Thinking of buying a new car?

The IRS wants you to know there is a tax advantage to buying a new car, motorcycle, light truck, or motor home, before January 1, 2010, whether you itemize or not. Call your tax accountant for details.

Extended Home Buyer Credit for Repeat Buyers

The IRS wants you to know that, if you are thinking about replacing your current home, you may be eligible for a new credit of up to $6,500!

1. You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010. 2. If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010. 3. For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return. 4. A buyer may qualify for a reduced credit, If the taxpayer lived in the same principal home for any 5 consecutive years during the 8-year period ending on the purchase date of the new home, and the settlement date is after 11/6/09. 5. The maximum credit for this type of buyer is $6,500. Married individuals filing separately are limited to $3,250. 6. People with higher incomes may now qualify. The new law raises income limits for homes purchased after 11/6/09. Full credit is available to singles with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers. 7. The IRS will issue a revised Form 5405 in December, 2009. The new form must be used for homes purchased after 11/6/09 – whether the credit is claimed for 2008 or 2009 – and for all home purchases claimed on 2009 returns. 8. No credit is available if the purchase price of the home exceeds $800,000. 9. The purchaser must be 18 or older on the date of purchase. If married, only one spouse must meet this age requirement. 10. A dependent can't claim the credit.

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Taxable State Tax Refunds

Don't assume your entire state tax refund is taxable just because state/local income taxes were part of your itemized deductions in the previous year. Look up the potential sales tax deduction available to you for the previous year, then complete the worksheet to determine what portion of your state tax refund is taxable.

Prompted by an NATP question.

New Home Buyer Credit for Military Serving oustide the USA

The new home buyer credit is extended for 1 additional year to June 30th, 2011, if you are in the military and serving outside the USA for at least 90 days.

Energy Credit for 2009 and 2010

The IRS wants you to know you can get a larger energy credit than in 2007!

Seven things you need to know!

1. The credit is 30% of cost of qualifying improvements up to $1500 limit for 2009/2010 combined.
   
2. Improvement include insulation, energy-efficient exterior windows, heating and a/c systems.
   
3. "Energy efficient" products must meet higher standards than for the 2007 credit.
   
4. Manufacturers must certify products meet new standards, providing a written statement..
   
5. Qualifying improvements must be put in service between 1/1/2009 and 12/31/2009 inclusive.
   
6. Improvements must be made to the taxpayer's principal residence in the United States.
   
7. Taxpayers must claim the credit on the tax return for the year when the improvements are made.

Extension of 1st Time Home Buyer's Credit

A House and Senate vote is expected next week on an extension of the $8,000 1st Time Home Buyer's Credit. Expect this to be the LAST extension. The only way credits work is if a sense of urgency is created. Contracts would have to be signed by April 30th and the sale closed by June 30th, 2010. There may also be a provision to give a $6,500 tax break to homeowners who have owned a home in 5 consecutive years of the last 8. More later!

Massachusetts drivers' license reminders

Pam Moore, EA, sent the following:

MA RMV announced a free service to sign-up for driver's license renewal reminders. You may choose e-mail, text, or telephone reminder. There are plans to expand reminders to registrations, etc. Smart way to avoid a fine for driving without a license if you forget to renew! Link:
https://secure.rmv.state.ma.us/RMVReminder/intro.aspx.

Proposed Social Security One-Time Payment

Obama asked Congress to approve $250 payments, in 2010, to more than 50 million Social Security recipients who will not get a cost-of-living increase in 2010. The payments would also go to Veterans, Railroad Retirees, and Public Employee retirees who don't receive Social Security.

New Car Sales and Excise Tax Deduction for 2009

The IRS wants you to know:

Taxpayers purchasing new cars, light trucks, motor homes or motorcycles, may qualify for a special sales and excise tax deduction on 2009 tax returns.

New autos must be purchased in 2009 and before January 1, 2010. The deduction is limited to taxes and similar fees paid on up to $49,500 of purchase price. There are income limits to qualify for the deduction.

This deduction is available even if you don't itemize!

Hidden Off-Shore Accounts

You will be pleased to know that IRS has extended the deadline for disclosing hidden off-shore accounts until October 15, 2009!

