IRS Tax Audits

I have yet to meet anyone who is thrilled when they receive one of "those letters' from the IRS informing them of a tax audit! They are, simply put, NO FUN!

What is the best way to prevent a tax audit? No one really knows for sure. I have my own suspicions on a few things that would trigger an audit from the IRS, but the truth is not even the IRS revenue agents know the internal workings of the system when it comes to choosing who gets audited.

So, my advice has always been and continues to be: KEEP IMMACULATE RECORDS! Period! We all have legitimate deductions that we can claim on our tax returns. Keep your receipts and documentation to prove your claims for deuctions in the event of an audit. You will sleep much better after receiving one of "those letters" if you know that you have records to substantiate everything on your tax return.

If you do receive an IRS letter informing you of an audit, E-File Florida is prepared to represent you before the IRS, if you so choose. Only CPA's, Tax Attorneys and Enrolled Agents (EA's) can represent taxpayers before all administrative levels of the IRS. While CPA's and Tax Attorneys are licensed by their prospective state, only Enrolled Agents are Federally Licensed by the US Department of Treasury~Internal Revenue Service to practice in all 50 states.

It would be highly recommended to hire representation in the event of an audit. I've seen too many taxpayers try to represent themselves only to end up having the audit extend further back to other years that were never in question at the onset because the taxpayer offered a little too much information that seemed questionable to the IRS revenue agent! So, the moral of this story is: Taxpayer Beware of the IRS Tax Audit~They are on the rise!

Feel free to contact E-File Florida by calling (954) 583-8534 or by email at: info@efileflorida.com. We are here as a resource to you. Visit our website at www.efileflorida.com and sign up for our free Tax Tips newsletter.

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).

Will You Have To Pay Tax On Your Unemployment Benefits?

We don't need to tell anyone that it's been a rough year or two in the financial world, especially our own!! If you, like many, have found yourself jobless and have received unemployment benefits for 2009, we have good news and bad news. Normally, unemployment benefits are taxable. But, under the American Recovery and Reinvestment Act (ARRA), the first $2,400 of unemployment benefits an individual receives in 2009 are tax free. This is a nice tax break for those that have found themselves jobless in 2009. So, while you still have to include the income you received from unemployment on your tax return, the first $2400 will not be taxed at all.

Feel free to contact E-File Florida to assist you in the preparation of your 2009 tax return.
We have over 19 years of tax preparation experience and we are Federally Licensed to do so! Give us a call at 954-583-8534 to schedule an appointment. You can also visit us on the internet at www.EfileFlorida.com. There, you will find interesting tax tips and articles as well as links to our tax blog.

Time to Gather Those Tax Papers

The holidays are behind us and the new year is here! As those credit card bills start to roll in, Uncle Sam will also be calling for his share of your hard earned dollars this tax season. We’ve included a list of tax documents/records that you should keep in a separate folder to make things handy when it comes time to actually file your federal income tax return. Here they are:

Income Documents

 W-2s

 Form(s) 1099

 Proof of jury duty pay

 Proof of alimony you received

 Social Security statement (1099-SSA)

 Dividend and interest statements (1099-DIV and 1099-INT)

 Retirement distributions (1099-R)

 Brokerage statements (1099-B), along with statements showing when you bought and sold your investments

 K-1 statements reporting profits from partnerships, trusts, and small businesses

 Record of income and expenses for your rental property **

 Record of income and expenses for your self-employment **

**Contact our office if you would like a questionnaire to assist you in gathering this information.

Other Tax Documents

 HUD-1 Escrow statement for property you bought or sold

 Summary of moving expenses **

 Summary of educational expenses (college tuition) **

 Summary of your child care, day care, or adult day care expenses **

 IRA contributions (traditional, SEP, or rollovers)

 Student loan interest paid (1098-E)

**Contact our office if you would like a questionnaire to assist you in gathering this information.

Tax Deduction Documents

 Health care expenses (doctors, dentists, health insurance, eyecare, prescription medicines)

 Real estate taxes

 Mortgage interest paid (form 1098 from your Mortgage Company)

 Gifts to charity **  Last year's tax preparation fees  Job-related expenses (union dues, job education, uniforms) **

 Loss of property due to casualty or theft

 Gambling losses

**Contact our office if you would like a questionnaire to assist you in gathering this information.

There are a few changes that took place last year that might affect your tax refund (in a good way). Don’t overlook them! These include:

 First time homebuyer’s tax credit

 Home energy tax credit

 Increased higher education tax credit

 Property tax deduction (for those that do not normally itemize)

 Sales tax deduction for new car purchases (made after Feb, 2009)

 Making Work Pay tax credit

We cannot emphasize enough that GOOD RECORD-KEEPING is an essential must when it comes to claiming deductions on your tax return! If you have any questions or concerns, feel free to contact E-File Florida at (954)583-8534 or by email: info@efileflorida.com. We are here as a resource to you. Feel free to visit our website at www.efileflorida.com and sign up for our free Tax Tips newsletter.

