General Information about the EITC (Earned Income Tax Credit)

17. February 2010 · Write a comment · Categories: General Tax · Tags: , , , , , ,

Attention U.S. citizens or resident aliens: If you worked in the U.S. during 2009 and did not earn much money, you may qualify for the Earned Income Tax Credit, or EITC. This is a refundable tax credit the U.S. government gives to working people who don’t make much money.

The government applies your EITC against the amount of taxes you owe after all your other credits and withholdings are added up. If the EITC is greater than the amount of tax you owe, then they will pay you the difference. (This is why it’s called a “refundable credit.”)

However, if your EITC is less than your taxes owed, you will not be able to receive it.

There are several rules the U.S. government requires before you can claim the money.

You (and your spouse, if you are filing as a joint couple) must have a valid Social Security Number. You must be a U.S. citizen – OR – a resident alien all of 2009 – OR – a nonresident alien married to a U.S. citizen or resident alien. You cannot file as “Married Filing Separately.” You (or your spouse, if you are filing jointly) cannot be named as a dependent on someone else’s 2009 tax return. You must not have very much investment income. You must not be able to file Form 2555 or Form 2555-EZ for foreign earned income. You must have a qualifying child – OR – be a person aged between 25 and 64, residing in the U.S. at least 6 months, and not be someone else’s dependent on their 2009 taxes.

In order to receive an EITC refund, you will have to file your 2009 tax return. Workplaces and banks will start mailing out tax information forms in January and February 2010. These forms will show how much tax was withheld from your paychecks, how much interest banks paid you for your bank accounts, and other information.

Once you receive those documents, you can file your 2009 U.S. income tax return. The deadline to file is April 15, 2010.

For more information or to see if you qualify for the Earned Income Tax Credit, go to www.irs.gov/eitc or call 800–829–3676 and request Publication 596, Earned Income Credit.

Tax Credit Extended for First Time Home Buyers

15. February 2010 · Write a comment · Categories: General Tax · Tags: , , , , ,

Great tax professionals always keep a watchful eye on the actions of Congress and the IRS, many of which may affect your tax filings. A prime example is the extension and expansion of the first-time homebuyers tax credit President Obama signed in November of 2009, which was scheduled to lapse on December 1. The ,000 credit will now be in effect through the end of June 2010.

The date for qualifying purchases has been extended to April 30, 2010 with an additional two-month period allotted to close on the purchase (until June 30, 2010). Limits on income were also raised, with single buyers able to earn a maximum of 5,000 and married couples able to earn 5,000.

The act has also been expanded to allow a tax ,500 credit for existing homeowners. In order to qualify, you must have lived in your present home as your principal residence for five consecutive years during the past eight years. If you purchase a home in 2010 you will be able to claim the credit on either your 2009 or 2010 tax return, and you do not have to repay the credit unless you sell the home within 36 months.

There is also good news for military personnel in the act. Those personnel who have extended duty service outside of the US for at least 90 days from 12/31/08 – 5/1/2010 will have the first time homebuyers credit extended another year until April 30, 2011.

With more people qualifying under the new rules, it is hoped that the revised version of the tax credit will stimulate the housing market more than the original version by boosting both home sales and prices.

While the homebuyer credit is very beneficial, it is also quite complex, with repayment rules, documentation requirements, a cap on purchase prices and more. Taxpayers are urged to meet with their tax professionals for end-of-the-year planning. Doing so now can reduce your tax liability and save you money on both state and federal taxes. Expert tax advice is especially necessary when it comes to navigating the ins and outs of this newly expanded homebuyer credit.

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Tax Credits Continue For Homeowners

13. February 2010 · Write a comment · Categories: General Tax · Tags: , ,

The Federal Government has announced that it will be continuing to grant tax credit on energy saving devices this year, as long as the devices are installed and working by December 31, 2010. This extended deadline means that a number of people will be installing better insulation, more efficient heat pumps, new windows, and a host of other improvements this year. Now is the perfect time for you to join in these savings.

First off, you don’t want to wait until the last minute. As the deadline approaches, everyone and their brother is going to be installing all kinds of energy saving devices, so towards the end of the year, you should expect to see these devices get more expensive and see longer waits to have them installed. Besides, going green saves you money, and you’ll be getting the tax credit anyway, so why wait? You can start saving now, and have the same tax credits as people who waited, plus all the money you’ll save on utilities in the meantime.

Of course, many people already knew that you could get tax credit for a more efficient water heater, but did you know that you can have your roof redone? That’s right; certain types of roofing reflect more of the sun’s rays away from your home. Come summer, this will save you a great deal of money on your air conditioning, and you can get a 30% tax credit. You can also replace your windows and doors with the same credit. Upgrades to your heating, ventilation, and air conditioning (HVAC) systems are also given the tax credit.

Here’s the one that blew me away: you can get a tax credit on wood stoves. That’s right; the Federal Government is now willing to give you a tax credit on that fireplace that you’ve always wanted. It will have to meet certain thermal efficiency requirements, of course, but talk about home improvement! The provision also includes pellet stoves, which are more compact than wood stoves and just as cozy in the winter. Of course, the fireplace you install will have to be the real kind – there’s no tax credit on having a natural gas burner with fake logs around it.