Sales and Excise Tax Deduction on your 2009 tax return

The IRS wants you to know:

1. State/local sales and excise taxes paid on up to $49,500 of purchase price of each qualifying vehicle are deductible.

2. Qualified motor vehicles include new cars, light trucks, motor homes and motorcycles.

3. To qualify, the new car, light truck and motorcycle must weigh less than 8,501 pounds. Motor homes are not subject to the weight limit.

4. Purchases must occur after between Feb. 17, 2009 and December 31, 2009 inclusive.

5. Taxpayers who buy new motor vehicles in states with no sales tax (AK, DE, HI, MT, NH, OR), may be entitled to deduct other fees or taxes assessed on the purchase. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee.

6. Taxpayers may claim the deduction when filing 2009 returns in 2010 (not on 2008 returns).

7. The deduction can be taken whether one itemizes, or not. Taxpayers who don't itemize will add the additional amount to the standard deduction.

9. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individuals, between $250,000 and $260,000 for joint filers.

Computer technology and 529 plan distributions

The IRS wants you to know: the purchase of computer equipment, technology, internet access, and related services, is an allowable use of 529 plan distributions in 2009 and 2010. The 529 beneficiary must use the equipment, technology, and services while enrolled at an eligible educational institution.

Cash for Clunker Appliances

Thinking of buying a new appliance, air conditioner or furnace? Rebates will be available across the country as part of the Economic Stimulus Plan.

States will write their own rules for the rebates. The Department of Energy will review state plans in October. Money should start coming to purchasers by November. Some states may need extra time to structure their plan.

You don't have to trade-in an old appliance, but the idea is to get rid of the energy-wasting appliances currently in your home or office.

IRS Tax Refund Option in 2010

To make it easier for those who get tax refunds to save, the IRS will allow tax filers in 2010 to recoup their refund by issuing U.S. savings bonds.

More than $10,000 in cash

Generally, any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file Form 8300 with the IRS.

New Address for IRS Estimated Payments

Massachusetts residents: send IRS estimate payments to this new address, effective for the September 15th 2009 and all subsequent payments:

Internal Revenue Service
P.O. Box 37007
Hartford, CT 06176-0007

This address is also used by residents of:

Maine
Maryland
New Hampshire
New Jersey
Pennysylvania
New York
Vermont

Google Caffeine

Compare the upcoming Google Caffeine at http://www.comparecaffeine.com with the current Google search. Love the name!

Casualty Losses in 2009

For 2009, individuals must reduce their casualty and theft losses for personal-use property by $500 instead of $100. This $500 reduction for losses of personal-use property applies to each casualty or theft event.

News for the Unemployed!

Congressman Jim McDermott (D-WA) and 23 co-sponsors have introduced the Emergency Unemployment Compensation Extension Act of 2009 (H.R. 3404) to provide extra weeks of benefits in high unemployment states. Following link is to copy of proposed bill.

www.govtrack.us/congress/billtext.xpd?bill=h111-3404

Rogue creditors limited by MA SJC!

The Massachusetts Supreme Judicial Court has toughened rules for debt collectors effective October 1, 2009. Good news for those at the mercy of rogue creditors! Following is a link to an August 7th, 2009 Boston Globe article.

www.boston.com/business/personalfinance/articles/2009/08/07/sjc_toughens_rules_for_debt_collectors

Reprieve for New Bedford RMV Office

Thanks to Senator Montigny and others, the New Bedford RMV Office will not close as previously announced. It will serve as an express registry office (limited transactions) but this is still good news for those living in the Greater New Bedford area.

Minimum Wage Increase

Federal minimum wage will rise to $7.25 per hour tomorrow, July 24th, 2009. Massachusetts minimum wage is $8.00 per hour (effective January 1, 2008).

Boston Meals and Hotel Taxes

Mayor Menino meets hotel and restaurant industry representatives today to discuss his proposed 2% hotel tax increase (to 14.45% total state and city taxes), and .75% meals tax increase (to 7% total state and city tax), to be effective October 1, 2009. The Boston City Council will decide next week whether or not to approve the rate hike.

Cape Cod Businessman Guilty in Tax Fraud Case

Article from Cape Cod Times about Cape Cod resident who didn't declare $500,000 in income!

