With the stuttering state of the economy, for many people every cent saved counts.  As tax season comes along, those who are unable or unwilling to file their own taxes would engage the services of professional tax preparers.  But for a substantial group of others, they would choose instead to use the services of volunteer or free tax preparers.  This service is known as Volunteer Income Tax Assistance (VITA), and has been set up by the IRS for precisely the purpose of providing free voluntary help to taxpayers in submitting their tax returns.

However, not everyone may utilize these free services.  Only those whose annual wages are below $49,000 qualify for VITA.  Besides VITA, another IRS program helping taxpayers, in particular the elderly is Tax Counseling for the Elderly (TCE).  TCE collaborates with the AARP in providing this free service to the elderly at over 7,000 of its locations across the United States.

While it is still only the start of the tax season, the IRS is expecting many more people to file their returns early this year with the intention of getting back their refunds earlier as well.  Even this little bit helps considering the state of the economy.  The IRS operates on a first-come-first-served basis as far as issuing refunds go.

Taxpayers have started filing their tax returns electronically since last Friday when the IRS opened its doors to receive returns.  Likewise, the VITA and TCE centers will be opening in the coming weeks, expecting to receive a huge influx of taxpaying Americans requiring help with their tax returns.  Both these programs also accept electronic filing.

But should you approach either the VITA or TCE for assistance, be sure you have full documentation in order for them to help you.  For example, to apply for the making work pay tax benefit, you need to have your W2 statement to show that you have worked.  Merely having unemployment earnings statements does not qualify you for the Earned Income tax credits.

Other key important documents you should have with you when filing your taxes with the VITA or TCE would be your original Social Security cards and that of your dependents (if any), your driver’s license and your bank particulars, especially if you would like to use a direct deposit.  It increasingly appears that this year, the VITA and TCE will be kept extremely busy.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

One of the benefits granted under the American Recovery and Reinvestment Act 2009 (ARRA) is a tax deductible amount from costs incurred for energy efficient home improvements.  In the past, the government did give a similar incentive but it was removed in 2008 only to be reenacted in 2009, but bigger and better.  This is good news to taxpayers.

Under the new legislation, homeowners who make renovations or improvements to their homes in the form of energy efficient lighting, heating, better insulation, energy-saving air conditioners or furnaces etc, are entitled to a tax credit of up to 30% of the costs of their improvements, up to a maximum of $1,500 (the previous ceiling was $500).  Therefore, if a taxpayer makes $5,000 worth of renovations to save energy in the home, he will be eligible to the maximum $1,500 credit.

But in order to qualify for the tax benefit, the amount spent is not the sole criteria.  Installing an equipment or product having the Energy Department’s Energy Star logo is not sufficient.  An added condition is that the manufacturer or maker of the energy saving materials or products must certify that it is up to the standard of energy efficiency set by the government.  With this official certification, you would be eligible for the tax credit.  Hence, taxpayers are advised to retain a copy of the manufacturer’s certification for tax purposes.  This certification was not a requirement under the old legislation.

This tax credit is open to every taxpayer irrespective of how much you earn.  But your home improvements must have been made no earlier than 2009 to be eligible for the 2010 tax year.

There is good news in that even though you have claimed under the old legislation (say for $500), you would still be eligible to claim up to the full amount of $1,500 under the new law.  The previous amount already claimed is not taken into consideration when calculating your new tax credit.

Another piece of good news has to do with a particular category of energy improvement.  Homeowners who have taken steps to utilize alternative energy would be eligible for the 30% tax credit but without the maximum limit of $1,500.  Therefore, it pays even more to install solar or geothermal heaters, wind turbines, solar call panels, geothermal heat pumps, magnetic generators and the like.  For this category of energy efficient improvements, the cost of installation and site preparation are also included in the calculation of the tax credit, besides the cost of the equipment itself.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

The IRS Goes Video

Ever since the enactment of the American Recovery and Reinvestment Act 2009 (ARRA), the IRS has been going on overdrive to explain the nature and implications of the various tax incentives under the Act to the American taxpaying public.  In another act of reaching out to the people, the IRS has started its own YouTube channel.

The videos on the channel are short, pithy messages aimed at bringing clarity to the still-oft misunderstood facets of the ARRA such as the first time homebuyers’ tax credit, the sales and excise tax deduction for new car buyers and the making work pay tax incentive.  There is a video that even includes instructions on how to use the withholding tax calculator that helps you calculate the amount of withholding tax you should pay.  All the videos refer the viewers back to the IRS website, http://www.irs.gov.

In total there are about 70 to 75 IRS videos and they are in English, Spanish and American sign language.  These videos first made their appearance in August last year and to-date have been viewed some 230,000 times, no mean feat for government videos.  Terry Lemons, the IRS senior spokesman, quipped that very soon, the IRS videos would rival the most hip dance music videos in YouTube.

Viewers come across the IRS videos through various means that include links from third party websites, besides the result of the IRS’ own outreach efforts.

Nic Cage Vows to Pay Up Tax Dues

Actor Nicolas Cage, 46, says he fully intends to pay back all the taxes he owes the IRS.  The actor has been issued with multiple liens on his various properties including a $6.3 million lien for taxes he owed between 2002 and 2004.  In 2008, another lien was filed against him for a further $6.8 million for unpaid taxes in 2008.  In total, Cage owes the IRS about $14 million in taxes.

