In an effort to shame those that owe the state taxes, New York has taken the extraordinary (and desperate) measure to name the 500 biggest tax delinquents (individuals & businesses) on their website www.nystax.gov.

The move by the state Department of Taxation and Finance is part of a more aggressive effort to recoup some of the more than $14 billion owed to New York. Officials estimate at least $4.2 billion is recoverable and could help close next year’s projected $9.1-billion budget deficit.

Of the 250 individuals owing the most in back taxes, 33 are from Nassauand 21 from Suffolk. Among the 250 businesses owing the most in back taxes, 22 are from Nassau and 30 from Suffolk.

The site is going to be updated each month, eventually listing ALL tax delinquents regardless of how much they owe.  However, only those with at least one tax warrant out will be listed on NY’s site.

The site will be updated at the beginning of each month, according to department spokesman Brad Maione. He said information about all tax delinquents, regardless of how much they owe, will eventually be available online through a searchable database.

It remains to be seen how much the shame of being listed as a tax delinquent on nystax.gov will have on recouping actual fees.  However, in this day an age many businesses and individuals perform simple google searches on their potential business partners.  I am guessing that having the stain of “tax delinquent” on your name can not help your business prospects.

If you are listed on NY’s website as a tax delinquent, or you believe you are about to be listed, contact R&G Brenner as we can help you get your name removed.

Source: NY Newsday

The IRS has reported that more than 1.4 million tax payers are due over $1.3 BILLION in unclaimed refunds because they have not filed a 2006 tax return.  These refunds are still available, but only if a 2006 tax return is filed before April 15th, 2010.  After that, the government gets to keep your refunds.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury…

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2006. For example, most telephone customers, including most cell-phone users, qualify for the one-time telephone excise tax refund. Available only on the 2006 return, this special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. For details, see the Telephone Excise Tax Refund page on IRS.gov.

In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2006 were $38,348 for those with two or more children, $34,001 for people with one child and $14,120 for those with no children. For more information, visit the EITC Home Page.

So if you thought you did not make enough income to file a tax return for tax year 2006, you may have money due to you.  The median refund for 2006 is $604, and in this economy every penny counts.  If you haven’t filed a 2006 tax return, contact an R&G Professional today and we will help you determine if any of these unclaimed refunds belong to you.

Source: IRS.gov

There are many ways to maximize your refund  in any given tax year.  However, as opposed to sifting through reams of tax laws to determine whether or not you qualify for certain tax credits, various deductions or if you should file additional tax schedules, one of the easiest & most frequently overlooked adjustments you can make is to your employee withholding.

Your employee withholding is the amount of taxes your employer withholds from your paycheck for tax purposes.  In the absence of credits/deductions, the majority of a taxpayer’s refund comes from an overpayment of this withholding.  Hence the term “Tax Return”.  Asking your employer to slightly increase your weekly withholding, can make a significant difference in your future tax returns.

This is especially important now because the IRS has made changes to their federal with holding tax tables. The new Working Pay Credit aims to off-set the decrease in tax withholdings.  However, not all employees will qualify for this credit, which means that those who are normally accustomed to a refund, can wind up OWING taxes.

Most wage earners will benefit from larger paychecks in 2009 and 2010 as a result of the changes made to the federal income tax withholding tables to implement the Making Work Pay tax credit. However, some people may find that the changes built into the withholding tables result in less tax being withheld than they prefer.

If you’re not eligible for the Making Work Pay tax credit, withholding changes could mean a smaller refund next spring. A limited number of people, including those who usually receive very small refunds, could in some situations owe a small amount rather than receiving a refund. Those who should pay particular attention to their withholding include:

• Pensioners
• Married couples with two incomes
• Individuals with multiple jobs
• Dependents
• Some Social Security recipients who work
• Workers without valid Social Security numbers

The Making Work Pay tax credit, normally a maximum of $400 for working individuals and $800 for working married couples, is reduced by the amount of any Economic Recovery Payment ($250 per eligible recipient of Social Security, Supplemental Security Income, Railroad Retirement or Veteran’s benefits) or Special Credit for Certain Government Retirees ($250 per eligible federal or state retiree) that you receive. If you are affected by this reduction, you should review your withholding to ensure that sufficient funds have been withheld to meet your tax obligation.