There are also tax credits available for people who want to go big, people who are serious about saving the planet and saving money. The installation of a fuel cell generator, wind generator, or solar panel qualifies homeowners for tax credit. If you’ve ever been without electricity because of a winter storm, having an on-site winter or solar system will sound like a very good idea.

2010 is the year to go green.

And remember, Going Green also means SAVING Green!

How the HST Affects Buying a Home

13. February 2010 · Write a comment · Categories: General Tax · Tags: , ,

There has been a lot of confusion about how the newly implemented HST affects the purchase of a new, or used home. Many realtors and brokers are pointing their finger at the HST factor for the recent drop in the real estate market. They say that many people simply do not understand what the HST means to them and they are under the impression that this new tax means a substantial increase in the cost of buying a house.

First of all, it’s probably important to understand what the HST is all about. The Harmonized Sales Tax, or HST, was put into affect on July 1, 2010 in the Canadian provinces of Ontario and British Columbia only. This new tax combines both the federal goods and services tax (of five per cent) with the provincial sales tax, which is seven per cent in British Columbia and eight per cent in Ontario. The HST combines these two single taxes into one. As well, it is being applied to certain goods and services, while remaining exempt from others. This, perhaps, is where most of the confusion lies.

Most items that were tax exempt before, like prescription drugs and groceries, will remain tax-free. Items that were taxed with both the GST and the PST prior to the HST will remain taxed the same. However, the controversy lies in the ‘other’ goods and services that were once only taxed the GST, such as everyday products like haircuts and gasoline. Now, as of July 1, they are HST taxed, meaning they are essentially being taxed both the GST as well as the PST. This has caused a significant rise in everyday essentials. So services such as lawyers for instance, were only subject to GST before July 1 but are now subject to both, meaning the full HST is applied to lawyer’s fees.

When it comes to buying and selling a home, the mortgage fees and banking fees will remain as before, meaning they are still tax-exempt. One difference, however, will be in the real estate commissions, as they are now subject to the full HST instead of only the GST as pre-July 1. Also, new homes in both provinces will be taxed the HST, but are eligible for tax rebates depending on the cost of the new home. In Ontario for instance, a home under 0,000 is eligible for a rebate of 75 per cent of the provincial part of the tax, up to a maximum of ,000.

In British Columbia, homes under 5,000 are subject to a 71.43 per cent tax rebate of the provincial portion of the HST while homes over 5,000 can apply for the maximum rebate of ,250. Something else to factor in is the cost of new appliances, movers, painters and construction workers who are all now on the hook to charge both GST and PST, meaning you, as a consumer, will be fitting the entire HST bill.

Buying a new home may have gotten a little more complicated, or perhaps it has just gotten a lot more expensive for the average person. Being in the market for a new home can be exciting but it something best done with a lot of financial planning.

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Non-Us Citizens Not Obliged To Pay Gambling Winnings Tax-Recover Gambling Taxes Paid

09. February 2010 · Write a comment · Categories: General Tax · Tags: , , , , , , ,

As a non-US citizen, if you win gambling monies while visiting the US, you weren’t obliged to pay the 30 percent tax imposed on the monies. However, if you won over 00, it is likely that you paid the 30 percent tax before even receiving your winnings, which makes it possible that you are entitled to recover gambling taxes you may have paid. Learning how to get your gambling winnings tax back can be quite beneficial to you, especially if you find a refund management company that can assist you in getting this rebate without a lot of hassle and fuss.

Getting your gambling winnings tax rebate involves following the right steps and processes that will prove that you are entitled to recover gambling taxes you have paid. First, you will have to locate your winning slip that shows the amount you won and which casino you were at. If there were taxes taken from the winnings, the slip will represent the taxes paid and will also record the date and time. If you have misplaced this slip, there are online refund management firms that will assist you in obtaining the winning slip in order to recover gambling taxes you paid. Getting your gambling winnings tax rebate can consist of many other forms and a great deal of work on your part, which can be made much easier with the use of a management company.

The next step in getting your gambling winnings tax refund is to qualify for the rebate. This will include proving that you won the gambling money no more than 3 years prior, as well as that you were the legal resident of another country at the time you won. To recover gambling taxes, the IRS is going to make sure that you meet every single eligibility requirement with documented and valid proof. An online refund management company will typically let you know if you are eligible without having to go through a long process. If, in fact, you are eligible, the same firm can provide you with the necessary services to obtain your refund.

The IRS can have very long processes, with wait times that can drive anyone crazy and such tedious methods that it can be both time consuming and discouraging for those that can’t keep up with the IRS-which is most people. For this reason, there are several companies that can become your advocate and get the gambling winnings tax refund for you. They will handle the IRS providing the forms and transferring to the IRS for submission, helping you to recover gambling taxes owed to you.

As there are so many non-US citizens that frequent the US to enjoy the mass of casinos and gambling outlets, there are some that leave with extra money won from a casino, they likely paid gambling winnings tax as a precautionary measure by the IRS. If this is your situation, with these steps and the use of a professional, you can easily and quickly recover gambling taxes due to you.

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