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20090722/NEWS/907220325&emailAFriend=1

New Bedford Area Unemployment

Unemployment in the New Bedford area rose to 13.6% in June. Compare it to 8.1% in June 2008. Towns included are Acushnet, Dartmouth, Fairhaven, Freetown, Gosnold, Mattapoisett, New Bedford, and Rochester. Economists predict the rate will not begin to fall until June 2010!

Plan to Test Elderly Drivers more often In Massachusetts

From the Insurance Institute for Highway Safety:

“There isn’t much evidence that elderly drivers are a big menace to other people on the road. Looking at per-licensed-driver rates, drivers in the 30- to 59-year-old category are much more likely to kill other motorists, pedestrians, and bicyclists than elderly drivers."

So should we plan to retest that group as well?

Owe Tax to Louisiana or Delaware?

Both Louisiana and Delaware have scheduled a tax amnesty program for September 1 through October 31, 2009.

Summer jobs and taxes

The IRS wants students to know some things about summer jobs!

1. Students must fill out a W-4 when starting a new job. A W-4 is used by employers to determine the income tax that will be withheld from paychecks. Students with multiple summer jobs should make sure all employers are withholding enough taxes to cover the total income tax liability.

2. Tips received are taxable income.

3. Students do odd jobs to make extra cash. Earnings you receive from self-employment are subject to income tax. This includes income from jobs like baby-sitting and lawn mowing!

4. If you have net earnings of $400 or more from self-employment, you have to pay self-employment tax. This tax pays for your benefits under the Social Security system.

5. Subsistence allowances paid to ROTC students participating in advanced training are not taxable. Active duty pay – such as pay received during summer advanced camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are a direct seller and treated as self-employed for federal tax purposes if you meet the following conditions:

You are in the business of delivering newspapers.
Your pay for these services directly relates to sales rather than to the number of hours worked.
You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.

7. Generally, newspaper carriers or distributors under age 18 are not subject to self-employment tax.

Summertime Child and Dependent Day Care

1. The cost of sending your child or dependent to a day camp may count as an expense towards your child and dependent care credit, even if the camp specializes in a particular sport or activity.

2. The overnight cost of sending your child or dependent to an overnight camp is NOT considered a work related expense and will NOT count towards your child and dependent care credit. Get the camp to separately state the care aspect of the daytime cost on the invoice.

The following publication will help with other day-care questions.

IRS Publication 503

More on the NH vs. MA Sales Tax Issue

Yesterday, NH's governor signed a bill that protects its retailers from having to report sales to the home states of out-of-state buyers.

Now MA will have to prove goods or services bought in NH are being used, stored, or consumed in MA. MA DOR will have to go after MA residents instead of NH retailers. That puts the burden back where it belongs, with the state that is imposing the tax.

MA residents still have to declare these goods/services on their personal tax returns and pay use tax to MA - not often done, and little enforced.

The NH bill comes after MA attempted to collect $108,000 in "use" taxes from Town Fair Tire for sales it made to MA customers at its NH stores.

New Mailing Address for 1040 Series

Massachusetts residents:

As of July 1, 2009, there's a new address for mailing 1040 series returns, including amendments (gone is the old and dearly loved Andover address!):

Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0002

Massachusetts RMV License Renewals

Some good news from Massachusetts RMV: The Registry will begin offering customers the opportunity to go online and request notification by e-mail or telephone before licenses expire.

The Registry stopped mailing reminder notices last year. The move was designed to save $800,000 annually, but sparked complaints from drivers frustrated by the lack of notification.

Massachusetts RMV Office Closings

Not only will you pay more sales tax on your auto purchase after August 1st, but RMV is closing some offices and opening others. The 5 new offices will open in state buildings, saving rent expenses. As leases expire, closings are scheduled between now and December.

New Branches:

MTA Charlton Turnpike Center (full service)
MTA Natick Service Plaza (express)
MHD Canal Visitor Center (express)
MHD Peabody (express)
Boston TBD (full service)

Branches Closing:

Lowell (closing July)
North Attleboro
Cambridgeside Galleria
New Bedford (closing July 24th)
Springfield (Eastfield Mall)
Southbridge
Framingham
Falmouth
Eastham (one day)
Beverly
Boston (Chinatown)

Taxachusetts or Not!

What % of your income goes to income, sales, real estate, and personal property taxes?

