Homeowners can find cash with the homeowners tax credit
February 10, 2010 by Taxcut Editor
Filed under Personal and Business Taxes
Benefits of the tax credit
Homebuyers can find cash today with the $ 8,000 first-time homebuyer tax credit. The credit is the showpiece of the 2009 American Recovery and Reinvestment Act. It was designed by the government to boost housing sales and help spur the market to recovery. Projections are that the plan was successful. Chief economist for the National Association of Realtors Lawrence Yun said, “According to our projections, homebuyers will purchase an additional 300,000 homes in the coming year as a result of the tax credit.”
Overall, the tax credit was a help to the nation’s recovery efforts. Yun said, “We think this year’s tax credit will certainly have a much bigger impact because it is a true tax credit which is also refundable. For instance, if you owe $ 1,000 in taxes and qualify for the first time homebuyers credit, you receive a tax refund of $ 7,000.” Yun believes the credit will continue to bring down housing inventories and stabilize housing costs.
Tax credit for first time homebuyers
There are rules along with the first-time homebuyer tax credit. Here are the main ones:
- It does not have to be repaid unless the home is sold within three years
- It is available to homes purchased between January 1st and December 1st of 2009.
- Restricted to individuals with AGI of $ 75,000 or more and couples with AIG of $ 150,000 or more
- The tax credit is for up to 10% of the purchase price, to a maximum of $ 8,000
- The credit can be taken in 2008
- It applies to first-time homebuyers, or those who have not owned a home in three tax years
The filing exceptions to the tax credit are:
- Those who closed on a home prior to April 15, 2009
- Those who got an extension to file taxes
- Those who filed an amended return
Critics and complainers
Though many financial experts are in support of the tax credit, there is still a portion of analysts who don’t believe it is the easiest way to find cash today. A Certified Financial Planner for the Wise Investor Group, Greg Smith, opines the tax credit is an incentive to buy, but buyers need to be realistic about the benefits of the tax credit. He said, “This incentive only works for people who have complete job security, who know they won’t be transferred within three years, who qualify as first-time homebuyers and have the ability to obtain financing. They must also live in an area with reasonable housing prices.”
Michael Dooley, another financial planner in Beverly, Massachusetts, agrees. He said, “While the theory behind the tax credit is great, I just don’t think $ 8,000 is enough. The people who would benefit from this the most are looking to survive financially or are even leaving their homes because they can’t afford them.” The tax credit was meant to cover 10% of the home’s purchase price, but surveys show that in reality it’s only covering about 4%.
Performance thus far
Although there are detractors to the tax credit who don’t believe it is the answer to finding cash today as easily as it was supposed to, it still is allowing buyers to purchase homes. The real job of the tax credit was to benefit first-time homebuyers and spur them into action. The tax credit has done that and can’t be deemed a failure yet.
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US Congress Approves Tax Breaks For Homebuyers And Businesses
November 11, 2009 by taxman
Filed under IRS News Items
 The US House of Representatives has expanded loss carry back provisions and extended the homebuyer tax credit after approving the Worker, Homeownership and Business Assistance Act of 2009 on November 5.
