Maco & Associates
News You Can Use
February 2011

In This Issue
Things are getting hectic
Making Work Pay Tax Credit
IRA Information
Child Tax Credit
American Opportunity Tax Credit
Contact Us For a Tax Appointment!
Call us!
If you haven't contacted us (by sending back our postcard, calling us, or emailing us), please get in touch with us as soon as possible.
You can call or email:

610-489-7215
[email protected]

Tax Season Considerations
Greetings!

As tax season swings into full gear, we want to update you on how returns are progressing and call your attention to tax credits that may apply to you this year.
Things are getting hectic...
We need your patience!We're asking for your patience over the coming weeks as we work through your tax returns. Rest assured that we are making progress, but we hope you understand that the IRS is experiencing substantial delays due to the reprogramming of its systems and forms.

You may recall our email a few weeks ago where we pointed out that taxpayers who itemize their deductions wouldn't be able to file their taxes until February 14th because of the extensions of various expired provisions that were re-enacted in late December. So though we are continuing to meet with our clients and submitting your taxes as fast as we can, this does not mean you will see refunds as quickly as usual this year!

In addition, because of all the tax code changes, our turnaround time is not the 2-3 weeks you may be used to. We believe that your return deserves care and attention so that it's error-free and takes advantage of every available credit and opportunity to reduce your tax liability.

Thank you for your continued trust. Please know how important your business is to us!

Making Work Pay Credit...
This credit is available again for the 2010 tax year for many of our clients. It allows you to gain back up to 6.2% of your earned income, with a maximum of $400 per individual or $800 for working married couples. Here are some additional details:
  • The income phase-out begins at $75,000 for individuals
  • Earned income can be from wages or self-employment
  • Other credits (such as Economic Recovery Payments) can reduce the amount of this credit
  • You cannot receive the credit if you are claimed by someone else

Making Work Pay CreditThe Making Work Pay credit took effect in July 2009, so you probably received this credit on last year's taxes as well. It may have been delivered to you as a small adjustment in your paycheck -- if that's the case, then you won't receive the credit on your tax return as you've already received it throughout the year.   

 

To claim this credit on your 2010 return, you must determine if you have already received the credit throughout the year. For those who are filling a 1040, you will use Schedule M to determine your credit amount. Those filling a 1040-EZ should use the worksheet on the back to determine the amount you put on line #8.   

 

We'll also help you determine if you should receive this credit on your taxes when you submit your files to us!  

 

IRAs - Contribution Limits & Penalties...
For those of you wondering about the contribution limits for your traditional or Roth IRA, the limit for 2010 was $5,000 or the amount of your taxable compensation (whichever is smaller). If you are over 50, then your contribution limit is $6,000. The same limits will apply for 2011, in case you're starting to plan your contributions for this year. Roth IRA

What happens if you accidentally over-contributed to your IRA last year? If you don't withdraw the excess (and anything earned on that excess amount) by April 15th, you're subject to a 6% tax. We suggest removing the excess as soon as possible. Have questions? Check out this clarification from IRS.gov.

And don't forget! Workers get a 2 percentage-point break on their payroll tax this year. Instead of paying 6.2% on wages up to $106,800, you're only paying 4.2% this year. On a $50,000 salary, this amounts to a $1,000 savings. Consider putting this extra money away for retirement!

Child Tax Credit...
Tchild tax credithe Tax Hike Prevention Act passed last December retained the $1,000 child tax credit that you may receive on your 2010 taxes, so look forward to this one again next year. This credit is even paid to those who have no tax liability, so if you don't owe any federal income tax but qualify for the credit, you'll receive it as a refund.

American Opportunity Credit...
American Opportunity CreditThis undergraduate tuition and required course material credit remains in effect. Eligibility to take the $2,500 credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly). Study commuters who use public transportation also receive a credit, which has been extended through 2011 so you can receive this credit on next year's taxes as well. This measure provides up to $1,000 a year in savings.

The American Opportunity Credit is something we can be sure you receive when you meet with us or send in your files.

For helpful tax information year-round, visit our blog.
 

And don't forget to check the Resources section of our website, which is loaded with helpful information, like links to refund tracking services, IRS forms, and tax calculators!  

 

Again, we appreciate your patience during this hectic time of year!

 

- Maco & Associates