Tax Carnival Ecstasy – January 22, 2013

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Welcome to the January 22, 2013 edition of tax carnival ecstasy. In this edition we start off with an article from Bill Smith on the IRS delay in tax filing acceptance until the end of January, a delay caused by the late tax law changes passed by congress. There is also an article from John Schmoll who looks at 4 Helpful Free Investment Tools that you can use. Hope you like all the articles, tweet our carnival on Twitter, share with your friends, bookmark and come back next time.

Brian McKay presents Mortgage Debt Cancellation Relief Extended Until December 31, 2013 posted at Bank CD Rates, Mortgage Rates, Savings Rates, Banking Reviews, saying, “Homeowners facing a foreclosure, a short sale or reduced loan principal by their lender after December 31, 2012, faced owing taxes on any mortgage debt that was forgiven by the mortgage lien holder. Home owners had rushed to complete short sales or debt reduction before the end of the 2013 because it looked like the fiscal cliff tax issues wouldn’t be worked out in Washington.”

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Taxes (Photo credit: Tax Credits)

swapnil presents Share Market: Tax Structure in India posted at Share Market.

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Bill Smith presents Free Tax Filing for 2011 Taxes posted at 2011 Tax, saying, “Each year, thousands of taxpayers fail to file their federal income taxes. Some individuals willingly forgo this action while others run into special circumstances.”

Bill Smith presents Processing of Tax Returns to Begin on January 30 posted at 2012 Tax – Free Tax Filing Options, saying, “Earlier this week, the US Internal Revenue Service (IRS) announced that electronic filing of tax payments for the year 2013 will commence on January 30.”

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John Schmoll presents 4 Helpful Free Investment Tools posted at Frugal Rules, saying, “Investing in the stock market can be a challenge for the seasoned investor, much less a newbie investor. By using some free investment tools you can make more informed investment decisions that will benefit your portfolio.”

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Bill Smith presents Eliminating State Income Taxes Could Spur Economic Growth posted at 2012 Taxes – Free Tax Filing Options, saying, “While Washington continues to struggle with attempts at major changes to the federal tax system, individual states have no such problem.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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What is the Federal Residential Renewable Tax Energy Credit?

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If you have made renewable energy improvements to your home, or you are considering them, you should know about the Federal Residential Renewable Energy Tax Credit. The Federal Residential Renewable Energy Tax Credit is a program that gives a huge tax incentive to people who install solar-electric systems, solar water heaters, geo-thermal heat systems, fuel cells and/or wind turbines. If you have installed a renewable energy system, or you are planning to install one, the tax credit can help you recoup a large portion of your initial investment.

A Brief History

The Energy Policy Act of 2005 was the first act to establish tax credit for residential renewable energy installations. The Energy Improvement and Extension Act of 2008 and The American Recovery and Reinvestment Act of 2009 further strengthened and extended the original act. As of this writing, the tax credit is available until 2016, although there is a good possibility that this deadline will be extended as it has in the past.

Who Is Eligible?

If you have a solar-electrical system, solar water heater, geo-thermal heat system or wind turbines that were installed after 12/31/2008 then you are eligible for a 30% tax credit with no maximum amount. If you had your system installed before 1/1/2009, then there is a maximum credit of $2,000. In the case of wind turbines installed before 1/1/2009, the maximum credit is $4,000. Additionally fuel cells need to have been installed after January 1, 2006 and the maximum credit is $500 per half kilowatt. There are certain federal Energy Star requirements for renewable energy systems, so if you are planning an installation, then you should consult with a professional about which systems are eligible to receive the tax credit. If you already have a renewable energy system installed, you should consult with a tax account to find out if you can still claim the credit.

Other Caveats

The home or homes served by the solar panal installation system do not have to be the taxpayer‘s primary residence, except in the case of fuel cells, where only the taxpayer‘s primary residence is eligible. For solar water-heating systems, the Solar Rating Certification Corporation (SRCC) or a comparable state agency must certify the system for performance. Additionally, the solar water-heating system must heat at least 50% of the home’s water. Hot tubs and swimming pools with solar water heat are ineligible for the tax credit. Fuel cells must generate at least .5 kilowatts and have electricity generation efficiency greater than 30%.

Although determining your eligibility may seems confusing, it is actually not that difficult. Most renewable energy systems installed after 12/31/2008 are eligible. However, you should check with the IRS or with a tax accountant if you are not certain. If you are planning on installing a new renewable energy system, than you should definitely consult with the company doing the installation to make sure that you get a system that will get you the tax credit so that you can offset your initial investment.

About the Author: Odette Maupredi has spent months researching residential solar panel benefits and highly recommends everyhomeowner look into both state and federal energy programs. You could stand to save quite a bit of money if you can afford to participate.