Click HERE for more information on who qualifies for the Making Work Pay tax credit, withholding information for employees & employers, as well as special penalty relief for taxpayers.

This all boils down to the personal preference of the taxpayer.  If you are accustomed to a refund and do not qualify for this new credit, or simply wish to have a bigger refund come tax time, then it is a very good idea to increase your withholding.  If you require those additional fund to make end meet weekly, then you must do what in necessary.  However, this may mean smaller refunds than you are accustomed to and even the possibility you will owe taxes.

Contact an R&G Brenner professional today for more information and assistance.

Source:  IRS.gov

I recently read an article that breaks down the differences in the two most popular tax preparations software; Intuit’s TURBOTAX and H&R Block’s AT HOME (previously knows as TAX CUT).  I am going to post some of the interesting findings and add R&G Brenner’s comments underneath:

TAXES can make people do silly things, like investing in chinchilla and ostrich ranches or, over the last several years, buying a second home — which was a bad move just about anywhere in the United States.

For some folks, buying tax-preparation software may be nearly as wrong-headed…And if your taxes are complicated, you may be better off enlisting a professional’s help.

Obviously, R&G Brenner’s business depends on paid tax preparers, therefore it will not shock anyone that I agree with the above statement.  For  those with no experience with tax law it is almost NEVER a good idea to attempt to self-prepare your taxes.  This is where those who think they are saving $100-$200 dollars could be costing themselves thousands of dollars.  Adding dependents, itemized deductions, multiple W2’s/1099’s, unemployment income or rental income drastically increases the complexity of tax returns.  And regardless of how good the automated step-by-step instructions are in do-it-yourself software is, they routinely miss deductions and credits which can dramitcally affect this size of one’s refund or the amount of taxes owed.

About three of every four filers receive a refund, and filing online can accelerate the process. You must use software, either personally or through a preparer, to file electronically, and e-filers can see their refunds in as few as 10 days, Mr. Williams said. Mail filers typically wait at least six weeks.

At R&G Brenner we do NOT charge any additional fees to file electronically.  A lot of firms like H&R Block continue to charge extra fees to e-file.  Read the fine print.  Depending on which version of do-it-yourself software you use, there can be additional charges to e-file and that needs to be factored into the bottom line.  And heaven forbid you need to file multiple states or you buy a software package that doesn’t include the forms you require.  This all equates to more fees than the enticing low pricing  they advertise or the lure of a “free” tax return.  Not to mention the actual time-factor involved!  But I will leave that for a little later…

Before you buy a tax-preparation program, understand that it won’t be a panacea. You still have to keep good records — they matter mightily if you’re audited — and, in complicated situations, you may need to research tax laws yourself. The software can’t tell you whether tuition for your Spanish class is deductible, only that job-related educational expenses might be. What’s more, it won’t ease the headache you may get by trying to find answers on the I.R.S. Web site. The agency provides reams of guidance, but the rules can be murky for people who muck about with them only occasionally — even pros…

The biggest shortcoming in each program isn’t what’s in it but what’s not: You’ll have to laboriously enter your personal data. If you’ve used tax software previously, you can transfer some of your information. But you’ll need to update entries to reflect last year’s earnings and expenses, and that takes time.

Well said.  Just because you buy tax software doesn’t mean that your taxes are going to magically prepare them self.  Someone (you) is going to have to dive into all your receipts and expenses to organize them and determine what is deductible and what is not.  The rules change if your are an employee, independent contractor, self-employeed or a combination of the three.  Furthermore, all tax software has to be approved for release BEFORE the beginning of the current tax season.  The biggest problem we see with this is that many tax laws are not completely settled on before January 1st.  Thus, no tax software is ever fully complete out of the box.  For example, the IRS ruled that charitable donations for earthquake related relief for Haiti was ruled deductible for tax year 2009 if made before February 28th of this year.  There is no way do-it-yourself software will know this unless you continually apply updates as they are released.  Failing to install updates can have serious consequences in the miscalculation of your tax return.  It could take years for the IRS and/or state to catch those mistakes.  And for those that owe taxes and do not pay all that is due, it could result in high penalties and accrued interest…sometimes more than your tax liability itself.

