The tax relief act guide has launched exclusive funding scheme and it is offered to people with no credit check to avoid foreclosure income. The primary goal behind it is to manage tax related issues by using the fund to pay off the tax debt. The debt laden people will get tax relaxation under this new plan that will help to manage their catastrophic financial situation. You can opt for debt settlement and utilize the fund to pay off the debt.

The tax specialists can negotiate on your behalf with the IRS and offer best solution for your tax debt according to your financial situation. The specialist’s deft knowledge on tax law will help you deal with the crisis by lifting the interest and penalty charges on the owed amount.

You need to apply for the fund by filling the online application form and it requires no credit check. The tax attorney will guide you to avoid wage garnishment and penalty imposed on the obligation. You need to provide income certificate so that the tax attorney can take appropriate action.

It can be a difficult process to deal with the IRS so ensure that the tax attorney is experienced and competent in his work. You can use the fund to pay off your tax debt otherwise your property can be seized. When people failed to pay off the tax debt then the debt can be paid off under installment agreement. The penalty charges and the interest on the principal balance will be reduced, thereby making it affordable to pay off.    

The tax relief helps people who are crushed under overwhelming tax debt and guide to regain control over their financial situation. You can eradicate the tax privileges, stop wage garnishment, seizure of property if you get assistance from tax relief companies.

Therefore, you can take help from tax relief guide act and get attain financial independence. You need to be careful so that you do not get into the trap of debt in future.

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Help with 2010 Federal Income Tax Issues

Tax rate brackets for 2010 remains unchanged or has changed slightly, depending on your perspective, the IRS recently announced.  Perhaps because of the low economy as well as the inflation, only marginal changes have been made from the 2009 tax bracket.  CPI or Consumer Price Index data that the Bureau of Labor Statistics released is used by the IRS to calculate these tax parameters.   These has also been reviewed by various tax experts and firms and they have come up with a consensus on how much these tax exceptions are, what the standard deductions are and of course the income brackets are also considered and these figures will barely change in the following year.  Although there are a few notable change that will take place next year.  This will help in your tax planning for this coming tax season and employer setting withholding for 2010. Here is some of what this coming tax season will generally look like.

Personal exemption remains unchanged at $3,650 USD as well as the $5,700/$11,400 USD standard deductions for general taxpayers, perhaps except for the $50 USD increase for payers with the head of household status.  Around 2 out 3 taxpayers choose standard deductions in filing their returns rather than itemized deductions. These itemized deductions include mortgage interest, state and local taxes and charitable contributions.

Because of only around 0.2% inflation level, most employees will not receive as high a take home pay in January as they experienced the previous years because of the automatic adjustments in inflation.

Tax bracket thresholds will all see very little change this coming tax season. Tax for married couples filing jointly is up from $67,900 USD to $68,000 USD, their income threshold bracket that separates 15% to the 25% bracket is up only by a very little margin.

The gift tax exclusion given annually won’t change as well.  It remains pegged at $13,000 USD. In essence anyone can give away as much as $13,000 without tax considerations.  Wealthy people take advantage of this benefit as part of their strategy in their estate planning.  This can be done by paying for one’s tuition fee, medical bills and the likes, although this must be sent directly to the provider involved.

Your tax bill is lowered by indexing brackets when inflation is high and by including your income in a lower bracket, a good example is the 15% instead of the 25% bracket.  This lack of change makes for a level playing field for many taxpayers although high income earners can benefit from this due to “stealth taxes” like limits on itemized tax deductions as well as personal exemptions.

Savings on tax can vary widely depending on inflation adjustments and the circumstances of the individual involved. There is generally very little change with the tax payments this year compared to the previous years, only around $12.50 for $100,000 joint married couple and $6.25 for single individual.

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Retirement Savings

Exceptions to Avoid Early Distribution Penalty

Hopefully, each individual is saving money for his or her retirement. We keep our savings in either the IRA or 401k account until we reach the age of 59 ½ when they can withdraw from the account and use the money for their daily expenses when we retire from work. This is the ideal scenario, but sometimes, there comes a time when we need the money and withdraw from our retirement plan before reaching the minimum age or retirement age. When this happens, early distribution takes place and the government imposes a 10% penalty for the early distribution. The contribution for the said retirement plan directly comes from the taxpayer’s paycheck before withholding the tax or it can be deducted from the paycheck as part of the tax return for IRA contributions.