Many states and municipalities are currently raising taxes (fact of life). California is again issuing IOU's for state income tax refunds!

Use the link below to see your 2008 tax burden. Massachusetts ranks 23rd. Alaska has the least, thanks to oil, Connecticut the greatest, but also has the highest per capita income in the nation, just ahead of Massachusetts. So given our 23rd place tax burden, and our 2nd place per capita income ranking, let's whine about the weather instead.

http://www.retirementliving.com/tax_burden_2008.pdf

MA Sales Tax Increase Delayed Start Date

The sales tax rate increase will go into effect August 1st, rather than July 1st as previously announced. New rate will be 6.25%. That gives us all of July to shop at the lower 5% rate!

QuickBooks Help

Do you struggle at year-end to get your records in some recognizable order so you can file your tax returns?

Patrick McKrill of Ameritax Waltham will help you organize, reconstruct, or keep your books up-to-date and shovel-ready for your tax accountant. Call him for an appointment: (857) 205-6418 or e-mail pmckrill@ameritaxpros.com.

Hurricane Season 2009 and the IRS

The IRS suggests we get ready for Hurricane Season 2009 by backing up our tax records, and updating our Belongings Inventory. Publication 584 helps with the task!

http://www.irs.gov/pub/irs-pdf/p598.pdf

Cash for Clunkers

Want to know more about the "Cash for Clunkers" program?

Trade-ins can get no more than 18 mpg, built in 1984 or later, owned and insured by the buyer for a year/more. Refer to the EPA's combined city-highway rating (check here for a guide).

Buyers get a $3,500 voucher for the old car getting at least 22 mpg. Voucher increases to $4,500 if the new car gets 10 mpg more than the trade-in. Buyers can use the voucher toward a 5-year lease. Vouchers are available for small/large light-duty trucks.

IRS E@lert notes the lack of means testing (higher earners aren't excluded). Dealers participating in the program will get voucher payments directly from the Department of Treasury. Vouchers will not be considered income, the traded-in vehicle can't be resold or used for parts, and the MSRP of the new vehicle can't exceed $45,000.

Ameritax Waltham

A warm welcome to Patrick McKrill and our Ameritax Waltham office!

Patrick has a wealth of experience in paralegal work, QuickBooks accounting, and specializes in Chapter 11 monthly bankruptcy trustee reporting.

Visit our partner www.greywolfllc.com for Patrick's other services.

Alaska, Delaware, Hawaii, Montana, New Hampshire or Oregon?

The IRS has clarified what you may deduct in lieu of sales tax on your tax return.

Taxpayers in these states may deduct other fees or taxes imposed by state and/or local governments (purchase between February 17th and December 31st inclusive).

The qualifying fees or taxes must be assessed on the purchase, and based on the sales price or per unit fee. Congress intended these fees or taxes to qualify for this above-the-line deduction.

"This tax break is available for people purchasing a new car this year. That can include people in states without a sales tax,” said IRS Commissioner Doug Shulman. “This means more people can take advantage of this deduction when they file tax returns next year.”

The deduction is limited to fees or taxes paid on up to $49,500 purchase price for a qualified new car, light truck, motor home or motorcycle.

See the following link for more information:

http://www.irs.gov/newsroom/article/0,,id=206633,00.html

2009 $8000 Home Buyer's Tax Credit

HUD has issued Mortgagee Letter 2009-15 outlining official guidance on how to use all/part of your tax year 2009 $8,000 Home Buyer's Tax Credit for part of your down-payment, or to help pay closing costs. You have to make the first 3.5% of the down-payment before you can use up to $8,000 for the remainder. Talk to your bank or go to:

http://www.hud.gov/news/release.cfm?content=pr09-072.cfm for more information.

To see if you qualify for the Home Buyer's Tax Credit, read IRS Form 5405 instructions at:

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

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Hawaii Tax Amnesty

Hawaii has an ongoing 30-day tax amnesty ending June 26th, 2009 should you happen to owe taxes to that state. Penalties will be set aside during that time, and statutory interest will be halved to 4%. So if you should be lucky enough to owe Hawaii, now's the time to file and pay!

Time To Clean Up the Tax Preparation Industry?

