be made of neither — a nonsense conclusion.”

He was even more dismissive of Procter & Gamble’s argument that to be taxable a product must contain enough potato to have the quality of “potatoness.” This “Aristotelian question” of whether a product has the “essence of potato,” he insisted, simply cannot be answered.

In the Pringles litigation, three levels of British courts engaged in a classic debate over line-drawing, a staple of first-year law school classes. At some point, a potato-chip-like item is so different from a potato chip that it can no longer be called one — but when? Lord Justice Jacob invoked the wisdom of Justice Holmes: “A tyro thinks to puzzle you by asking you where you are going to draw the line and an advocate of more experience will show the arbitrariness of the line proposed by putting cases very near it on one side or the other.”

In other words, sometimes you just have to call them as you see them.

Conservatives like to insist that their judges are strict constructionists, giving the Constitution and statutes their precise meaning and no more, while judges like Ms. Sotomayor are activists. But there is no magic right way to interpret terms like “free speech” or “due process” — or potato chip. Nor is either ideological camp wholly strict or wholly activist. Liberal judges tend to be expansive about things like equal protection, while conservatives read more into ones like “the right to bear arms.”

In the end, as Lord Justice Jacob noted, a judge can only look at the relevant factors and draw an overall impression. His common-sense approach was a rebuke not only to Procter & Gamble, but to everyone out there who insists that the only way to read laws correctly is to read them strictly.

http://www.nytimes.com/2009/06/01/opinion/01mon4.html?_r=1&scp=1&sq=pringles&st=cse

[ypsiCPA]

Wizard of Id

[ordinarydude]

Evidently not. I wouldn't be surprised to hear/read of more "shutdowns" here in the DFW area.

Ordinary

[Stock]

not so lucky

[ordinarydude]

I'm not the least bit surprised this happened to Lucky.

Ordinary

[Stock]

Federal Court Shuts Down Dallas Tax Preparer

Last update: 4/22/2009 10:54:00 AM

Owner of 'Lucky's Translation and Tax Service' Allegedly Ignored IRS's Warnings to Stop Claiming False Deductions

WASHINGTON, April 22, 2009 /PRNewswire-USNewswire via COMTEX/ -- A federal court in Dallas has permanently barred a Garland, Texas, man from preparing federal tax returns for others. Lucky Ngo, who operated "Lucky's Translation and Tax Service" and "Water Inn," prepared over 6,100 federal tax returns for customers since 2004, according to the government complaint filed in the civil injunction case.

Ngo agreed to the permanent injunction order. The government lawsuit alleged that Ngo had a long history of preparing false tax returns claiming improper deductions for non-deductible personal expenses.

According to the complaint, Internal Revenue Service (IRS) officials twice met with Ngo and explained to him that the deductions he was claiming were improper, but Ngo continued to claim improper deductions. Ngo's conduct allegedly caused over $9.6 million dollars in harm to the United States.

"The Justice Department and Internal Revenue Service are working together closely to shut down tax preparers who refuse to comply with the tax laws," said John DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division. DiCicco thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Chris Hendrix, a revenue agent with the IRS's Small Business/Self-Employed Division, who conducted the investigation.

Since 2001, the Justice Department's Tax Division has obtained more than 385 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department's Web site, as is information about the Justice Department's Tax Division.

SOURCE U.S. Department of Justice

[ypsiCPA]

More on First-Time Homebuyer Credit

Purchase price includes more than the contract price (relevant for homes under $80,000)

Purchase price. The purchase price is the adjusted
basis of your home on the date you purchased it. This
includes certain settlement or closing costs (such as legal
fees and recording fees) and your down payment and
debt (such as a first or second mortgage or notes you
gave the seller in payment for the home). If you build, or
contract to build, a new home, your purchase price can
include costs of construction. For more information about
adjusted basis, see Pub. 551, Basis of Assets.

[ypsiCPA]

First-Time Homebuyer Credit

If you purchase a home by November 30, 2009, a refundable credit can be claimed on your 2008 return (amend if you previously filed without the credit) or on your 2009 return.

Qualifications:
1. You (and if married, your spouse), haven't owned a home in the three years prior to closing.
2. Modified adjusted gross income (MAGI) doesn't exceed $95,000 ($170,000 if filing a joint return). See instructions http://www.irs.gov/pub/irs-pdf/f5405.pdf for definition of MAGI.