The 10% penalty for early distribution aims to discourage tax payers from using their retirement money before they retire. The early distribution is also considered as part of an income for the year thus income tax is applicable to it.

As with all taxes, the IRS gives exemptions to those who withdraw from their retirement plan and there are different sets of rules and exemptions for those who are under the IRA and those who are under the 401k.

Generally, taxpayers who withdraw from their retirement plan are exempted if the taxpayer is disabled, if the retirement plan or account was given to you as beneficiary of the deceased plan holder, the distribution was used to pay for an IRS levy, withdrawn by qualified reservists when the taxpayer reaches 55 years old, or the money is used for annuity. These exemptions eliminate the penalty but the distribution is still considered as an added income, therefore you should pay the necessary added income tax for it.

For those who have accounts deposited at the IRA, the 10% penalty is waived if the taxpayer use the money for building or acquiring the taxpayer’s house, paying for college tuition fee and medical expenses of the taxpayer if he is unemployed at the time. If the taxpayer withdrew an amount which exceeds the expenses for the exemption, the amount in excess will have a tax with 10% penalty.

The 401k participants also have exemptions that are exclusively applicable to 401k participants only. The taxpayer can withdraw money and the 10% penalty will be waived if the money is to be used for paying excess contributions. The tax payer can also apply for loans using their 401k account. If the loan was approved by the 401k, the taxpayer could borrow as much as 50% of their account balance and it should be paid within 5 years unless the money is used to buy the taxpayer’s house. The loan is exempted from the penalty as long as it is fully paid within 5 years.

If in case you’ve paid an incorrect penalty for distributions, you can file for a re-computation using the form 5329 and it can be filed not later than 3 years after the due date. When you file for re-computation, you must indicate the tax year that the inappropriate penalty was reflected. The IRS will do the necessary steps to update your record.

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Expanded Standard Deductions Puts More Money Back in Your Pockets

Saving on Taxes in the Long Run

President Obama is taking steps in helping the people he signed new laws on taxes and added new provisions so that people would pay less tax. One of the changes that he made is expanding the standard deduction. Started in 2009, people could save on expanded standard deduction as compared to itemized deduction. The expanded standard deduction covers property taxes, sales taxes and other discounts if the taxpayer is an elderly or blind.

There are instances when the itemized deduction appears to be higher than the expanded standard deduction. The taxpayer should compute using both the itemized deduction and the expanded standard deduction, see which among the two calculations work better for him and could save him some money. The difference might be small, but it’s still money worth saving.

To be able to see the difference between the amount that you are going to pay for the expanded standard deduction and the itemized deduction, you must compute the tax using two different calculations. The method for the computation is the same but the result would be different.

First, try comparing the total expanded standard deduction from the total itemized deduction then multiply the difference to your marginal bracket.

Second, compute your state income tax refund using the expanded standard deduction and make another computation using the itemized deduction. If you use the itemized deduction, the state refund this year would be the taxable income on next year’s federal tax. Multiply your state refund this year to your marginal federal bracket. The end result would be the additional tax that you are going to pay for the following year.

Lastly, net your federal tax savings by using itemized deductions and compare this from the state refund increase.

By comparing the different computations, you would be able to see which among the expanded standard deduction and the itemized deduction works best for you and enables you to pay lesser tax. You can also download Schedule L, which uses the expanded standard deduction and compare it to Schedule A, which uses the itemized deduction, you will see that Schedule A is longer than Schedule L but Schedule A might be better, depending on the situation, the sum of your deductions and your tax bracket.

You might have a bigger refund if you itemize all your deductions. But look at how much you are going to save if you do not include your state refund on the following year’s income tax return. Itemized deduction is a short term solution while the expanded standard deduction is a long term solution in paying lesser tax. If you use both the expanded standard deduction and the itemized deduction for the computation, and compute these taxes in a span of 5 years, you’ll see the difference between the two deductions. So take advantage of paying lesser tax and recognize the big savings that you are going to save. This is legal and you won’t get sued for it.

