It’s April 18th…Are Your Taxes Done?

It’s April 18 already. Are your taxes done? If not, here are some stress-relieving ideas:

• Don’t Procrastinate Anymore – Resist the temptation to put off your taxes until the very last minute. Our office needs time to prepare your return, and we may need to request certain documents from you, which will take additional time.
• Don’t Panic If You Can’t Pay – If you can’t immediately pay the taxes you owe, consider some alternatives. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late-payment penalty rate. You also have various options for charging your balance on a credit card. There is no IRS fee for credit card payments, but the processing companies charge a convenience fee. Electronic filers with a balance due can file early and authorize the government’s financial agent to take the money directly from their checking or savings account on the April due date, with no fee.
• Request an Extension of Time to File – But Pay on Time – If the clock runs out, you can get an automatic six-month extension, bringing the filing date to October 17, 2011. The extension itself does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late-payment penalty if you have not paid at least 90 percent of your total tax by that date. Call us for a variety of easy ways to apply for an extension.

Remember: Get your documents to us as soon as you can, and we’ll help you take care of whatever comes up

The Alternative Minimum Tax

The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.

Here are six facts the Internal Revenue Service wants you to know about the AMT and changes for tax year 2010.

1. Tax laws provide tax benefits for certain kinds of income and allow special deductions and credits for certain expenses. These benefits can drastically reduce some taxpayers’ tax obligations. Congress created the AMT in 1969, targeting higher income taxpayers who could claim so many deductions they owed little or no income tax. 
2. Because the AMT is not indexed for inflation, a growing number of middle-income taxpayers are discovering they are subject to the AMT. 
3. You may have to pay the AMT if your taxable income for regular tax purposes plus any adjustments and preference items that apply to you are more than the AMT exemption amount. 
4. The AMT exemption amounts are set by law for each filing status.
5. For tax year 2010, Congress raised the AMT exemption amounts to the following levels: $72,450 for a married couple filing a joint return and qualifying widows and widowers; $47,450 for singles and heads of household; $36,225 for a married person filing separately.
6. The minimum AMT exemption amount for a child whose unearned income is taxed at the parents’ tax rate has increased to $6,700 for 2010.

If you want further information on the AMT and your tax situation, please let us know.

Are You Eligable for a Tax Credit?

A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to the point that you would receive a refund rather than owing any taxes.

Here are the credits we will consider when preparing your taxes:

• The Earned Income Tax Credit is a refundable credit for low-income working individuals and families. Income and family size determine the amount of the credit. For more information, see IRS Publication 596, Earned Income Credit.
• The Child and Dependent Care Credit is for expenses paid for the care of children under age 13, or for a disabled spouse or dependent, to enable the taxpayer to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
• The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
• Adoption Credit: Adoptive parents may qualify for an enhanced tax credit of up to $13,170 in 2010 ($13,360 in 2011) for qualifying expenses paid to adopt an eligible child. The credit may be allowed for the adoption of a child with special needs even if you do not have any qualifying expenses. The adoption tax credit does have income phase-out limits, starting at $182,520 in 2010 (and $185,210 in 2011). For more information, call us or see the instructions for Form 8839, Qualified Adoption Expenses.
  

  Note: The adoption credit is enhanced for years 2010-2012. It is scheduled to revert back in 2013 to its pre-2001 dollar limit of $5,000, or $6,000 if a special needs child is adopted.

• Credit for the Elderly or the Disabled: This credit is available to individuals who are either age 65 or older or are under age 65 and retired on permanent and total disability, and who are U.S. citizens or residents. There are income limitations. For more information, call us or see IRS Publication 524, Credit for the Elderly or the Disabled.

Rest assured, we will make sure you receive all the tax credits for which you are eligible

Larry D. Stone,  Stone CPA

970.668.0772, 970.668.0434, 888.668.0772

[email protected]