Information provided by the IRS:

The American Recovery and Reinvestment Act was passed in early 2009 and created the American Opportunity Credit. This educational tax credit – which expanded the existing Hope credit – helps parents and students pay for college and college-related expenses.

Here are the top nine things the Internal Revenue Service wants you to know about this valuable credit and how you can benefit from it when you file your 2009 taxes.

1.      The credit can be claimed for tuition and certain fees paid for higher education in 2009 and 2010.
2.      The American Opportunity Credit can be claimed for expenses paid for any of the first four years of post-secondary education.
3.      The credit is worth up to $2,500 and is based on a percentage of the cost of qualified tuition and related expenses paid during the taxable year for each eligible student. This is a $700 increase from the Hope Credit.
4.      The term “qualified tuition and related expenses” has been expanded to include expenditures for required course materials. For this purpose, the term “course materials” means books, supplies and equipment required for a course of study.
5.      Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year.
6.      Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.
7.      To be eligible for the full credit, your modified adjusted gross income must be $80,000 or less — $160,000 or less for joint filers.
8.      The credit begins to decrease for individuals with incomes above $80,000 or $160,000 for joint filers and is not available for individuals who make more than $90,000 or $180,000 for joint filers.
9.      The credit is claimed using Form 8863, Education Credits, (American Opportunity, Hope, and Lifetime Learning Credits), and is attached to Form 1040 or 1040A.

For more information about the American Opportunity Tax Credit visit the IRS Web site at IRS.gov/recovery.

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Provided by the IRS:

WASHINGTON – The Internal Revenue Service is joining national TV network Telemundo in a special one-hour tax program for Spanish-speaking taxpayers on Sunday, Jan. 24.

The program, “Los Impuestos y Usted” (”Taxes and You”), will air at:

*       3:00 p.m. Eastern time
*       2:00 p.m. Central time
*       2:00 p.m. Mountain time
*       3:00 p.m. Pacific time

Consult your local listings for exact times.

“Los Impuestos y Usted” will focus on a variety of tax issues. In addition to topics such as who must file a tax return and who can claim deductions and benefits, the program focuses on the Earned Income Tax Credit – a valuable credit that unfortunately one in four eligible taxpayers overlook. Workers with incomes under $48,279 could receive larger refunds if they qualify.

In addition, the program will explain Free File, a service that allows many taxpayers to file their taxes online at no cost. The show will also discuss other kinds of free assistance available from the IRS.

Mónica Noguera, host for many of Telemundo’s special programs, will present the IRS program, which features in-studio interviews with IRS tax experts.

Information about the IRS is available in Spanish at http://www.irs.gov/espanol or toll-free at 1-800-829-1040, extension 8.

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If you are receiving a federal tax refund from the Internal Revenue Service, you can choose to use that money to purchase U.S. savings bonds.

Here are the top six things you’ll need to know about using your federal refund to purchase savings bonds.

1.      You may use a portion of your refund to purchase up to $5,000 in U.S. Series I Savings Bonds.
2.      The total amount of saving bonds purchased must be a multiple of $50. Additional money over the specified amount must be deposited into another financial account – such as a checking or savings account.
3.      The bonds will be issued in your name. For married taxpayers filing a joint return, the bonds will be issued in the names of both spouses.
4.      You will receive the U.S. savings bonds in the mail.
5.      You normally select this option by filing Form 8888, Direct Deposit of Refund to More Than One Account.
6.      Form 8888 has step-by-step instructions on how to select this option and how to specify the amount of your refund you want to use to purchase savings bonds.

For more information about the U.S. Savings Bonds refund option, visit IRS.gov.

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WASHINGTON – The Internal Revenue Service today released the 2010 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.

Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 80-page document, The Truth about Frivolous Tax Arguments <http://www.irs.gov/pub/irs-utl/friv_tax.pdf> .

The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. It will help taxpayers avoid wasting their time and money with frivolous arguments and incurring penalties.

Congress in 2006 increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

IRS highlighted in the document about 40 new cases adjudicated in 2009. Highlights include cases involving injunctions against preparers and promoters of Form 1099-Original Issue Discount schemes and injunctions against preparers and promoters of false fuel tax credit schemes.

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Information provided by our IRS:

Getting ready to file your tax return?  Make sure you have all your documents before you start. You should receive a Form W-2, Wage and Tax Statement from each of your employers.  Employers have until February 1, 2010 to send you a 2009 Form W-2 earnings statement. If you haven’t received your W-2, follow these four steps:

1. Contact your employer If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed.  If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address.  After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.

2. Contact the IRS If you do not receive your W-2 by February 16th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

*       Employer’s name, address, city and state, including zip code and phone   number
*       Dates of employment
*       An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2009. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

3. File your return You still must file your tax return or request an extension to file by April 15, even if you do not receive your Form W-2. If you have not received your Form W-2 by April 15th, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible.  There may be a delay in any refund due while the information is verified.