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Energy Efficiency Can Equal Tax Credits

New Credit for the Environment-Friendly Homeowners

The U.S. government is coming up with new credits to help the citizens improve their way of living one is the Energy Tax Credit. Actually, this credit is not totally new but was revised for the benefit of the homeowners and the environment.

This is meant for home improvements that aim to lessen the electricity bill. This way, homeowners are encouraged to be eco-friendly thus helping save the environment. The renovations and repairs should be done and completed before the due date and it should have an environment-friendly factor and this means that not all home improvements are qualified for the credit.

It also gives a 30% rebate from the amount spent on certain types of doors, windows and lighting fixtures that are included in the Energy star tax credit. This, however, is only valid for the year of purchase only.

Energy Tax Credit Scope

Being a homeowner is not limited to owning houses only. Those who own condos and co-ops are also considered as homeowners and they are also included in the credit, regardless of their income bracket. Some homeowners may even get federal tax benefits apart from the rebates.

Homeowners who bought certain types of doors and windows that meet the requirements of the Energy Star will be given rebates, provided their date of purchase is from January 4, 2010 onwards.

Utility companies could also give discounts to homeowners who have certain appliances that are included in the list of environment-friendly products

Energy Tax Credit Amendment

This is the combination of the Energy Policy Act of 2005, which was amended in 2008, and the American Recovery and Reinvestment Act of 2009. This was signed by President Obama and it has more coverage than when the law was implemented in 1995 because President Obama aims to lessen the harmful effects of appliances and vehicles to the environment. This new law is beneficial for the homeowners because they have more credits if they use environment-friendly products

Products and appliances that qualify for the credit and are bought from January 1, 2009 to December 31, 2010 have a 30% rebate. These products and appliances should have a certification from the manufacturer and it should contain the product’s code.

Energy Tax Credit Qualifications

To be able to qualify for the credit, the home should be a primary residence. The construction of the house is not qualified but renovations that are done from 2009 to 2010 are qualified for the 30% rebate.

The renovations and repairs could cost up to $1,500.00 and the rebate can only be claimed once. Such renovations, repairs and appliances include asphalt or metal roof, biomass stoves, insulation, sliding glass doors, water heaters, storm doors and storm windows.

The credit also cover repairs of vacation houses or secondary houses with no credit limit and the credit can be claimed every year, provided that it consist of solar panels, solar water heater, geothermal heat pumps or wind energy systems.

Fuel cells could have a tax rebate if it was installed during the construction of the primary residence and not a vacation home. The construction should be done from 2009 to 2010.

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Revisions and Adjustments

The Child Tax Credit is applicable to taxpayers who have a dependent or dependents that is or are living with the taxpayer. The said dependent should be below 17 years of age by the end of the tax year.

Child Tax Qualifications

There are qualifications and requirements that should be met and submitted before the taxpayer can claim it. There are separate requirements for the child, the taxpayer should meet the qualifications and the credit limit should also be taken into consideration. The rules in dependency exemption also apply in the CTC. The taxpayer who is qualified to claim the CTC should also follow the same rules. The only difference is that the child should be below 17 years old before December 31 of the current year and the child can be the taxpayer’s own child, adopted child, foster child, stepchild, brother or sister, stepbrother or stepsister or even the taxpayer’s own grandchild. The child must be living with the taxpayer for more than 6 months and the child should not be self-supporting. Most importantly, the child should also be a resident or a citizen of the United States.

As for the credit limit, the taxpayer could claim $1,000 per child as stated under the regulations of the new CTC. It also depends on the tax liability, filing status and the taxpayer’s modified adjusted gross income. If the taxpayer is single and has a modified adjusted gross income that reaches $75,000, the CTC is automatically void. If the taxpayer is married, the taxpayer and the spouse could file for either a joint or separate income tax. For joint filers, the CTC is cancelled if the modified adjusted gross income exceeds $110,000. As for separate filers, if their modified gross income reaches $55,000, the CTC is also cancelled.