As your taxes become more complicated, the programs’ guidance can become less helpful…My wife and I, for example, moved from Philadelphia to Massachusetts in 2008 and, as a result, paid state and local taxes in several places last year. Philadelphia alone imposes a variety of taxes on the self-employed, and I managed to get tangled up trying to record all of them. In both programs, I had to jump back and forth repeatedly between the interview and the underlying forms to ensure I got them right. In several instances, I had to override the interviews and record information directly to the returns.

This is playing with fire.  Yes, sometimes the only way to deal with a unique tax situation is to manually override the warnings that are specifically designed to prevent errors.  If you do not know the tax laws of these special situations, you are asking for trouble.  The consumer do-it-yourself tax programs are bogged down with thousands of “error” notifications which can make even a simple override harrowing and nerve racking.  At R&G Brenner we do not use these overly simplistic tax programs.  We use an industrial tax program specifically designed and integrated to handle every state in the union that imposes an income tax.  There is rarely a need to override a program verification error…but when there is, you can rest assured our professionals know when to do it.

[No do-it-youself tax program] is certain to deliver you from tax-time stress. It’s the hard questions, like puzzling through the alternative minimum tax, that eat up the most time and cause the most worry. When you grapple with those, you may still be gulping antacids and aspirin come April 15.

The biggest factor in preparing your own tax return aside from the stress of organizing your records, determining witch tax laws apply to you & overriding the program is the TIME you MUST devote in learning all this stuff; and in many cases your time is way more valuable than small fee  you could have spent having a tax professional prepare your most important annual financial document.  Unfortunately, the recent economic crisis has put a lot of people out of work and thus they have a lot more time to attempt to prepare their own taxes.  However, just because you can, doesn’t mean you should.  There are a lot of people out there that love to cook for themselves.  But even that takes practice to become adept at it.  I find it mind-boggling how many people are willing to take the risk preparing their own taxes without any prior experience.  If you miscalculate your taxes in the IRS’ favor, they are not going to contact you saying “you qualified for this credit, so here’s an extra $1000″.

If you are one of the many that has attempted to prepare your own taxes, don’t worry.  At R&G Brenner we offer a FREE consultation for your current years taxes as well as a FREE review of your prior three year’s returns.  We will only quote you a fee if we can do better.  Furthermore, we have a tax software trade-in whereby we will reduce our quoted fee by the retail amount you paid for your software.  We also offer many more attractive promotions that will save you time and money (including a FREE tax return when your refer 3 new clients).  So when it comes to your tax return leave it to the Professionals.  No need to take unnecessary risks.  Go Green – Go R&G Brenner.

Source: NY Times

It appears that for the third year in a row, NY state is planning on delaying refunds to New York taxpayers. The last two years, the state was savvy in delaying refunds by issuing a blanket letter requesting “additional documentation” in order to release refunds.  However, in many cases, the state already had all the documentation in order to process refunds.  In light of the current budget crisis, it appears New York State can no longer beat around the bush.

Two other states–Hawaii & North Carolina–have already informed their taxpayers that refunds could be held as long as July!  New York state may soon follow suit if they can not resolve the projected $8.2 Billion budget gap by April 1st.  And with the State Senate at a stand still, and continuous infighting between NY legislators and Governor Patterson, it appears almost certain that New York will also be forced to delay over $500,000,000 in state refunds.

NY State has until June to issue all refunds before they must pay out interest.  However, this is little comfort for struggling & out-of-work NY taxpayers that need these refunds just to make ends meet.

“The refund checks amount to money that belongs to taxpayers. They haven’t given the state permission to manage it for them,” said an editorial in North Carolina’s News and Record newspaper. “[The state] should have anticipated and planned for shortfalls. Time is money, and the money should be returned to its rightful owners on time.”

Both New York and North Carolina point out that delays will not apply to those returns that have already been filed. New York has paid out $293 million in refunds so far to 281,000 taxpayers; North Carolina has issued more than $400 million.

However, since the majority of taxpayers have not yet filed, these refund delays will affect the majority of NY Taxpayers.  This is not right.  NY Taxpayers pay on time, their refunds should be distributed on time.  We here at R&G Brenner recommend that if you are able to file your tax return and have not yet done so, to file as soon as possible to avoid having your refunds delayed.

