The Federal Tax Credits Blog

Posts Tagged ‘additional child tax credit 2009 calculator’

In November 2009, the IRS launched a new National Research Program Initiative (the Initiative): an industry wide detailed random audit of employment taxes for 6,000 businesses over the course of the next three years. The purpose of the Initiative is two fold: (1) assess systemic employment tax compliance; and (2) collect assessments from delinquent employers.

With tax revenues dwindling from the recession, the U.S. Treasury Department is stepping up efforts to close the tax gap the difference between overall tax liabilities and taxes paid to the IRS. Auditing employment taxes is seen by the IRS as a crucial means of closing the tax gap. For tax year 2001 for example, the gross tax gap was estimated by the IRS at around $345 billion, with underreporting of employment taxes accounting for around 17% of the tax gap.

The IRS will audit businesses to ensure that Federal withholding taxes are deducted and paid over to the government from employees wages for Social Security and Medicare as well as Federal Unemployment taxes. An employer found to be in noncompliance could face stiff civil penalties and interest on unpaid taxes. These penalties could have a particularly severe impact on small business owners.

The IRS has prioritized four areas to focus their auditing efforts under the Initiative, including:

aE¢ Worker classification: i.e. whether an employer properly classifies an employee as an employee or independent contractor for tax purposes. Determining which depends on the behavioral, financial and type of relationship the company has with the person performing the work.

aE¢ Employee fringe benefits: A fringe benefit is a form of pay for the performance of services. i.e. benefits such as insurance coverage, company car or child care, etc. that are provided by employers tax free to employees but not to independent contractors.

aE¢ Reimbursed business expenses: e.g. reimbursement for taking a client to lunch, purchasing office supplies: which requires a written business expense plan. I.E. You must have paid or incurred expenses that are deductible while performing services as an employee. You must adequately account to your employer for these expenses within a reasonable time period, and you must return any excess reimbursement or allowance within a reasonable time period.

aE¢ Compensation of owners who are also employees of the company, whereby unpaid taxes may result in personal liability for the employer.

Now that the Employment Tax audit Initiative has started, it has been reported that the IRS has already begun the process of selecting businesses for audit of their employment taxes. Noncompliance with employment tax law can result in severe consequences for employers. To ensure that procedures are in place for Employment tax compliance with applicable tax law can save time, money and heartache in the event of an audit.

For example, the Internal Revenue Code requires a written reimbursement plan in order to take advantage of the tax benefits of legitimate business expenses. Employers should consider consulting with experienced counsel in preparation for the Initiative and in the event of an audit of their employment taxes.

Vivica Fox’s Alter Ego Shoot, Plus Vivica Cries Over 50 Cent on Mo’Nique Show (Video)

Vivica A. Fox lives life on the wild side in a shoot for Derek Blanks. When asked to explain the concept behind the shoot Vivica says “Choices:Life is about choices! Dare to walk on the wild side.,, Or Live right on the right side! Enjoy life to the fullest!” In other Vivica news, Did anyone [...]

California begins vaccinating kids. Is it safe for you?August 7 2009

The American Recovery and Reinvestment Act of 2009

If you are planning on attending an institute of higher education in the future, there is some good news for your wallet. Now that Congress has passed the American Recovery and Reinvestment Act of 2009, getting that education may bit a bit easier.

Student Loan Interest

The good news is that many folks who in the past were unable to take advantage of this tax break can now do so thanks to more relaxed rules concerning the deduction of student loan interest. You can write off up to $2,500 of annual college loan interest charges if you qualify. The bad news is that if your modified AGI is too high, the break is phased out. The 2009 phase-out range for unmarried taxpayers is between modified AGI of $60,000 and $75,000, the range is between modified AGI of $120,000 and $150,000 for joint filers.

Hope Scholarship Credit

For 2009, the Hope Scholarship credit amounts to 100% of the first $1,200 of a college student’s annual tuition and fees (no room and board costs) plus 50% of the next $1,200. So the maximum Hope credit is $1,800 per qualifying student. But here’s the rub: The Hope credit can be claimed for only two tax years for any one student. It’s unavailable after the student has logged two years’ worth of academic hours. Also, the Hope credit is allowed only when the student carries at least half of a full-time load for at least one academic period beginning in the year the credit is claimed.

Lifetime Learning Tax Credits

The Lifetime Learning credit is less restrictive. It’s mainly intended to help defray college costs after the first two years, when the Hope credit is no longer allowed. The Lifetime credit is available for an unlimited number of years and without any requirement to carry a certain course load. Graduate courses are cool. So are random classes not intended to lead to any sort of degree, such as professional training seminars and courses to update your software skills. The credit equals 20% of tuition and fees up to $10,000, for a maximum annual credit of $2,000.

Qualifying expenses for both the Hope and Lifetime credits include post-secondary tuition and fees for you, your spouse, and any other person claimed as a dependent on your tax return.

For 2009, both credits are phased out between adjusted gross income of $100,000 and $120,000 for joint filers; $50,000-$60,000 for unmarried taxpayers. You’re completely ineligible if you’re married and file separately from your spouse.

Top ten stories of 2009

In an upshot, if 2009 made us all a little poorer, it also made us all cleaner and more hygiene-oriented. It brought heartaches, joy and astonishment to Highlands County residents. It also brought closure to the family of a Florida Highway Patrol trooper ruthlessly killed while on duty. The economy continued to roil; residents endured not one but three anthrax hoaxes; ordinary residents prodded …

child tax credit Worksheet and Calculator for 2009, 2010.mov

Question: question about the recovery rebate credit?

i saw on irs.gov that the credit calculator for 2008 tax credit won’t be available until feb 2009.
here’s a scenario i have a question on…
single unmarried mother who’s child was born in 2005. all prior years the father has claimed the child.
this year they separated and she will be claiming him. obviously the stimulus payment in 2008 was based on 07 info and she received 600. now it 2008 she’s HOH and 1 dependent.
now that she has a dependent in 08 shouldn’t she receive $300 recovery rebate credit?
Bob: okay thanks.. thats what i thought but the site i’m using isn’t calculating it for her.. it’s giving her $31?? i thought it might have something to do with the year her son was born

Answer: The check last summer was based on 2007 as an estimate of what you should get. Your situation for 2008 is what determines what you should have got, so when you do your 2008, you will get what is entitled to you for your 2008 situation. Since she has a dependent in 2008 but not in 2007, she will get $300 tacked onto her 2008 refund.

MICHELLE SINGLETARY: A Few Tweaks for a More Secure Future

Despite a still funky economy, many people are doing well.Yes, the unemployment rate is too high. People continue to lose their homes. And credit card debt is smothering many consumers.But as the year comes to a close, I wanted to address questions from readers who are fine financially yet need some tweaks to the way they handle their money. Let’s start with a young couple in their late 20s who …