In cases where the credit is greater than the liability, the taxpayer can get a refund and this is known as “additional” Child Tax Credit or ACTC.

The Recovery Act

This act revises the qualifications for the CTC. It broadens the scope of eligibility by decreasing the minimum income bracket of the taxpayer from $12,550 to $3,000 so that more taxpayers can claim their CTC.

Other Option for Those Who Are Not Qualified for CTC

If the taxpayer is not qualified to get the CTC, then the taxpayer can apply for ACTC. This enables the taxpayer to decrease his tax liability. When this happens, the taxpayer can even get a refund. To be able to qualify for the ACTC, the taxpayer should meet the requirements of the regular CTC, the tax liability should be less than the allowed CTC, and the taxpayer should have an income of more than $11,750.

For the computation and additional limitations under the ACTC, you can read the IRS publication 972.

CTC is a good way to lessen your tax and even get a refund. All you have to do is to qualify for the CTC and submit all the requirements. This way, you could save money and put it to better use.

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Tax Cut for Uncle Sam

Each business or investment falls in either one of these tax categories, namely the capital gain and the ordinary tax. Businessmen who do not know which category do their business falls under opt to have both. This is a disadvantage because they might be paying more than what they should actually pay for.

Determining Difference Between Ordinary and  Capital Gain Taxes

If you sell an asset or an investment like a house, dividend or business to gain profit, capital gain is applied. But if your business earned money through gaining interest, then ordinary tax is applied.

Capital gain only applies when you sold the business or asset to a price which is higher than the asset’s adjusted tax basis. However, if the said asset is given to you as a gift or inheritance and you sold it, a different set of rules is applicable to it.

Capital Gain Tax Computation

The amount that you’re going to pay depends on your marginal bracket, the type of asset that was sold and how long you own the asset or investment. If you own the asset for less than one year, then it is considered as short term gain thus ordinary tax is applied. But if you own the asset for more than one year, then it is considered as long term capital gain, thus capital gain is applied.

The amount of capital gain is also dependent on your bracket. If you belong to a bracket that is higher than 15%, the rate is 15%. But if you belong to the 10% and 15% bracket, the rate is 5%. This rate applies to all sales and transactions done from May 6, 2003 to December 31, 2008.

Businessmen prefer to pay capital gain because it has a lesser rate. Capital gain rates range from 5% to 28% while the ordinary rate is 35%.

There are instances when selling the asset that you owned for more than a year could place you in a higher bracket. If this happens, you could still pay for a portion of the asset using capital gain at the 5% bracket, but the remaining portion of the taxable asset should be paid using the 15% rate.

Using the “netting rules” in computing for the capital gain taxes

Short-term capital gains and losses are netted with each other while long-term gains and losses are also netted against each other using another set of rules. When the net short-term gains or losses as well as the net long-term gains or losses are computed, these nets are netted against each other using a standard formula. All these rules and formulas are collectively known as the “netting rules”.

When the capital losses are netted against the gains, the excess of which could be as high as $3,000 and it could be deducted to the ordinary income of each year. The unused capital losses are carried forward to the following year.

If you intend to make lots of money, you should know when to sell your assets and the proper tax that applies to it.

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Keep your retirement funds safely in your pocket.

Exceptions to Avoid Early Distribution Penalty

Each individual is saving money for his or her retirement. They keep their savings in either the IRA or 401k account until they reach the age of 59 ½ when they can withdraw from the account and use the money for their daily expenses when they retire from work. This is the ideal scenario, but sometimes, there comes a time when people need the money and withdraw from their retirement plan before they reach their retirement age.

When this happens, early distribution takes place and the government imposes a 10% penalty for the early distribution. The contribution for the said retirement plan directly comes from the taxpayer’s paycheck before withholding the tax or it can be deducted from the paycheck as part of the tax return for IRA contributions.

The 10% penalty for early distribution aims to discourage tax payers from using their retirement money before they retire. The early distribution is also considered as part of an income for the year thus income tax is applicable to it.