Comments:
1. Credit is 10% of purchase price, but cannot exceed $8000 ($4000 if married filing separately).
2. Credit is reduced if MAGI exceeds $75,000 ($150,000 if filing jointly). It may make sense for joint filers with over $150,000 income to file separate returns. Filing status cannot be changed from joint to separate on an amended return, but this might work for credit claimed on 2009 return.
3. If home is purchased between January 1, 2009 and November 30, 2009, the credit does not have to be repaid.

[cintrix]

I'm convinced that assisted living is a scam in that they prey on the "guilt" factor of children of elderly. Medicaid doesn't pay assisted living either but it will pay for a nursing home. We came very close to taking the assisted living route - gave them a deposit and we were ready to sell the house to pay for it until I found a really nice nursing home.

[Schekin]

Thanks.
OT: I remember now, my mother was in assisted care independent living plus she had fulltime private nursing/personal care and her accountant argued for the meals and lodging also. It didn't fly! And it was a big chunk. Oh well. The Nursing home she was supposed to enter was so disgusting that I kept her in the nicer place to which she was accustomed but the private pay cost would have been similar for both so if I had her in a "pigsty nursing home" she could've deducted it all.. Go figure!

[cintrix]

Looks like as long as it is for medical reasons they are all deducible:
Nursing home expenses are allowable as medical expense tax deductions on your tax return in certain instances. If you, your spouse, or your dependent is in a nursing home or home for the aged, and the primary reason for being there is for medical care, the entire cost, including meals and lodging, is a medical expense and is tax deductible on your tax return. If the individual is in the home mainly for personal reasons, then only the cost of the actual medical care is a medical expense and tax deductible on your tax return, and the cost of the meals and lodging is not tax deductible on your tax return.

[cintrix]

Excellent.

[Schekin]

The nursing part of it is deductible. Room and board part may be contested. There is a breakdown. From experience with my mother's care.

[ypsiCPA]

"Qualified long-term care services" are deductible, so yes.

[cintrix]

Are fees paid to nursing homes considered medical expenses that can be deducted?

[Billybob_TX]

Just did my taxes on both Taxcut and Turbotax. Taxcut did a much better job. Turbotax refused to treat wash sales correctly, and options trades were completely ignored. Taxcut imported the .txf file correctly and only had a few wash sale problems which were easily correctable. Result: Turbotax sucks, and Taxcut works much better.

[ypsiCPA]

Stimulus: How it may affect your wallet
Congress has finalized the economic recovery plan. Here's a look at some of the provisions geared at financial relief for individuals.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: February 12, 2009: 6:17 PM ET

NEW YORK (CNNMoney.com) -- There's still no official legislative text yet, but key lawmakers in the Senate and House have said they've reached a compromise on a final economic recovery package.

The new stated topline price tag: $789.5 billion. That's below both the $820 billion House-passed version and the $838 billion Senate-passed version.

The compromises that the House, Senate and White House made have changed the scope of a number of provisions, including those affecting individuals directly. In some cases, they either reduced or expanded a benefit relative to what appeared in the Senate or House versions of the bill.

Here's a look at some of the provisions that will have a direct affect on individuals in their paychecks, on their tax returns, and with regard to their unemployment benefits and health insurance if they've lost a job.

The information below is based on materials put out by the key committees in the House and Senate as well as House Speaker Nancy Pelosi, D-Calif.

Making Work Pay Credit: The bill provides a $400 credit per worker and a $800 credit per dual-earner couple. The full credit would be paid to people making $75,000 or less ($150,000 per dual-earner couple). A partial credit would be paid to those making above those amounts but no more than $100,000 ($200,000 for couples).

The credit would also be refundable, which means that even very low-income families who don't make enough to owe income tax would be able to claim it.

For most working individuals, the credit will be paid over time at roughly $15 per period, assuming 26 pay periods in a year. Estimated cost: $116 billion.

One-time payments to those who don't work: For retirees, disabled individuals and others who don't work, the bill provides a one-time $250 payment. Estimated cost: $14.2 billion.

Break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax. The AMT was intended primarily for high-income taxpayers but has in recent years threatened to engulf those lower down the income scale. Estimated cost: $470 billion.