IRS Launches Tax Return Preparer Review; Recommendations to Improve Compliance Expected by Year End

IR-2009-57, June 4, 2009

WASHINGTON — IRS Commissioner Doug Shulman announced today that by the end of 2009, he will propose a comprehensive set of recommendations to help the Internal Revenue Service better leverage the tax return preparer community with the twin goals of increasing taxpayer compliance and ensuring uniform and high ethical standards of conduct for tax preparers.
Some of the potential recommendations could focus on a new model for the regulation of tax return preparers; service and outreach for return preparers; education and training of return preparers; and enforcement related to return preparer misconduct. The Commissioner will submit recommendations to the Treasury Secretary and the President by the end of the year.

“Tax return preparers help Americans with one of their biggest financial transactions each year. We must ensure that all preparers are ethical, provide good service and are qualified,” Shulman said. “At the end the day, tax preparers and the associated industry must be part of our overall game plan to strengthen the integrity of the tax system.”

The first part of this groundbreaking effort will involve fact finding and receiving input from a large and diverse constituent community that includes those that are licensed by state and federal authorities — such as enrolled agents, lawyers and accountants — as well as unlicensed tax preparers and software vendors. The effort will also seek input and dialog with consumer groups and taxpayers.

“We plan to have a transparent and open dialogue about the issues,” Shulman said. “At this early and critical stage of the process, we need to hear from the broadest possible range of stakeholders.”

Later this year, the IRS plans to hold a number of open meetings in Washington and around the country with constituent groups.

More information, including schedules and agendas for public meetings, will be posted on the “Tax Professionals” page on this Web site and will be communicated to stakeholder groups.

IRS Fact Sheet for Business Owners

Media Relations Office, Washington, D.C.

Media Contact: 202.622.4000
Public Contact: 800.829.1040

Business Provisions of the American Recovery and Reinvestment Act of 2009 (ARRA)

2009-11, May 2009

The American Recovery and Reinvestment Act of 2009 (ARRA) provides a number of tax incentives for businesses. Most of the tax incentives for businesses are found in Subtitle C of Division B, Title I of ARRA. In addition, some of the energy incentives, contained in Subtitle B, [and a subsidy for premiums for COBRA health continuation coverage in Title III of Division B,] provide tax relief for businesses.

Here is a summary of the key ARRA provisions, in numerical order, which may impact businesses, large and small:

Tax Incentives for Business (Subtitle C)

50-Percent Special Depreciation Allowance/Bonus Depreciation (Section 1201)

The new law extends the 50-percent special depreciation allowance that was available for 2008 acquisitions to acquisitions of qualifying property in 2009. This provision enables businesses to deduct half the adjusted basis of qualifying property in the year it is placed in service. The extension applies to qualifying property placed in service in 2009 (2010 for long production period property and certain transportation property).

Acceleration of Certain Business Credits (Section 1201)

Corporations that acquire eligible business property have an additional year to accelerate certain tax credits in lieu of a bonus depreciation deduction. The extension applies to eligible business property placed in service in 2009 (2010 for long production period property and certain transportation property).

Section 179 Expensing (Section 1202)

During 2009, small businesses can elect to expense up to $250,000 of the cost of qualifying property under section 179. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sports utility vehicles. The $250,000 amount provided under the new law is reduced if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000.

Expanded Net Operating Loss Carryback (Section 1211)

Many small businesses that had expenses exceeding their income for 2008 can choose to carry the loss back for up to five years, instead of the usual two years. For small businesses that were profitable in the past but lost money in 2008, this could mean a special tax refund. The option is available for a small business that has no more than an average of $15 million in gross receipts over a three-year period. This option is available for most eligible taxpayers for a limited time. A corporation that operates on a calendar-year basis, for example, must file a claim by Sept. 15, 2009. For eligible individuals, the deadline is Oct. 15, 2009.

Estimated Tax Requirement Modified (Section 1212)

Many individual small business taxpayers may be able to defer until the end of the year paying a larger part of their 2009 tax obligation. For 2009, eligible individuals can make quarterly estimated tax payments equal to 90 percent of their 2009 tax or 90 percent of their 2008 tax, whichever is less. Individuals qualify if they received more than half of their gross income from their small business in 2008 and meet other requirements. For details, see Publication 505.