Top Ten Most Overlooked Tax Deductions

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Each year the Internal Revenue Service (IRS) reports the most common tax deductions taxpayers forget about when submitting their income tax return.  Among one of the most common mistakes taxpayers make is they forget to place their Social Security number on the form or they make a mistake when entering the information.

It is possible for some taxpayers to be overpaying so it helps to make sure you review deductions available and understand how to claim them correctly to obtain the credit.  Below is a list of the most common deductions overlooked by taxpayers:

  1. State sales tax: Taxpayers who live in a state that doesn’t impose an income tax often forget to claim this deduction.  The IRS has a table that can be used to help you figure out the amount to deduct.
  2. Charitable contributions: This includes charitable deductions from your paycheck, items purchased for a charitable event such as a fundraiser or if you drove your vehicle for charity, the IRS lets you deduct a certain amount per mile.  Save all receipts and if you make a donation of 250 or more, get written confirmation from the charity.
  3. Student loan interest: If mom or dad paid for a student loan for a child not claimed as a dependent, the interest can be claimed on your return.
  4. Moving expenses: If you moved to take a new job, the expenses related may be deductible.
  5. Child care credit: Having a credit can help reduce taxes owed.  If your expense is paid through an account at work, it is easy to overlook but if you pay several thousand for child care it helps reduce taxes owed.
  6. Earned income tax credit: While the rules to this may be complex, many taxpayers don’t claim it.  This is considered a refundable tax credit instead of a deduction.
  7. State tax paid last spring: If you paid state income taxes in quarterly payments or had them withheld, they can be deducted on your current return.
  8. Energy-saving home improvement credit: This is a credit that is 30 percent equal to the cost of energy-saving improvements.  The IRS provides details on qualifications for this credit.
  9. Jury duty payments:  If your employer required you to give them payments you receive for jury duty, you can claim the amount on your return.
  10. Refinancing points: There are points that can be deducted when you refinance your home at one time.  This depends on how many years are on your mortgage and you can deduct points that are remaining if you sell you r home after paying if off or refinance again.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to loans.

Common Tax Deductions That Are Overlooked For Small Businesses

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Having a successful tax season involves proper planning throughout the year to maximize on the deductions that relate directly to your business and its income level.

Starting up Expenses

Capital expenses are one of the expenses that are constantly overlooked when looking for ways to reduce your tax expenses. They usually include marketing, overheads and other related expenses needed to start off your business. You can only deduct them for the first five years after your business opens and cash starts flowing into the business.

Education and training expenses

These are some of the other expenses that most businesses tend to overlook as deductions. Any training and education carried out to improve the skills of your workers and the business in general can be used to reduce the tax liability. However the training and education needs to be related to the business and this rule has to be strictly followed for the expenses to qualify as deductions.

Fees for Professional Services

Some of the professional services sought by the business such as accounting and architect fees qualify as deductible expenses. The only rule that one has to consider is that the services need to relate to the current year. If they relate to the future, the expenses then need to be distributed over the years.

Bad Debts Expense

Debts that you never recover from your customers qualify as deductible expenses. However this only applies to businesses that sell goods and not those that provide services.

Other Expenses that Qualify

Businesses differ and hence there may be other expenses that may qualify as deductibles in your business. IRC and 162 can help you identify some of the unique expenses to your business. In case you find them too confusing, refer the matter to your tax accountant with some of the codes that you think fit in with your business. He or she will be in a position to guide you to identify the respective expenses.

This is one thing that you should be very sure about in your small business. Your tax accountant can help you ensure that you take advantage of the tax deductible expenses.

What is the Dependent Care Tax Credit?

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What is the Dependent Care Tax Credit?

When you are a working taxpayer and have dependents that require care while you are working, you can take a tax credit called the Child and Dependent Care Tax Credit, to help offset the expenses. The dependent can be a child under the age of 13 or a spouse that requires care due to physical or mental limitations.

You can also claim the tax credit when you are looking for work. This is considered the same as working for this tax credit. Full time students are considered to have earned income while … Read more at 2009 Taxes

turbotax

What is the Dependent Care Tax Credit?

When you are a working taxpayer and have dependents that require care while you are working, you can take a tax credit called the Child and Dependent Care Tax Credit, to help offset the expenses. The dependent can be a child under the age of 13 or a spouse that requires care due to physical or mental limitations.

You can also claim the tax credit when you are looking for work. This is considered the same as working for this tax credit. Full time students are considered to have earned income while they are away from the home to qualify for the tax credit.

You have to name the care provider on your tax return and it cannot be a spouse, dependent, or someone under age. And you must fulfill the residence test where the child or dependent spouse must have lived in the house for more than half the tax year.

You can claim $3,000 for one dependent or $6,000 for two dependents. See IRS Publication 503 for more information on completing Form 2441 and claiming this credit when you prepare your taxes this year.

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