According to the Oscar winning actor, bad business management was the primary cause of his financial problems, a situation largely brought about by his previous financial manager, Samuel Levin.  Cage is suing Levin for $20 million claiming that the latter misappropriated his funds in risky and speculative property investments.  Court papers also state Cage’s allegation that Levin failed to pay the actor’s income taxes.

Levin, on the other hand, is counter-suing, alleging that it was Cage’s massive spending habits that brought about his own financial woes.

Nevertheless, in an interview with People’s Magazine, Cage has given his assurance that he will fully pay up the entire $14 million tax bill owed to the government and declared that he is current in his taxes for 2009.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

Foreign Banks to Comply with IRS Law

A new law for foreign banks compels them to divulge information about the deposits by their US account holders.  Its objective is to nab US tax evaders who stash their money in accounts with foreign banks especially in the light of the confession of Swiss bank UBS of assisting its American customers in dodging taxes.  The bank had to pay hefty fines and release details of several thousands of its US account holders to the IRS last year.

The law provides for a withholding tax of 30% of their income from US customers if the foreign banks fail to comply.  It is expected to be passed by the US Congress in the coming months and would go into effect December 31, 2012.

However, the IRS who is tasked with enforcing the law said that it would not expect foreign banks to give information on the identities of individual account holders.  That would be too impractical in view of the millions of existing and future accounts.  Hence the IRS would be taking a more general approach by looking at the banks’ macro processes.  This ought to come as a relief to foreign banks who have been asking for a softer stance in this matter by the US government, complaining of the difficulty of compliance.

The law encompasses all other financial institutions like hedge funds and private equity funds.  In addition, a US tax official also mentioned that there would likely be greater leniency for existing accounts compared with new accounts.

Municipal Bonds Regulated by IRS and SEC

The IRS is collaborating with the Securities and Exchange Commission (SEC) in enforcing greater regulations on the municipal bond market.  The respective heads of the IRS and SEC signed a Memorandum of Understanding (MOU) on behalf of their agencies on this matter.  The cooperation between the agencies is aimed at improving the compliance to the rules on municipal securities, especially tax-exempt bonds.  Under the MOU, the agencies also agreed to share information on practices and risks in the municipal bond market.

State and local governments through their municipal councils often issue bonds to the general public in efforts to raise funds for essential works like road maintenance, schools and hospitals.  The market is worth an estimated $2.8 trillion.  Many retail investors participate in this market because municipal bonds are seen as safe investment risks that give reliable returns.

However, recent adverse developments have underscored the importance of stricter regulations over this market.  Jefferson County, Ala., almost fell into bankruptcy when JPMorgan Chase & Co. canceled interest-rate swap contracts with the county worth around $700 million, causing its debts to skyrocket to $3.9 billion.  If Jefferson had gone under, it would have been the nation’s largest municipal bankruptcy in history.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

The IRS has decided to relax the requirements on Americans who hold assets in foreign accounts, albeit slightly.  For years, those who have accounts in foreign banks and other financial institutions worth more than $10,000 were required to fill in the Foreign Bank Account Report (FBAR) but a new push by Congress to get the IRS to stem tax evasion has seen the government agency come down hard on such taxpayers.  Willful failure to submit or misrepresentation in the FBAR form entails a $100,000 fine or half the value of the account per year.  Non-willful compliance with this regulation results in a $10,000 annual fine.  Both these situations take no account of the amount of the infringements.

The IRS initiative clearly worked because last year, about 550,000 American taxpayers filled up the FBAR, a number that reflected a substantial increase of about 60% from the year before.

Last year’s IRS campaign aimed at thousands of Americans with foreign bank accounts kicked up a lot of fuss from many quarters.  A diplomatic row almost erupted between the US and Swiss governments over the IRS demands that UBS bank of Switzerland reveal details of their US account holders suspected by the IRS of tax evasion.  In the end, the Swiss bank relented and revealed the identities of thousands of their American depositors.

In a move that further emancipated the situation, last summer some IRS officials went on to expand the limits of the FBAR requirement to include foreigners doing business in America and US investors who had interests in non-traditional deposit taking institutions like hedge funds and private equity funds.  In a contrary but welcomed move last week, the officials from the US Treasury issued guidelines that absolved these investors from having to meet the requirement of filling up the FBAR forms, at least for this year.

However, other foreign account holders having foreign financial interests must still comply with the regulation.  These include those with ownership or control in a foreign bank or brokerage account, those with offshore annuities or offshore insurance policies that accrue cash value (owned directly or through a trust), those who invest in foreign mutual funds and those who own or control foreign companies with offshore accounts

Even the filing process is not very straightforward.  The FBAR filing deadline is June 30 not April 15, the normal tax filing deadline.  No extensions for the deadline will be entertained.  FBAR forms may be dropped off at any IRS office or mailed to a special address in Detroit.  Most people would like to have the deadlines the same as for normal tax filings, but the decision to alter this rests with the US Congress, not the IRS.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world.  If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.