A New Year~Welcome 2010!

'Click here to read a special message from E-File Florida.'

New Mileage Rates For 2010

The Internal Revenue Service has issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
  

The new rates for business, medical and moving purposes are slightly lower than last year’s.

E-File Florida wants to remind you that you must keep a detailed written record (Mileage Log) of all business, medical or charitable mileage to substantiate the mileage deduction. Things to keep track of include: The date, purpose of the trip and the actual miles driven (beginning odometer and ending ododmeter). It helps to have gasoline & maintenance receipts to further prove that you did indeed 'use' you car throughout the year and bolster your claim for deduction.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

We cannot emphasize enough that GOOD RECORD-KEEPING is an essential must when it comes to claiming deductions on your tax return! If you have any questions or concerns, feel free to contact E-File Florida. We are here as a resource to you. Visit our website at www.efileflorida.com and sign up for our free Tax Tips newsletter. You can send inquiries to: info@efileflorida.com.

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).

Latest Update On Extension of Homebuyers Tax Credit

Good News! President Obama signed H.R. 3548 on Friday morning, Nov. 6, 2009, enacting into law an extension and adjustment of the $8,000 tax credit for first-time buyers.

Here are some of the highlights of this new extension:

• Adds money for certain move-up buyers
• Creates one deadline for signing a contract and a later deadline for closing
• Changes income requirements
• Limits a purchased home's cost to $800,000
  

First-time Homebuyers

Most of the details for first-time homebuyers are the same rules that currently exist. The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a "first-time buyer."

• A purchase must be under contract by April 30, 2010.
• A purchase under contract by April 30 must close no later than June 30, 2010.
• After Dec. 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples. This increases the limits that were in place effective through Nov. 30 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.
• Effective immediately: The maximum home value purchased cannot exceed $800,000. Prior to the law being signed, first-time homebuyers had no limitation on a home's cost.
  

Current Homeowner Tax Credit

Here's some great news for homeowners that wish to 'upgrade' to another home. An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. In order to qualify, the owner must have owned and used the same residence as a principal residence for any consecutive five-year period in the previous eight years. This new tax credit is effective immediately. Eligible homebuyers do not have to wait until Dec. 1 to close in order to qualify. Personal income limits, maximum home value, and contract/closing deadlines are the same as those for first-time homebuyers.

Additional Changes

The new law requires a buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don't deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won't receive the credit without submitting proof to the Internal Revenue Service (IRS).

E-File Florida is uniquely positioned to help taxpayers/homebuyers through the maze of purchasing their new home and applying for the First Time Homebuyer's Credit. We are licensed in real estate as well as income taxes. Feel free to call or email us with any questions you may have. We are here to serve YOU.

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).

Update: First Time Homebuyer's Tax Credit

There is the potential for some really good news for those of you that are still wanting to purchase a new home. Early next week the U.S. Senate will be voting on an amendment that would extend the first-time homebuyer tax credit. If passed, the Dodd-Lieberman-Isakson amendment will:

• Provide the $8,000 tax credit to any buyer (not just first time).
  
• Set income limits at $150,000/$300,000 for single/married buyers.
  
• Make the credit available until June 30, 2010.
  

Those of you that already own a home can benefit if this amendment passes. You will be able to take advantage of the current housing prices & low interest rates to possibly move into a home that better suits your family. Under the provissions of this proposed amendement, you will now be able to take advantage of the First Time Homebuyer's Credit! Those of you that have been contemplating buying your first home may have an extra window of time to make it happen!

You can rest assured that we will be keeping a pulse on this one and will be passing on any new developments to you as soon as we get word.

E-File Florida is uniquely positioned to help taxpayers/homebuyers through the maze of purchasing their new home and applying for the First Time Homebuyer's Credit. We are licensed in real estate as well as income taxes. Feel free to call or email us with any questions you may have. We are here to serve YOU.

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).