As with all taxes, the IRS gives exemptions to those who withdraw from their retirement plan and there are different sets of rules and exemptions for those who are under the IRA and those who are under the 401k.

Generally, taxpayers who withdraw from their retirement plan are exempted if the taxpayer is disabled, if the retirement plan or account was given to you as beneficiary of the deceased plan holder, the distribution was used to pay for an IRS levy, withdrawn by qualified reservists when the taxpayer reaches 55 years old, or the money is used for annuity. These exemptions eliminate the penalty but the distribution is still considered as an added income, therefore you should pay the necessary added income tax for it.

For those who have accounts deposited at the IRA, the 10% penalty is waived if the taxpayer use the money for building or acquiring the taxpayer’s house, paying for college tuition fee and medical expenses of the taxpayer if he is unemployed at the time. If the taxpayer withdrew an amount which exceeds the expenses for the exemption, the amount in excess will have a tax with 10% penalty.

The 401k participants also have exemptions that are exclusively applicable to 401k participants only. The taxpayer can withdraw money and the 10% penalty will be waived if the money is to be used for paying excess contributions. The tax payer can also apply for loans using their 401k account. If the loan was approved by the 401k, the taxpayer could borrow as much as 50% of their account balance and it should be paid within 5 years unless the money is used to buy the taxpayer’s house. The loan is exempted from the penalty as long as it is fully paid within 5 years.

If in case you’ve paid an incorrect penalty for distributions, you can file for a re-computation using the form 5329 and it can be filed not later than 3 years after the due date. When you file for re-computation, you must indicate the tax year that the inappropriate penalty was reflected. The IRS will do the necessary steps to update your record.

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Historical image of 1870 Tax Day Reminder

Normally, all previous years’ taxes are to be postmarked no later than midnight on April 15th of the following year of any given year. Meaning, that your taxes due for 2010 must be paid and filed by April 15th 2011, correct? Well, normally, yes; but not this year. The only time that this normally fluctuates is if and when April 15th falls on a weekend. April 15, 2011 will be on a Friday – so what gives? For the millions of American, like me, who wait until the last possible minute (my mantra – procrastinate later) this is welcome, but puzzling news. While we procrastinators and last minute filers rarely reason long enough to ask why, it is important to know the correct date, and to realize how it may or may not have an effect on other dates relevant to Tax Day 2011 such as automatic extension dates.

Extension to Pay NOT an Option

It is imperative to state and remind that although the IRS grants “automatic” extensions allowing taxpayers to file their final forms sixty days later, the extension and any estimated owed taxes are still due on tax day, which for 2011 means that your forms and payment (normally done on a Form 1040 V) must be postmarked at or before midnight, Monday April 18, 2011.

Tax Day 2011 Extended Due to Emancipation Day Recognition

What holiday? So by now, most of us Americans are racking our brains and scratching our heads trying to figure out what holiday in April is nationally celebrated. Tax Day 2011 has been extended due to remembrance, recognition and celebration of Emancipation Day, a Washington D.C. holiday, not a nationally recognized holiday.

Emancipation Day had been recognized previously by (Washington D.C.) mayoral proclamation and now by being officially designated as an officially recognized public holiday of the District of Columbia. The holiday commemorates the “first freed” by the U.S. federal government when President Lincoln signed the Compensated Emancipated Act nine months prior to his issuance of the infamous Emancipation Proclamation.

As a result of the public holiday in Washington D.C. the Department of Treasury, the governing body overseeing the Internal Revenue Service, has extended Tax Day 2011 until Monday, April 18, 2011.

Careful Calendar Markings Required

Emancipation Day does not equate to Tax Amnesty Day. Just because Tax Day 2011 is not April 15th versus the 18th does not automatically adjust other dates by 3 days. Keep these dates in mind:

Overseas Exception Due Date: June 15, 2011, the 15th falls on a regularly scheduled business day and hence the deadline will not be extended without approval.

Automatic Approval Extensions Due Date: June 15,  2011 (remember – estimated payments must still be sent in via IRS Form 1040V with the request for extension; it is better to over estimate as you may still be held liable for penalties for underpayment.)