Discharge of Business Indebtedness (Section 1231)

The act allows certain businesses that repurchase specific types of debt in 2009 and 2010 to pay taxes on cancellation of debt income over a five year period, starting with tax year 2014.

Exclusion of Gain on the Sale of Certain Small Business Stock (Section 1241)

ARRA provides an extra incentive for investment in small businesses. The new law provides an increase in the Section 1202 exclusion from 50 percent (60 percent for enterprise zone qualified business entity stock) to 75 percent for any gain from the sale or exchange of qualified small business stock acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. This provision is limited to individual investors and not available to corporations.

S-Corporation Built-in Gains Holding Period (Section 1251)

For tax years beginning in either 2009 or 2010, the new law eliminates the corporate level tax on the built-in gains of an S-Corporation that converted from C-corporation status at least seven tax years before the current tax year.

COBRA PREMIUM ASSISTANCE (title III)

COBRA: Health Insurance Continuation Subsidy (Section 3001)

Under the new law, employees who were involuntarily terminated after Aug. 31, 2008 and before Jan. 1, 2010, and who elect COBRA health continuation coverage, are entitled to receive a 65 percent subsidy on their COBRA premiums. For periods of COBRA coverage beginning after Feb. 16, 2009, the involuntarily terminated employee must be treated as having paid the required COBRA premium if the individual pays 35 percent of the premium amount. The employer (or, in some cases, multiemployer health plan or insurer) may recover the other 65 percent by taking the subsidy amount as a credit on their quarterly employment tax return.

Energy Incentives (Subtitle B)

Extension of Renewable Energy Production Tax Credit (Section 1101)

The new law generally extends the “eligibility dates” of a tax credit for business facilities producing electricity from wind, closed-loop biomass, open-loop biomass, geothermal energy, municipal solid waste, qualified hydropower and marine and hydrokinetic renewable energy. The new law extends the "placed in service date” for wind facilities to Dec. 31, 2012. For the other facilities, the placed-in-service date was extended from Dec. 31, 2010 (Dec. 31, 2011 in the case of marine and hydrokinetic renewable energy facilities) to Dec. 31, 2013.

Election of Investment Credit in Lieu of Production Credit (Section 1102)

Businesses that place in service facilities that produce electricity from wind and some other renewable resources after Dec. 31, 2008 can choose either the energy investment tax credit, which generally provides a 30 percent tax credit for investments in energy projects or the production tax credit, which can provide a credit of up to 2.1 cents per kilowatt-hour for electricity produced from renewable sources. A business may not claim both credits for the same facility.

Repeal of Certain Limits on Business Credits for Renewable Energy Property (Section 1103):

The new law repeals the $4,000 limit on the 30 percent tax credit for small wind energy property and the limitation on property financed by subsidized energy financing. The repeal applies to property placed in service after Dec. 31, 2008.

Coordination with Renewable Energy Grants (Section 1104): Business taxpayers also can apply for a grant instead of claiming either the energy investment tax credit or the renewable energy production tax credit for property placed in service in 2009 or 2010. In some cases, if construction begins in 2009 or 2010, the grant can be claimed for energy investment credit property placed in service through 2016, and for qualified renewable energy facilities, the grant is 30 percent of the investment in the facility and the property must be placed in service before 2014 (2013 for wind facilities).

New Clean Renewable Energy Bonds (Section 1111)

Certain State utilities, governmental entities and cooperatives that initiate projects to generate electricity from renewable sources (for example wind and solar) can finance those projects through qualified tax credit bonds. The new law increases the amount of funds available to issue new clean renewable energy bonds from the one-time national limit of $800 million to $2.4 billion.

Temporary Increase in Credit for Alternative Fuel Vehicle Refueling Property (Section 1123):

The new law modifies the credit rate and limit amounts for property placed in service in 2009 and 2010. Qualified property (other than property relating to hydrogen) is now eligible for a 50 percent credit, and the per-location limit increases to $50,000 for business property (increases to $2,000 for other/residential locations). Property relating to hydrogen keeps the 30 percent rate as before, but the per-business location limit rises to $200,000.

