Perhaps you've read the New York Times Article about this.  It's been kind of hot on the internet.  The idea is that the IRS already has most of our income tax return data, so why don't they just prefill all of our returns for us and just have us sign them if they're correct?  What a stroke of genius!

   Now, you might think that something like that would put me out of business (don't worry, there's enough weird tax law to keep me working until retirement.)  But think of the time, effort, and money it would save millions of people.  For example, the number one cause of audit letters is because a taxpayer forgot to include an important document in his tax return.  The IRS has those documents, that's how they know if you've missed something.   If you start with the information the IRS already has about you, that's most of your return right there! 

   It's not a perfect solution, by any means.  Let's face it, in my job, if the IRS prepares your tax return for you, you're going to owe.  I once helped someone whose taxes had been prepared by the IRS and was looking at owing $8,000!  When I was done with her returns (there were a few of them) she had a refund of $3,000.   Here's where I'd like you the think that "Jan's the most amazing tax person in the world!" --but to be brutally honest, she would have gotten the same results with Turbo Tax. 

   When the IRS prepares your taxes, they always use the highest possible tax bracket and never give you any deductions, even if they have deduction information (like your mortgage interest.)  So as much as I'm all for them starting our tax returns for us, personally, I'm going to be finishing my return on my own. 

 

President Obama signed into law legislation what will allow you to claim donations that you made to Haiti earthquake relief in 2010 on your 2009 income tax return.   The donation must be made before March 1 if you want to include it for 2009.  Haiti donations must be cash if they are to be claimed in 2009, donations of clothing or other supplies can still be claimed on your 2010 return.

Donate to Haitian Relief Effort 

 

 

Retirees:  If you received an Economic Recovery Payment for $250, you need to report it on your 2009 taxes.  You won't be taxed on the $250, but if you didn't receive the $250 payment, you may qualify to receive it as part of your tax refund.  If you try to claim the credit in your taxes, but have already received it, it will hold up your refund. 

 

The problem is:  what if you don't remember if you got a payment or not?  The IRS doesn't provide that information and you can't just go online and look it up.

 

The IRS has provided phone numbers to the organizations that provided the $250 payments.  If you honestly don't remember receiving the $250 payment, before you file your return, please check.  Try calling:

 

Social Security Administration:  800-772-1213.

Veteran's Administration:  800-827-1000.

Railroad Retirement Board:  I don't have a phone number, but I do have a website.  It won't tell you about your personal payment, but it may help you figure out if you qualified for one. 

 Railroad Website 

 

 If you're retired and you also qualify for the Making Work Pay Credit, that $250 payment  will reduce the $400  Credit.  Sorry.

 

 

The president has proposed a new tax credit for employers.  Under the new plan, a business could claim a credit of up to $5,000 for every net new employee it hires.  Net, meaning, you can't fire a guy and replace him with another one just to get the credit.   There's also a proposal to reduce employment taxes to employers for increasing employee's wages by $1,000.  (Perhaps your employees have already told you about it.)

     So far, these are proposals haven't been passed into law yet.  But I've already seen several articles online about how to scam the tax credits.  I'm sure that by the time this actually passes into law, all the little loopholes the scammers have proposed will be covered.  If you've caught some of those articles on-line, remember- if it sounds to good to be true:  then it probably is.   In the mean time, if you need to hire-- then hire.  If you don't--don't make decisions based upon a proposed tax credit that isn't yet a law.

 

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