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August 2009 Tax Update

by SD Tax Pro

08 21, 2009 | Posted in Our Blog | 0 comments

The First Time Homebuyers $8,000 Federal tax credit will expire 31 Nov 2009. You must close escrow on or before/no later than 31 November 2009 to receive this credit.

Yes you may amend your 2008 tax return to claim the credit, or just add it to your 2009 tax return. If you have a liability this tax credit will be used against that balance. So there could be some tax planning for 2009. If you feel you might owe taxes for 2009, then wait and apply the credit against your bill and have Uncle Sam pay part or all of that liability.

For a single person your adjusted gross income must not exceed $75,000 (MFJ-$150,000) to qualify.

Unfortunately, the IRS has announced that due to false claims they are now taking up to 12 weeks to process these claims and issue checks.

Businesses

The IRS announced August 1st they have assigned 67 new auditors to the 5 southern California Counties. This is to start the internal review of at least 40% of business type returns. They are reviewing Taxpayers returns that include Schedule C, or have filed an S-Corporation tax return. The IRS just knows that these returns will generate back taxes. They are also working with the State of California EDD to review payroll records. Some of the penalties for these taxes are 100% of the tax, plus interest.

CP 2000’s (aka-nasty grams)

When the numbers you submit and what has been submitted to the IRS do not match, the IRS will issue a CP2000 notice. On 1 August 2009 the IRS announced that they will be sending out 5,000 notices per month for 4 months due to errors on the 2008 tax returns. They have announced that they expect that 60% of these letters will go to taxpayers that signed the return as “self prepared”. This may or may not be true, and the mistakes may or may not be accidental—bad math as opposed to deliberately not reporting income, or unlicensed preparers as opposed to registered and bonded preparers that will stand by their work and report all income and deductions properly.

The IRS also announced that they fully expect 25% of “self prepared” return taxpayers will go back to their professional, because it was “just too hard” to properly prepare the return, or the CP 2000 “scared them back”.

The IRS is actively pursing that all preparers be licensed and bonded with them. Currently only three states require any type of tax education or licensing, California, Oregon and Maryland.

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