The legislation will allow businesses of all sizes to use net operating losses from 2008 or 2009 to offset profits from five previous years, up from the normal carry back period of 2 years. However, business would only be able to offset 50% of their income in the fifth year of carryback, although the Act allows small businesses which have already elected to carry back 2008 losses under the American Recovery and Reinvestment Act to elect to carry back losses from 2009. The Act also extends the USD8,000 homebuyer tax credit to first-time homebuyers with a binding contract before April 30, 2010, allowing 60 days to close. Under the current law, this tax credit is due to expire on November 30, 2009. The legislation additionally expands the tax credit’s coverage by increasing the phase-out threshold for individuals to income above USD125,000, and for joint filers to income about USD225,000. Current law stipulates that the credit phases out for individuals with income starting at USD75,000 and for joint filers with income starting at USD150,000. The legislation makes available a USD6,500 credit to homebuyers who have been in their current residence for five or more consecutive years out of the last eight years. In addition, for military personnel there is an extended tax credit deadline of April 31, 2011, and more relaxed tax credit repayment terms. The homebuyer tax credit is available for the purchase of principal residences with a purchase price of up to USD800,000. Unemployment insurance for workers in every state will be extended by 14 weeks under the legislation, and for 20 weeks in states with an unemployment rate of more than 8.5%. This provision is paid for by an extension of the Federal Unemployment Tax Act (FUTA), which costs employers USD14 per year per employee, through June 30, 2011. The proposals were approved by a strong bipartisan majority of 403 to 12, and President Obama was due to sign the bill on the afternoon of November 6. Charles Rangel, Chairman of the House Ways and Means Committee, commented that: “I am pleased that Congress has united behind this vital assistance to families and businesses and I look forward to President Obama’s signature so this important bill can become law.” |
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Don’t fall for scams on Web, IRS warns
September 30, 2009 by taxman
Filed under IRS News Items
The federal income tax deadline is months away, but scam artists posing as Internal Revenue Service officials are still out in full force.
This year, the IRS has worked with cybersecurity agencies to shut down nearly 2,000 Web sites that falsely invoked the IRS name or logo in an effort to persuade taxpayers to hand over personal financial information, according to agency spokeswoman Dee Harris. The scam artists behind those sites use the financial information they collect to open credit cards, apply for new loans or make purchases under that person’s name.
“We’re seeing a lot of different scams,” Harris said. “The scams seem to be year-round and they take different angles to try and scam people.”
Some of the tax scams play on the Making Work Pay Refund, a refundable tax credit made available through the American Recovery and Reinvestment Act of 2009. The credit is passed on to workers in the form of a decreased tax withholding from their paychecks. But scam artists posing as IRS officials are approaching some individuals via e-mail and asking them to register with the agency so that the refund can be deposited into their bank account.
In other cases, scam artists tell taxpayers that they are due lottery winnings, recovered inheritance money, or tax refunds. In each of those scams, the consumer is asked to turn over personal financial data either by return e-mail or by entering it into a fraudulent Web site.
In addition, Harris said consumers who click on some of the links in e-mails from scam artists may inadvertently download spyware or other forms of software that compile information from their computer without their consent.
She encouraged consumers to be wary of unsolicited calls or e-mails that appear to come from the IRS. The agency does not initiate communication with taxpayers or collect personal financial information by e-mail or by phone.
“We’re not going to call them requesting personal information,” Harris said.
Cynthia Albert, director of operations and media relations for the Better Business Bureau of New Orleans, said consumers should always be careful when responding to requests about personal financial information.
“We tell everybody, no matter what they’re telling you on the Internet or on a cold call, do not divulge private or sensitive information without checking the source,” said Albert, who recommends looking up the phone number of any soliciting business or agency and calling them back to verify the information request. “They’re going to steal your identity and it takes a tremendously long time to get this straightened out.”
E-mail scams can be sophisticated and hard to detect, but Harris said there are several red flags that taxpayers can watch for. E-mails that request detailed or an unusual amount of personal information, those that dangle some sort of bait to get the recipient to respond, and e-mails that use extremely long addresses in any link contained in the message should all be viewed with caution, she said.
Anyone who has received a questionable e-mail claiming to come from the IRS should forward it to phishing@irs.gov, a mailbox the agency has established to review such missives. Harris also said individuals who have questions about whether or not the correspondence they received is actually from the IRS should stop by one of the agency’s local offices or call the agency at 800.829.1040
Furthermore, if you get a call from someone telling you that you have money coming to you and wants you personel finance info, Hang up the phone right away.. Legitimate companies are affiliated with the BBB, Dunn & Bradstreet, the NATP and other Well know industries. If you have a tax problem. Contact IGNCT. the Nation’s largest and most successful tax resolution firm. @ IGNCT, your case will be assigned with a real tax Attorney. You may request the CV of that attorney if you desire.