Increased Exclusion Amount for Commuter Transit Benefits and Transit Passes (Section 1151):

The new law increased to $230 the monthly tax exclusion for employer-provided commuter transportation and transit pass benefits, effective from March through the end of 2009. Employers can generally deduct these qualified transportation fringe benefits as a business expense. These benefits are also excluded from an employee's wages for income tax and payroll tax purposes. Because of this exclusion from employee wages, the employer can reduce the amount paid in employment taxes.

A Side Effect of Becoming Engaged!

One way to get a non-filing self-employed contractor to file back tax returns is to have him/her get engaged! I have had more than one fiancée drag the offending “intended” in the door by his ear, stating "No marriage until this tax situation is straightened out!"

Submitted by Pamela Foley Moore, E.A.

Graduation Congratulations!

Congratulations to twins Alicia and Laura Giannotti, daughters of our own Joe Giannotti (Worcester Ameritax office), as they graduate from high school this weekend. Alicia is heading for Wheelock and Laura for Emmanuel. We wish them the very best for a bright future!

Work Opportunity Tax Credit

Tax Credit Guidance to Businesses Hiring Unemployed Veterans and Certain Youth

IR-2009-55, May 28, 2009

Businesses planning to claim the newly-expanded work opportunity tax credit (WOTC) for eligible unemployed veterans and unskilled younger workers hired during the first part of 2009 have until Aug. 17 to request the certification required for these workers, according to the Internal Revenue Service.

Newly-revised Form 8850, now available on IRS.gov, is used by employers to request certification from their state workforce agency. The American Recovery and Reinvestment Act, enacted in February, added unemployed veterans returning to civilian life and “disconnected youth” to the list of groups covered by the credit. Though eligible unemployed veterans and disconnected youth who begin work anytime during 2009 or 2010 may qualify a business for the credit, certification by the state workforce agency is required.

In general, an unemployed veteran is a person discharged or released from the military during the five years preceding the hiring date who received unemployment benefits for at least four weeks during the one-year period ending on the hiring date. A “disconnected youth” is a person age 16 to 24 on the hiring date who has not been regularly employed or attending school and who meets other requirements.

The WOTC offers tax savings to businesses that hire workers belonging to any of 12 targeted groups, including unemployed veterans and disconnected youth. The oth er 10 include people ages 18 to 39 living in designated communities in 43 states and the District of Columbia, Hurricane Katrina employees, recipients of various types of public assistance, and certain veterans, summer youth workers and ex-felons. The instructions for Form 8850 detail the requirements for each of these groups.

The certification requirement applies to all groups of workers except employees who were Hurricane Katrina victims. Normally, a business must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But under a special rule, businesses have until Aug. 17, 2009, to file this form for unemployed veterans and disconnected youth who begin work on or after Jan. 1, 2009 and before July 17, 2009. Notice 2009-28, posted today on IRS.gov, and the instructions for Form 8850 provide details on this special rule.

Wendy W. Campbell
Senior Stakeholder Liaison
Internal Revenue Service
15 New Sudbury Street
JFK P.O. Box 9112, Stop 21300
Boston, MA 02203

Telephone: 617-316-2486< /SPAN>
Fax: 617-316-2713

Late Filing Tax Returns?

I just prepared 9 years worth of tax returns for a non-compliant commercial fisherman! That's a record for this year in our offices! If you need help in becoming compliant, contact me or one of our other offices.

Buying a new car in 2009?

If you are a Massacushetts resident and plan to buy a new car soon, June is the month!

Sales tax on new vehicles will rise to 6.25% on July 1st, 2009. You will be able to deduct sales tax on your 2009 income tax return (some income and deduction limits) whether or not you itemize.

2009 Graduations

Congratulations to Joann Pina as she graduates today from UMass Dartmouth with a B.S. in Finance, minor in Accounting! Well done - we're very proud of you!

Decoration Day

Memorial Day was originally called Decoration Day and was celebrated on May 30th!

From General Orders: "Let us, then, at the time appointed, gather around their sacred remains, and garland the passionless mounds above them with choicest flowers of springtime; let us raise above them the dear old flag they saved; let us in this solemn presence renew our pledge to aid and assist those whom they have left among us a sacred charge upon the Nation's gratitude—the soldier's and sailor's widow and orphan."

It is a pity that, while we decorate the graves and raise the flag, we do little to honor the sacred charge to aid the widow and orphan!

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