Temporary deduction for car buyers: The bill would let those who buy a new car, light vehicle, recreational vehicle or motorcycle in 2009 deduct state and local sales taxes as well as any excise tax charged in the purchase. The deduction would be available to those earning less than $125,000 ($250,000 for joint filers). Estimated cost: $1.7 billion.

Temporary credit for home buyers: The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009.

The full credit is available to those making $75,000 or less ($150,000 for joint filers). Estimated cost: $6.6 billion.

New temporary college credit: The bill introduces the American Opportunity Tax Credit, which would be in effect for 2009 and 2010. It expands the existing Hope Scholarship tax credit and would be worth as much as $2,500 for higher education expenses, up from $1,800 currently.

The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Those making between those amounts and $90,000 ($180,000 for joint filers) would get a partial credit. And the break would also be partially refundable, meaning lower income families with little or no tax liability could now claim some of the credit. Estimated cost: $13.9 billion.

Temporary Pell Grant increase: The bill increases the maximum Pell Grant by $500 to $5,350 in 2009 and $5,550 in 2010. Estimated cost: $15.6 billion.

Temporary expansion of child tax credit: The bill increases eligibility for the child tax credit by lowering the income threshold that must be met for the credit to be refundable. The threshold would be lowered to $3,000 for this year and next. That will allow lower income families to claim more of the credit than under current law. Estimated cost: $14.8 billion.

Temporary increase in earned income tax credit: The credit will be temporarily increased to 45% from 40% of qualifying earnings for low-income families with three or more children. It also includes a marriage penalty relief provision for couples who qualify for at least a portion of the credit. Estimated cost: $4.6 billion.
Direct lifeline benefits

Health insurance help for the jobless: The bill includes provisions to help eligible jobless workers pay for health insurance under Cobra. Cobra coverage allows newly unemployed workers to keep health insurance provided by their former employers for a period of time.

For workers who have been laid off between Sept. 1, 2008, and Dec. 31, 2009, the government will subsidize 65% of their premiums under Cobra for up to 9 months.

Those people laid off between Sept. 1, 2008, and the day the stimulus law goes into effect, and who did not sign up for Cobra, will get an additional 60 days to do so and receive the subsidy.

The subsidy will be limited to those whose income for the year is $125,000 or less ($250,000 for couples filing jointly). Estimated cost: $24.7 billion.

Another provision provides states funding to help pay for expanded Medicaid rolls for workers who've lost their jobs and can't afford health care on their own or can't get Cobra coverage because their former employer doesn't offer a health care plan. Estimated cost: $87 billion.

Unemployment benefits: The bill provides jobless workers with an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what's deemed a high unemployment state, of which there are now about 30. Estimated cost: $27 billion.

In addition, the weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive. Estimated cost: $8.8 billion.

Plus, the first $2,400 of benefits in 2009 would be exempt from federal income taxes. Estimated cost: $4.7 billion.

Food stamp payments: The bill includes a provision would increase food stamp payments by 13.6%, so a family of four would see an additional $80 on top of the $588 per month they receive currently. Estimated cost: $19.9 billion.

The bill also provides assistance to help local groups providing food and shelter, elderly nutrition services such as Meals on Wheels, and a program to help food banks re-stock their shelves. Estimated cost: $350 million.

Other help for needy families: The bill provides funding to states to create a contingency fund through 2010 for the welfare program called Temporary Assistance for Needy Families, which provides cash assistance to the needy. Estimated cost: $2.4 billion.
First Published: February 12, 2009: 4:40 PM ET

http://money.cnn.com/2009/02/12/news/economy/stimulus_individuals/index.htm?postversion=2009021218

[Stock]

CCH CompleteTax Highlights Tax Changes Affecting 2008 Individual Income Tax Returns

Last update: 1/30/2009 9:37:00 AM

Tax code exceeds 70,000 pages, CCH CompleteTax sorts through complexity, identifies changes taxpayers need to know in preparing 2008 income tax returns