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Recovery Zone Bond Volume Cap Allocations
June 18, 2009 by Taxcut Editor
Filed under IRS News Items
Notice 2009-50 provides guidance on the maximum face amount of recovery zone economic development bonds and recovery zone facility bonds, two new types of bonds enacted in the American Recovery and Reinvestment Act of 2009 that may be issued by each State, and the counties and large municipalities within such State, before January 1, 2011. The reallocations of bond volume cap to counties and large municipalities may be accessed at http://www.irs.gov/taxexemptbond/index.html. Recovery zone bonds provide tax incentives for State and local governmental borrowing at lower borrowing costs to promote job creation and economic recovery that is targeted to areas particularly affected by employment declines.
Notice 2009-50 will appear in IRB 2009-26, dated June 29, 2009.
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Tax Credits Available For Home Improvement Energy-Efficient Products
June 17, 2009 by Taxcut Editor
Filed under Taxcut Blogs on Energy Savings
A new federal tax credit for energy-efficient home improvements could put an extra $1,500 in homeowners’ pockets come tax time next year, but buyers should beware – not every green gadget under the sun qualifies.
How does it work?
The new tax credit is actually an expansion of tax credits first enacted by former President George W. Bush. The old rules allowed taxpayers to receive 10 percent of the price of certain energy-efficient products, up to a lifetime maximum of $500. President Barack Obama expanded the credit with the recently enacted American Recovery and Reinvestment Act. Now, consumers can get 30 percent of the price of certain energy-efficient items back at tax time, up to a lifetime maximum of $1,500.
Another change is that for big ticket items, such as wind turbines and solar water heaters, the $1,500 cap does not apply, and people can instead get back 30 percent of the total cost – materials and installation – through 2016. Credits for smaller-ticket items, such as windows, doors and roofs, can be claimed during both 2009 and 2010, and only 30 percent of the cost of materials – not installation – can be claimed.
Federal guidelines list 15 energy-efficient household items that qualify for the credit. Insulation, windows, doors, roofs and central air conditioners are among the items on the list, but each product has to meet specific guidelines in order to count.
“We offer energy-efficient roofing that you can get a tax credit on, as well as blown insulation,” said Brian Elias of 1-800-Hansons, an Oakland County-based window company that also offers roofing and other home improvement services. The guidelines for roofing are very stringent. The law states that eligible roofs are either metal or made of reflective asphalt shingles, which are made of lighter colors. To be even more specific, it also states that roofs qualify only if such roof has appropriate pigmented coatings or cooling granules.
As of June 1, the specifications for windows and doors that qualify also became much tougher to meet.
Under the old guidelines, a greater variety of doors and windows met the standard for the tax credit.Consumers needed a manufacturer’s certification letter or Energy Star label that showed it met the criteria. A safe harbor provision allowed the more lax guidelines to stay in place through June 1. That was when the criteria became more specific and much tougher to meet. In order for a door or window to qualify, both the U factor and the solar heat gain coefficient must be 0.30 or less. The U factor measures the rate of heat transfer, and the solar heat gain coefficient tells how well the product blocks heat caused by sunlight. The lower each number is, the better the product performs.
Though recent TV commercials have shown several companies advertising all their windows as qualifying for the tax credit, those statements likely will change as the rules change. Less-efficient windows that don’t qualify will continue to be offered through 1-800-Hansons. The company carries two lines of windows – I-Q Glass and the Ultimate Package – that qualify for the credit. “You have to buy energy-efficient windows, and the problem in our industry is everybody says windows are energy efficient, but the government didn’t qualify certain windows for a reason,” Elias said. “The problem for the consumer is they all look alike. The bottom line for the consumer? Know what makes a product qualify and be sure that’s what is being purchased.”
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