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Tax Tips Newsletter
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April 2009 - Vol 4, Issue 4
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Greetings!
Linda Head Short 0608

Tax season is almost over. If your tax information was in the office by the cutoff date, March 17, we will be completing your returns by April 15th. If your tax information came in after the cutoff date, we are making every effort to get your returns to you, but may have to file an extension. We will be contacting you in the next few days.

If you have not gotten your information in yet, please call the office so that we can prepare an extension for you.

If we are waiting for additional information to complete your returns, please contact us immediately so we can finaize them.

The office will be closed from April 16th - April 20th. We will be back in the office on April 21st.

Tax Deadline
Small businesses that had an operating loss in 2008 now have more options for carrying that loss back to prior tax years to get a tax refund.

The "American Recovery and Reinvestment Act of 2009" allows some businesses with a net operating loss (NOL) in 2008 to elect to carry the loss back for up to five prior years. To qualify, a business must have no more than an average of $15 million per year in gross receipts over the three-year period ending with the year of the NOL. If sales are higher than that, your business must live with the old two-year carryback rules.

There are special rules if your business does not operate on a calendar year. If your business operates on a fiscal year, you will have the option of using the five-year carryback for the loss that occurred in the tax year that ended in 2008 or the one that starts in 2008 and ends in 2009.

If you like, you can forgo the five-year carryback and carry your losses forward for up to twenty years. Keep in mind that the election cannot be revoked once filed.

For assistance in filing for an NOL refund, contact my office.
House
The IRS announced recently that taxpayers who qualify for the first-time homebuyer tax credit on a home purchased from January 1, 2009, through November 30, 2009, may claim the credit on either their 2008 income tax return due April 15, 2009, or on their 2009 tax return due April 15, 2010.

This option makes it possible for qualifying taxpayers to put money in their pockets in 2009, rather than waiting until next year to benefit from this tax break. Note that you can amend an already-filed 2008 return to claim the credit. Since the credit is "refundable," you may be eligible for a refund.

The first-time homebuyer tax credit provides a refundable credit of 10% of the home's purchase price, up to a maximum credit of $8,000 for couples filing joint returns ($4,000 if you're single or married filing separately). If you live in the home for at least three years, the credit does not have to be repaid. Income limits apply, with phase-out of the credit starting at $75,000 for single taxpayers and $150,000 for married couples filing jointly.

For first homes purchased from April 9, 2008, through December 31, 2008, a credit of up to $7,500 is available to qualifying taxpayers. This credit can only be taken on a 2008 tax return, and it must be repaid in 15 equal installments beginning with the 2010 tax year.

For California residents there is also a $10,000 credit for 2009 for those purchasing new construction homes.
California State Flag
The following information was part of the Franchise Tax Board's latest newsletters to tax preparers.

You can now get estimated tax payment reminders from the Franchise Tax Board. Simply log into ftp.gov and search for My FTB Account. You can also check on the status of your refund on the same site.

You can pay your taxes electronically on the FTB website also. Look for epay toolkit.

The FTB is beginning a nonfiler program. If you, or anyone you know has not filed tax returns for previous years, they will have 30 days from the time they are contacted by the FTB to respond and file returns.

If you have paid somone that should have received a 1099 and did not issue a 1099 to them, the FTB will NOT allow the deduction! Even if you have a cancelled check and an invoice from that vendor to substantiate the business expense. It is very important to make sure that you issue 1099 to those parties that should be getting one. Please be sure that you have a completed W-9 form from them BEFORE you issue them a check.
Golden Egg
The Tax Tip this week gives tip on whether or not you should itemize your deductions.

The Business Tip of the Month deals with improving your business by listening to customer complaints.

The Financial Tip of the Month deals with how to streamline insurance and transportation costs.

The Fraud Alert has to do with vacation scams.

Photos © Bigstockphotos.com, istockphoto.com

Sincerely,
Linda Heineman
Linda L. Heineman, CPA, CITP

phone: 626-577-0979
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