Approved Filing 1040 Extensions Due Date: October 15, 2011

The extension of Tax Day 2011 will give some the necessary additional weekend and time to prepare and file the required forms and payments, but hopefully it will allow all to reflect on the reason – Emancipation Day, commemorating the freeing of those held in servitude in the federal capitol.

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Free Tax Preparation and Filing

As a former tax preparation volunteer during my military service days, I am always taken aback and appalled at the number of people who pay hard earned and tough saved dollars to have their basic income taxes forms prepared and filed for them – there is free tax assistance programs for most Americans!

Every year millions of American taxpayers shell out their hard earned money in getting their income taxes prepared and filed from them. If your are dolling out dollars for your tax preparation every year, make sure that you do not qualify for free tax preparation help through one of the following tax preparation assistance programs that are likely available right in your own community. Some tax preparation assistance programs are income based eligible while others are age based for senior citizens, or even military specific without regard to income or age.

The Volunteer Income Tax Assistance (VITA) program is available in most U.S. cities and communities, but it is income based, meaning that to qualify for the preparation and filing assistance, tax payers must generally make less than $50,000 and cannot prepare their own taxes. While the IRS maintains a partial list of VITA sites throughout the U.S. it is not all inclusive so it may be best to check with your local IRS office for known community-based sites; you’re not likely to find out from the local H&R Block or Jackson-Hewitt tax preparation office – check you local phone book, newspaper or with community based organizations for a more complete listing of VITA sites in your area. The IRS has set up a toll-free number for checking for local VITA sites; 800-906-9887.

Military Free Tax Help

Also under the VITA program, in conjunction with the Armed Forces Tax Council (AFTC), is free tax preparation help to military members and their family. As the military has many special provisions, allowances, additional deductions or exclusions, the VITA program is essential in addressing these military specific issues such as combat zone pay exclusions, basic allowance for housing (BAH) issues, and the ever volatile Earned Income Tax Credit (EITC) which is a tricky issues for military members receiving BAH, BAS (basic allowance for sustenance) or other compensations in kind that are not directly gross pay entitlements. VITA members working with the military and their families receive specialized training specific to military tax issues.

As a former TAO (tax assistance officer) while I was in the military, I was thoroughly impressed with the fact that each year every TAO was required to undergo training and updated modules of tax training to better perform this volunteer task and to be best suited to assist fellow military personnel.  With no intended disrespect to other “tax professionals” it is a simple reality that military tax issues require a specialized tax trained person versed in military pay, benefits and compensation matters. That “Q” in block 13 of the W2 is a big number – what does it mean? A military VITA volunteer will know!

Specially trained VITA military tax preparation volunteers are versed in the most common situations that face most military personnel. This vital and military specific assistance helps ensure accuracy in filing and expediency in receiving refund; most are electronically filed for the service member and refunds are generally received in about one week’s time.

Free Senior Citizen Tax Preparation

The definition of senior citizen and “elderly” is subjective – most of the time. For IRS and VITA purposes, we are subjecting those aged 60 or older to this term for the purposes of receiving free tax preparation and filing. The VITA program in conjunction with the Tax Counseling for the Elderly (TCE) works with community based non-profit organizations to provide free, basic tax counseling and basic tax return preparation. I emphasize basic here because those these volunteers receive IRS training, they are not tax professionals – if you have the need to file every schedule and form under the IRS code then you are likely in need of a professional, not a community trained volunteer.

DIY Tax Preparation

If you have a basic tax return to prepare, don’t shy away from the ability to do it yourself. There are a number of free online programs that you can use to complete you income tax return, or even if your return is a little left of basic, you can purchase tax software programs that will guide you through even seemingly difficult tax situations with ease.

Stop Paying for Tax Preparation and Filing

The bottom line is that millions of American taxpayers spend money every year for tax preparation and filing when free assistance from VITA, TCE, AFTC, private and civic organizations (Senior Centers, American Legion, etc.) exists, and barring that, many free online programs or inexpensive tax preparation software programs exists to keep more money in the taxpayers pocket by not hiring out to expensive professional help when it is not likely necessary.

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