JOB SEARCH EXPENSES ARE DEDUCTIBLE

If you are looking for a new job in the same line of work, you may be able to claim a tax deduction for some of your job hunting expenses. You cannot deduct job search expenses if you never had a job or if there was a substantial break from the end of your last job and the time you began looking for another one. Furthermore, if you were reimbursed by your employer or another party for the costs incurred seeking employment, you may not deduct the expense. Job search expenses are reported as a miscellaneous itemized deduction, therefore only deductible if your total miscellaneous deductions exceed two percent of your AGI (adjusted gross income).

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HAVE YOU FILED YOUR 2009 TAX RETURN?????

Refunds totaling just over $917 million may be waiting for an estimated 984,400 taxpayers who did not file a federal income tax return for 2009, the Internal Revenue Service announced today. However, to collect the money, a return for 2009 must be filed with the IRS no later than Monday, April 15, 2013.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2009 returns, the window closes on April 15, 2013. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

Important Facts about Mortgage Debt Forgiveness

If your lender cancelled or forgave your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2012.

Here are a few key facts from the IRS about mortgage debt forgiveness:

1. Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.

2. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.

3. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Submit the completed form with your federal income tax return.

4. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.

TIPS IF YOUR NAME HAS CHANGED

If you were married or divorced and changed your name last year, be sure to notify the Social Security Administration (SSA) before you file your taxes with the IRS. If the name on your tax return doesn’t match SSA records, the IRS will flag it as an error and that may delay your refund. Letting the SSA know about a name change is easy. File Form SS-5, Application for a Social Security Card, at your local SSA office or by mail with proof of your legal name change. You can get Form SS-5 on the SSA’s website at http://www.ssa.gov, by calling 800-772-1213 or at local SSA offices.

Your new card will have the same number as your former card but will show your new name.

DISADVANTAGES OF MARRIED FILING SEPARATELY

Usually Married Filing Separately results in a larger tax due to the loss of certain credits and benefits. It’s as if you get penalized for being married and filing separately. See below for a partial list of credits and benefits lost when choosing Married Filing Separately;

1) Lost Credits: Earned Income Credit, Credit for the elderly or the disabled unless spouses lived apart for the entire year, Child and dependent care credit unless spouses lived apart for the last six months of the year, Adoption credit unless spouses lived apart for the last six months of the year and Education credits

2) Lost Education Benefits: Student loan interest deduction, Tuition and fees deduction, Savings bond interest exclusion

3) Net capital loss deduction is limited to $1,500 as opposed to $3,000

4) Both Taxpayer and Spouse must use the same deduction on their tax returns, either the Standard deduction or Itemized deduction

HAVING AN ACCOUNTANT OR CPA PREPARE YOUR TAXES MAY PREVENT IDENTITY THEFT

During tax season, I have noticed that a lot of people “shop” to get their taxes done.  They go from office to office seeing who can get them back the largest refund, leaving a trail of people who now possess their most financial sensitive information.  This is a HUGE mistake!  Unfortunately, a lot of tax preparation places are not ethical and “shopping” may cause you and/or your dependents to be a victim of identity theft.  I encourage taxpayers to go to an accountant or CPA to have their taxes prepared.

See below for a partial list of information obtained while getting your taxes prepared;

1. First and Last name

2. Social Security Number

3. Date of Birth

4. Phone Number

5. Address

6. Child/Dependent’s Information (Name, Date of Birth and Social Security Number)

7. Employer Information

8. Bank Account Information (Routing and account number)

9. Drivers License/State ID

 

WHO IS RESPONSIBLE FOR YOUR TAX RETURN?

Regardless of who prepares your tax return, you are ultimately responsible for what is reported on your return.  Be sure that you choose a knowledgeable tax preparer, preferably an accountant, CPA or tax specialist.  Also attempt to look at your return and ask questions.  Let me highlight what you are agreeing to when you sign your tax return (or efile authorization form if you are e-filing);

“Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete…………”