Tax Blog

Tax Deadline Extended for Tax Year 2010

2010-08-02T17:41:00Z

April 15, 2011 is Emancipation Day in Washington DC and is a Federal Holiday. Since April 15th falls on this day the due date to file your 2010 tax returns moves to Monday, April 18, 2011.

First-Time Homebuyer Credit Extended to 2010

2009-11-17T17:12:00Z

the Worker, Homeowner and Business Assistance Act of 2009 was signed on November 6, 2009. This act extended the First-Time Homeowners credit to June 2010 (must have valid contract by April 30, 2010 and close on June 30, 2010) to receive the $8,000 tax credit.

This act also authorized the credit to long-time homeowners who purchase a replacement home before June 2010 (contracted by April 30 and closed June 30).

Additionally, the income limitations to claim this credit were raised.

Additional benefits were given to military and certain government employees. Extending the date to purchase a home for one additional year.

Hurricane Preparedness Tax Free Buying

2009-04-23T12:31:00Z

Guidelines and Rules for the VA Hurricane Preparedness Sales Tax Holiday have been released.

The sales tax holiday event begins each year on May 25 at 12:01 a.m. and ending at 11:59 p.m. on May 31.

The full text of the Guidelines is attached and is available as PD 09-37 in the VA Tax Policy Library at: http://www.policylibrary.tax.virginia.gov/OTP/Policy.nsf/ccd0d2ea93db9ba485256968006a39ed/3b30fbc30deabc9f852575a000489d3b?OpenDocument

Additional information may be found at: http://www.tax.virginia.gov/site.cfm?alias=HurricanePreparednessEquipmentHoliday.

Turning 70 1/2 in 2009

2009-03-04T21:17:00Z

It was announced as part of one of the many tax act/stimulus packages released this year that anyone that would turn 70 1/2 in 2009 would not need to take the mandatory distribution. However if you chose to take your distribution at 70 1/2 that incomes is fully taxable at whatever your current tax rate is for that tax year.

Anyone electing to not take the distribution would not be penalized but would need to take the normal payment in 2010 as usual.

Home and Car Buyers benefits contained in the $787 Billion Stimulus Package

2009-02-17T20:10:00Z

The details are slowing coming out around what is contained in the $787 Billion stimulus package recently passed by Congress and waiting the Presidents signature today.

Contained in the package is a $400 dollar tax credit for single taxpayers and $800 for families. This will not be like the last stimulus as it won't come in a single check but will be reflected in each taxpayers paycheck. This means about $8 per week more in your check.

First time buyers will receive a $8,000 tax credit. Unlike the current $7,500 credit this new one will not need to be repaid unless you sell within 3 years of purchase.

This $8,000 credit is available to any first time homeowner who purchases a home between Jan 1, 2009 and Dec 31, 2009. Phase out for taxpayers whose AGI (Adjusted Gross Income) exceeds $75,000 or $150,000 for married taxpayers.

Also contained in this package is a deduction of the sales tax or excise tax for purchasers of new cars between the date the package is signed and Dec 31, 2009.

The deduction will be above the line and will be available even if the taxpayer does not itemize their deductions (Schedule A Filers).

The sales tax deduction is limited to purchases up to $49,500. As with everything else, the deduction will phase out for single taxpayers with an AGI (Adjusted Gross Income) of more than $125,000 and married taxpayers whose AGI exceeds $250,000.

The bill also contains a provision that extends the tax break for people that take public transportation to work. The bill allows employees to set aside up to $230 a month pre tax to cover the cost of a bus, train or van pool. This is an increase from $120.

Parents of college students will also get a break. Bill contains a more generous tax credit for higher education. Tax credit up to $2,500 a year will be allowed to cover the costs of higher education. Phase out amounts have also been increased to allow more taxpayers to benefit from the credit.

Unemployed workers will now be able to exclude the first $2,400 in unemployment benefits from taxes in 2009. Unemployed workers will also now get the chance to continue their former employers health insurance coverage for up to 18 months. This will be available through COBRA.

The stimulus bill will subsidize up to 65% of the COBRA costs for 9 months. This subsidize payment will only be available to workers that were let go between Sept 1, 2008 and the end of 2009.

As usual, more and more details are coming out about this round of stimulus payments so check here often.

Congressional Leaders tentatively agree on a $790 billion package

2009-02-12T15:25:00Z

As you might have heard, Wednesday the Congressional leaders agreed tentatively to a 2 year, $790 billion dollar stimulus package that would boost the economy and create 3.5 million jobs.

I am including the details below. They hope to have this package completed and on the Presidents desk on Monday, Feb 16th.

Total Tax Cuts
    $282 billion in total tax cuts, slightly more than the House bill

"Making Work Pay" Tax credit
    Individuals would get $400, families $800 in 2009 and 2010.

Alternative Minimum Tax fix
    $70 billion for a tax break to protect 24 million families from higher AMT

Social Security
    One time $250 payment to recipients of Social Security, Supplemental Security Income and veterans pensions and disability

Home buyer tax credit
    A new $8,000 tax credit for buyers of new or existing homes. Home needs to be purchased between Jan 1, 2009 and November 2009. Could not have owned a home for at least 3 years. Phase out for couples with income over $150,000 and single filers with income over $75,000. Will pay back the credit if home is sold within 3 years.

New car sales tax deduction
    Allows taxpayers to deduct the sales tax paid on new car purchases

Transportation infrastructure
    $50 billion for highways, bridges, mass transit, rail and airports

Education, other aid for states
    $54 billion in aid for states, $10 billion can go to modernize schools

Energy Assistance
   About $50 billion, including $11 billion for electric grid, $5 billion to insulate homes and $5 billion to fix federal bldgs.

Broadband Internet service
    $7 billion to expand broadband service, especially to rural areas

All the above are subject to change until the bill is signed by the President.

California Delays Issuing Refunds

2009-02-09T16:56:00Z

The California State Controller announced that effective February 1, 2009 all Personal and Business filer refunds will be delayed by 30 days. This is due to the ongoing cash and budget problems currently being experienced in the state.

Senate Reaches a Deal on a Stimulus PAckage

2009-02-07T01:38:00Z

Tonight, Feb 6, 2009 the US Senate reached a deal on a stimulus package.

Total package is $780 billion, down from the original package of $937 billion. The package is made up of tax cuts and new spending. Details aren't release but much of the new spending will go towards victims of the recession in the form of Food Stamps, Unemployment compensation and Health Care. Funds are included for construction of highways and bridges.

There is more work to be done before final passage. It takes 60 Senators to pass as this package would require a rise in the national debt.

Stay tuned to this space for the details of the tax cuts and spending.

1099 G Form from Virginia Department of Taxation

2009-01-30T17:02:00Z

Don't be confused. Virginia just sent out 1099 G forms. These forms mention an overpayment from 2007. This is not a notice of money being paid to you rather a notice that you already received this amount in 2007.

Typically the Virginia refund is reported as income on your Federal tax return in following year. The reason for this is that you used state tax withholdings and state estimated tax paid as an itemized deduction on your Federal tax return, Schedule A. Using this amount as a deduction reduced your taxable income. As a result of using this as a tax benefit it becomes taxable in the following year.

It is only taxable if you itemized in the prior year.

It is not taxable income on the Virginia return.

Virginia Encourages Electronic Filing

2009-01-28T02:18:00Z

The Virginia Department of Taxation announced today that paper filed returns will take longer to process than in prior years. They have hired less people this year to open, sort and process paper returns and encourage everyone to use electronic filing.

Electronic filing will take priority and will be processed ahead of any paper returns.

Use electronic filing to ensure a fast refund from Virginia.