RIVERWOODS, ILL., Jan 30, 2009 (BUSINESS WIRE) -- In the last year, nearly 3,000 pages were added to the federal income tax code; knowing about the changes that impact individual taxpayers is important in helping them minimize what they owe in taxes, according to tax analysts for CCH CompleteTax(R), the online tax preparation and electronic filing solution for the do-it-yourself taxpayer from CCH. CCH, a Wolters Kluwer business is a leading provider of tax, accounting and audit information, software and services. "With a tax code that is now equivalent to more than 33 copies of The New Oxford American Dictionary, it's pretty clear that the average person can't keep up with every rule and regulation, which is why so many people rely on tax software or tax professionals to help make sure they have the information needed to complete their tax returns accurately," said David Bergstein, CPA, tax analyst for CCH CompleteTax (). "But it's still important for people to have a basic understanding of tax rules so that they can be informed taxpayers and look for ways to minimize their taxes throughout the year." Over the past few years, and this year again, the IRS has changed the mailing addresses for filing income tax returns in several areas, making tax software's ability to easily electronically file tax returns all the more attractive. According to Bergstein, changes affecting 2008 tax returns run the gamut from credits and deductions to exemptions, exclusions and broad relief in disaster areas after an active 2008 summer storm season.

Below are just a few highlights of the changes for 2008, which Bergstein elaborated on in a podcast today; more detail on all are included in the free CCH CompleteTax Tax Guide, on the CCH CompleteTax site:

Exemptions

-- Personal exemption. This increased to $3,500 per person for 2008.
-- AMT exemption. The AMT exemption increased for 2008 to $69,950 for joint filers and surviving spouses, $46,200 for single filers and $34,975 for married persons filing separate returns.

Deductions

-- Standard deduction. This increased for 2008 to $10,900 for joint filers and surviving spouses; $8,000 for those filing as head of household; and $5,450 for single filers and married persons filing separate returns.
-- Temporary property tax deduction added to standard deduction. A temporary deduction, available for 2008 only, allows taxpayers who do not itemize deductions a limited deduction for state and local real property taxes. This increases the amount of their standard deduction by the amount of real property taxes they paid in 2008 or by $500 ($1,000 for joint filers), whichever is less.
-- Standard mileage rate. The standard mileage deduction rate for business and medical travel for 2008 split at mid-year. From January 1 through June 30, 2008, the deduction was 50.5 cents per mile for business and 19 cents for medical travel; and from July 1 through the end of the year, the deduction was 58.5 cents for business and 27 cents for medical travel. The standard mileage rate for charitable travel remained the same throughout 2008 at 14 cents per mile.
-- IRA deduction. The maximum IRA deduction allowed per person increased to $5,000 in 2008. Those who were at least 50 years old can make an additional catch-up contribution of $1,000 to their IRA (through April 15, 2009).

Credits

-- Recovery rebate credit. People who did not receive a full economic stimulus payment based on their 2007 income tax returns may be eligible for a recovery rebate credit. The recovery rebate credit is based on a taxpayer's 2008 tax situation, which may be different from 2007, making them eligible for additional rebate credit.
-- First-time homebuyer credit. A first-time homebuyer credit of up to $7,500 can be claimed by taxpayers who purchased their first home after April 9, 2008. This credit also will be available in 2009 to taxpayers purchasing their first home before July 1, 2009.

Exclusions

-- Estates. The amount that can be excluded from an estate for estate tax purpose remains $2 million for 2008.
-- Gifts. The amount of gifts that can be excluded from taxes remains $12,000 per taxpayer for 2008.

Disaster Relief

-- Tax relief. Taxpayers in two disaster areas: the Kansas disaster area (May 4, 2008 storms) and the Midwestern disaster areas (May 20 - July 30, 2008 storms and flooding) are subject to a variety of tax benefits including special rules to allow for borrowing from IRAs and other qualified retirement accounts.

About CCH CompleteTax CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer, continues to set the standard when it comes to making online tax prep and e-filing easy, efficient and affordable. CCH CompleteTax offers comprehensive support to help taxpayers through each step of preparing and e-filing both federal and state income tax returns. About CCH, a Wolters Kluwer business CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx(R) Office, CorpSystem(R), CCH(R) TeamMate, CCH(R) Tax Research NetWork(TM), Accounting Research Manager(R) and the U.S. Master Tax Guide(R). CCH is based in Riverwoods, Ill. Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has annual revenues (2007) of EUR 3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America and Asia Pacific and employs approximately 19,500 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit . EDITORS' NOTE: Federal income tax code page counts are based on the CCH Standard Federal Tax Reporter, a leading tax resource for professionals. SOURCE: CCH CompleteTax
CCH CompleteTax Leslie Bonacum [e-mail] 847-267-7153 or Mary Jung 773-429-0940 [e-mail] Business Wire 2009

[Stock]

I should have read before I re-posted.

