IRS Updates

Save on Tax Bill and Energy at the Same Time

There is a way you can reduce your tax payments and save on energy at the same time.  The IRS will give you a 30% tax credit for all energy-saving equipments you purchase and install by December 31 this year.  This credit has a maximum limit of $1,500 and would apply to purchases and installation of insulation, insulated windows, storm doors, water heaters, Energy Star compliant appliances, better insulated entry doors, more efficient heaters and air-conditioners.

As a result, many homeowners have been taking advantage of the government’s initiative to do up their homes with energy-efficient materials and equipment.

Another federal bill, nicknamed ‘Cash for Caulkers’ would have increased benefits for making homes more energy efficient in 2011.  However, this bill, although passed by the House of Representatives in May, was not passed by a Senate committee and so will not be voted on in time for 2011.

11 Percent Jump in Tax Audits, Mostly Among the Wealthy

The number of audits the IRS conducted this year saw an 11% rise compared to last year.  It is expected that the wealthy and big businesses would likely be audited.  At the same time, charitable organizations and other tax-exempt organizations would also be targeted.

The number of individual audits rose to the highest level in a decade, according to Steve Miller deputy IRS commissioner for services and enforcement.  The figure this year was 158 million individual returns audited in the budget year ended September, an increase of 1.43 million cases compared to last year.  Enforcement revenue shot above $57 billion, up almost 18% from last year.

All in all, slightly over 1% of individual tax returns were audited both by mail and in person.  On the other hand, for those with incomes above $1 million, the IRS audited more than 8% of these.  Nearly 389,000 taxpayers earned more than $1 million in taxable income last year. There were nearly 143 million tax returns filed, including those from individuals and married couples.

Corporate audits dropped slightly (by less than 1%) although the number of audits for companies with $10 million or more in assets rose by 7%.