4. File a Form 1040X On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

*       Form 4852, Substitute for Form W-2, Wage and Tax Statement (PDF 29K <http://www.irs.gov/pub/irs-pdf/f4852.pdf> )
*       Form 1040X, Amended U.S. Individual Income Tax Return (PDF 123K <http://www.irs.gov/pub/irs-pdf/f1040x.pdf> )
*       Instructions for Form 1040X (PDF 43K <http://www.irs.gov/pub/irs-pdf/i1040x.pdf> )

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Information provided by the IRS:

Taxpayers with disabilities may qualify for a number of IRS tax credits and benefits. Parents of children with disabilities may also qualify. Listed below are seven tax credits and other benefits that are available if you or someone else listed on your federal tax return is disabled.

1.      Standard Deduction Taxpayers who are legally blind may be entitled to a higher standard deduction on their tax return.

2.      Gross Income Certain disability-related payments, Veterans Administration disability benefits, and Supplemental Security Income are excluded from gross income.

3.      Impairment-Related Work Expenses Employees, who have a physical or mental disability limiting their employment, may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.

4.      Credit for the Elderly or Disabled This credit is generally available to certain taxpayers who are 65 and older as well as to certain disabled taxpayers who are younger than 65 and are retired on permanent and total disability.

5.      Medical Expenses If you itemize your deductions using Form 1040 Schedule A, you may be able to deduct medical expenses. See IRS Publication 502, Medical and Dental Expenses.

6.      Earned Income Tax Credit EITC is available to disabled taxpayers as well as to the parents of a child with a disability. If you retired on disability, taxable benefits you receive under your employer’s disability retirement plan are considered earned income until you reach minimum retirement age. The EITC is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund. Many working individuals with a disability who have no qualifying children, but are older than 25 and younger than 65 do — in fact — qualify for EITC. Additionally, if the taxpayer’s child is disabled, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for benefit programs such as Supplemental Security Income and Medicaid.

7.      Child or Dependent Care Credit Taxpayers who pay someone to come to their home and care for their dependent or spouse may be entitled to claim this credit. There is no age limit if the taxpayer’s spouse or dependent is unable to care for themselves.

For more information on tax credits and benefits available to disabled taxpayers, see Publication 3966, Living and Working with Disabilities or Publication 907, Tax Highlights for Persons with Disabilitiesavailable on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

*       Publication 3966 <http://www.irs.gov/pub/irs-pdf/p3966.pdf> , Living and Working with Disabilities
*       Publication 907 <http://www.irs.gov/pub/irs-pdf/p907.pdf> , Tax Highlights for Persons with Disabilities

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Information provided by the IRS:

The $250 Economic Recovery Payments that were issued in 2009 by the Social Security Administration, Department of Veterans Affairs and Railroad Retirement Board must be included when claiming the Making Work Pay Tax Credit on 2009 tax returns. Many people who worked during 2009 and also received a $250 Economic Recovery Payment in 2009 are slowing down their tax refunds by not properly including the payments when claiming the Making Work Pay Tax Credit.

Here are five tips from the IRS that will help you avoid these refund delays:

1.      If you worked during 2009, you may be eligible to claim the Making Work Pay Tax Credit that was established by the American Recovery and Reinvestment Act of 2009 and is worth up to $400 for individuals and $800 for married couples.

2.      The Economic Recovery Payments are not taxable income; however, anyone who receives social security, veteran or railroad retirement benefits, as well as certain other government retirement benefits, must reduce the Making Work Pay Tax Credit they claim by the amount of any payment they received in 2009.

3.      Taxpayers with earned income should claim the credit by attaching Schedule M to their 2009 income tax return.

4.      To help avoid delays when you claim the credit, make sure you properly report your Economic Recovery Payment on IRS Schedule M, Making Work Pay and Government Retiree Credits.

5.      If you are not certain whether you received the $250 payment, you should verify that information by contacting the appropriate agency before preparing and filing your tax return and claiming the Making Work Pay Tax Credit.

More information about the Economic Recovery Payment and the Making Work Pay Tax Credit can be found at IRS.gov/recovery.  Schedule M and the related instructions can be obtained at IRS.gov or can be ordered by calling 800-TAX-FORM (800-829-3676).

Links:

*       The American Recovery and Reinvestment Act of 2009: Information Center <http://www.irs.gov/newsroom/article/0,,id=204335,00.html>
*       Schedule M <http://www.irs.gov/pub/irs-pdf/f1040sm.pdf> , Making Work Pay and Government Retiree Credits

Additional Contact Information:

*       Social Security Administration <http://www.irs.gov/app/scripts/exit.jsp?dest=http%3A%2F%2Fwww.ssa.gov%2Frecovery%2F> – Toll free Number: 800-772-1213
*       Department of Veterans Affairs <http://www.irs.gov/app/scripts/exit.jsp?dest=http%3A%2F%2Fwww4.va.gov%2Frecovery%2F>  – Toll Free Number: 800-827-1000
*       Railroad Retirement Board <http://www.irs.gov/app/scripts/exit.jsp?dest=http%3A%2F%2Fwww.rrb.gov%2Frecovery%2F>

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IRS YouTube Videos:

*       Tax Filing Season 2010 English <http://www.youtube.com/watch?v=Z2faeHptrFw>  | Spanish <http://www.youtube.com/watch?v=TF6D_q6cxio>  | ASL <http://www.youtube.com/IRSVideosASL#p/a/u/0/_4lCHasLQ6Q>
*       Earned Income Tax Credit English <http://www.youtube.com/watch?v=B1Qo9EmTg-g>  | Spanish <http://www.youtube.com/user/IRSvideosmultilingua#p/a/u/0/TsYBmCwK0zc>  | ASL <http://www.youtube.com/watch?v=9vh9JcMXMr0>
*       Education Credits – Parents    English <http://www.youtube.com/watch?v=c8dGeQPJFsQ> | ASL <http://www.youtube.com/IRSVideosASL#p/a/u/1/joUofQQJMUk>
*       Education Tax Credit-Claim it-Students     English <http://www.youtube.com/watch?v=AbTWw-7EGGM>  | Spanish <http://www.youtube.com/watch?v=mNxXN4QsV00>  | ASL <http://www.youtube.com/IRSVideosASL#p/a/u/0/NgSkTDigMhQ>
*       Energy Tax Credits Claim It     English <http://www.youtube.com/watch?v=SJVErIO3jcA>  | Spanish <http://www.youtube.com/watch?v=_psOaIsnem4>  | ASL <http://www.youtube.com/IRSVideosASL#p/a/u/1/ftvkzvP_BAA>
*       Haiti Earthquake Donations     English <http://www.youtube.com/watch?v=ZLPzcJcKKEE>  | Spanish <http://www.youtube.com/user/IRSvideosmultilingua#p/a/u/1/k18kPgET9rg>  | ASL <http://www.youtube.com/IRSvideosASL#p/u/12/tOUConp5ELk>
*       Making Work Pay – Claim It     English <http://www.youtube.com/watch?v=pLbPS2ZKC9k>  | ASL <http://www.youtube.com/IRSvideosASL#p/a/u/0/dp-mCdWE774>
*       New Homebuyer Credit-Claim It     English <http://www.youtube.com/IRSvideos#p/u/2/FEceiZW9e3w>  | Spanish <http://www.youtube.com/watch?v=0rILbwwlstU>
*       New Homebuyer Credit-Military     English <http://www.youtube.com/watch?v=VoZ0CCGQ9U8>
*       Split Refunds-Savings Bonds     English <http://www.youtube.com/watch?v=aOGvIcNJPag>  | Spanish <http://www.youtube.com/watch?v=ssIrZ_Z_DYI>
*       Unemployment Compensation     English <http://www.youtube.com/watch?v=L1nNCeRQKUU>  | Spanish <http://www.youtube.com/watch?v=yvvUZJx2dp8>
*       Vehicle Tax Deduction – Claim It     English <http://www.youtube.com/watch?v=nw8dtXsUTS0>  | Spanish <http://www.youtube.com/watch?v=_CwL3XviwXE>  | ASL <http://www.youtube.com/IRSvideosASL#p/a/u/2/T5I-wn2B8Is>

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The following information has been provided by the IRS:

As you get ready to prepare your 2009 tax return, the Internal Revenue Service wants to make sure you have all the details about tax law changes that may impact your tax return.

Here are the top five changes that may show up on your 2009 return.

1. The American Recovery and Reinvestment Act

ARRA provides several tax provisions that affect tax year 2009 individual tax returns due April 15, 2010. The recovery law provides tax incentives for first-time homebuyers, people who purchased new cars, those that made their homes more energy efficient, parents and students paying for college, and people who received unemployment compensation.

2. IRA Deduction Expanded

You may be able to take an IRA deduction if you were covered by a retirement plan and your 2009 modified adjusted gross income is less than $65,000 or $109,000 if you are married filing a joint return.

3. Standard Deduction Increased for Most Taxpayers

The 2009 basic standard deductions all increased. They are:

*       $11,400 for married couples filing a joint return and qualifying widows and widowers
*       $5,700 for singles and married individuals filing separate returns
*       $8,350 for heads of household

Taxpayers can now claim an additional standard deduction based on the state or local sales or excise taxes paid on the purchase of most new motor vehicles purchased after February 16, 2009. You can also increase your standard deduction by the state or local real estate taxes paid during the year or net disaster losses suffered from a federally declared disaster.

4. 2009 Standard Mileage Rates

The standard mileage rates changed for 2009. The standard mileage rates for business use of a vehicle:

*       55 cents per mile

The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:

*       24 cents per mile

The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents per mile.

5. Kiddie Tax Change

The amount of taxable investment income a child can have without it being subject to tax at the parent’s rate has increased to $1,900 for 2009.

For more information about these and other changes for tax year 2009, visit IRS.gov.

Links:

*       FS-2010-4 <http://www.irs.gov/newsroom/article/0,,id=217792,00.html> , 2009 Tax Law Changes Provide Saving Opportunities for Nearly Everyone
*       The American Recovery and Reinvestment Act of 2009: Information center <http://www.irs.gov/newsroom/article/0,,id=204335,00.html>
*       1040 Central <http://www.irs.gov/individuals/article/0,,id=118506,00.html>
*       Form 1040 instructions (PDF 941K <http://www.irs.gov/pub/irs-pdf/i1040.pdf> )

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