Maybe O'BALMER will allow folks to double that next year. You never know/

[ypsiCPA]

Thanks for the additional info, especially as most homes aren't kept for 15 years.

If you qualify for the credit, it makes sense to claim it - regardless of uncertainty of how long you'll be in the home. It remains an interest-free loan, just the repayment can be accelerated.

Note the exceptions Generic posted:
Exceptions. The following are exceptions to the
repayment rule.

- If you sell the home to someone who is not related to
you, the repayment in the year of sale is limited to the
amount of gain on the sale. (See item 8 under Who
Cannot Claim the Credit for the definition of a related
person.) When figuring the gain, reduce the adjusted
basis of the home by the amount of the credit you did not
repay.

- If the home is destroyed, condemned, or disposed of
under threat of condemnation, and you acquire a new
main home within 2 years of the event, you continue to
pay the installments over the remainder of the 15-year
repayment period.

- If, as part of a divorce settlement, the home is
transferred to a spouse or former spouse, the spouse
who receives the home is responsible for making all
subsequent installment payments.

- If you die, any remaining annual installments are not
due. If you filed a joint return and then you die, your
surviving spouse would be required to repay his or her
half of the remaining repayment amount.

[Stock]

That credit is a 15 year tax-free installment "loan" of $7,500

Purpose of Form

Use Form 5405 to claim the first-time homebuyer credit.
The credit may give you a refund even if you do not owe
any tax.

The credit operates much like an interest-free loan. You
generally must repay it over a 15-year period. See
Repayment of Credit on page 2

Repayment of Credit

You generally must repay the credit over a 15-year period
in 15 equal installments. The repayment period begins 2
years after the year in which you claimed the credit. Thus,
if you claim the credit on your 2008 tax return, the
repayment period begins in 2010 and you must include
the first installment as additional tax on your 2010 tax
return.

If your home ceases to be your main home before the
15-year period is up, you must include all remaining
annual installments as additional tax on the return for the
tax year that happens. This includes situations where you
sell the home or convert it to business or rental property.
If you and your spouse claim the credit on a joint
return, each spouse is treated as having been allowed
half of the credit for purposes of repaying the credit.

Example 1. You claimed a $7,500 credit on your 2008
tax return. You must include $500 ($7,500 4 15) as
additional tax on your 2010 tax return and on each tax
return for the next 14 years.

Example 2. You claimed a $7,500 credit on your 2008
tax return. In 2009, you sold the home to your son. You
must include $7,500 as additional tax on your 2009 tax
return.

Exceptions. The following are exceptions to the
repayment rule.

- If you sell the home to someone who is not related to
you, the repayment in the year of sale is limited to the
amount of gain on the sale. (See item 8 under Who
Cannot Claim the Credit for the definition of a related
person.) When figuring the gain, reduce the adjusted
basis of the home by the amount of the credit you did not
repay.

- If the home is destroyed, condemned, or disposed of
under threat of condemnation, and you acquire a new
main home within 2 years of the event, you continue to
pay the installments over the remainder of the 15-year
repayment period.

- If, as part of a divorce settlement, the home is
transferred to a spouse or former spouse, the spouse
who receives the home is responsible for making all
subsequent installment payments.

- If you die, any remaining annual installments are not
due. If you filed a joint return and then you die, your
surviving spouse would be required to repay his or her
half of the remaining repayment amount.

[Schekin]

" If your home ceases to be your main home before the
15-year period is up, you must include all remaining
annual installments as additional tax on the return for the
tax year that happens. This includes situations where you
sell the home or convert it to business or rental property."

[Stock]

Thank you!

[ypsiCPA]

Welcome Generic! Here's the link to Form 5405.

http://www.irs.gov/pub/irs-pdf/f5405.pdf

[Stock]

Can you post a link from the IRS web site on that?