Sources: ABC News, AOL News, Newsday, NY Post

The First-Time Homebuyer Credit (FTHC)–where qualifying taxpayers can receive up to an $8,000 tax credit–is under tremendous scrutiny by the IRS as it has been earmarked this year as a credit that is likely to be abused.  This is not surprising considering the huge amount of money the IRS could stand to lose due to erroneous claims.  However, those that legitimately qualify for this credit MUST be diligent in the documentation they provide in order to receive this credit.  The IRS has just released a clarification on one of their requirements:

The IRS encourages buyers seeking the homebuyer credit to sign the settlement statement when they file their tax return — even in cases where the settlement form does not include a signature line.

When the IRS “encourages” something, it is highly recommended that taxpayers follow their instructions; especially if you want your tax return processed without unnecessary delays.  R&G Brenner has learned through first hand communications with the IRS that their auditors are being stretched thin due to the increased scrutiny of the FTHC.  Virtually all of their other duties including correspondence and desk audits have taken a back seat; not good news for taxpayers that are waiting on an IRS determination as this has added processing time to an already long and laborious process.

R&G Brenner recommends that all taxpayers planning on claiming the FTHC for tax year 2009, familiarize themselves with all the neccessary documentation and the signatures the IRS is requiring.  You can do so by clicking on the source links below.  If you are an R&G Brenner client, be sure to review the requirements with your tax professional before you send your tax return to the IRS.

Source: IRS.gov & IRS.gov

The following are a list of critical tax benefits all tax payers should be aware of.  Pay particular attention to the first one, as this will negatively affect taxpayers by reducing the amount they receive from the Child Tax Credit.

• The Child Tax Credit is set to decrease from $1,000 per child in tax year 2009 and 2010, to $500 per child in 2011. If you and your child(ren) qualify, it offers a hefty tax cut — especially this year. Remember that a credit is better than a deduction, since it reduces your tax bill dollar for dollar. If you’re in the 25% tax bracket, a single eligible credit is like having $4,000 of taxable income erased. If you have three children … well, you get the ide
• There’s a “Making Work Pay” credit that can put as much as $400 in your pocket (or as much as $800 for married folks filing jointly). It represents 6.2% of earned income, for those who qualify based on adjusted gross income. You may already have seen its impact via a reduction at work in your withheld taxes.
• The maximum IRA contribution for those who qualify is actually staying the same for 2010 — it’s $5,000 for most of us, and $6,000 for those 50 or older. IRAs are good places to stash dividend-paying stocks such as Lockheed Martin (NYSE: LMT),DuPont (NYSE: DD), or Chevron (NYSE: CVX). If you play by the rules, Roth IRAs will let you withdraw everything tax-free — making them especially attractive places to park stocks you expect to soar.
• Because of low inflation, some feared that contribution limits for 401(k) accounts would be lowered for 2010, since they’re supposed to be adjusted in line with inflation. But they remain the same in 2010, at $22,000 for those 50 and older, and $16,500 for the rest of us. Apparently, Uncle Sam is taking pity on the many of us who have not saved enough, and helping older Americans try to catch up.
• The Wall Street meltdown that knocked huge companies like Citigroup (NYSE: C) andAIG (NYSE: AIG) for a loop also battered gobs of homebuyers, some of whom had a portion of their mortgage debt forgiven. Under standard IRS rules, the value of that aid would count as taxable income, but the Mortgage Forgiveness Debt Relief Act waives that, for those who qualify. That’s a very big deal; if you had $40,000 of debt forgiven, a 25% tax on that would amount to $10,000!
• Similarly, unemployment income is usually taxable — but for 2009, you can exclude the first $2,400 you get.

Source: The Motley Fool

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.

Source: IRS.gov

Two H&R Block Tax Consultants have filed suit against H&R Block stating that they allegedly violated the Fair Labor Standards Act.

Barbara Petroski and Cathy Camden claim that Kansas City-based H&R Block (NYSE: HRB) enacted a companywide policy requiring its tax professionals to complete 24 hours of unpaid, mandatory training at the end of the tax season to be eligible to prepare tax returns for H&R Block clients during the next tax season

“It is time for H&R Block to step up and recognize the reality of a continuing employment relationship with (its) tax professionals, and to fulfill its legal obligation to pay these employees at least minimum wage for time spent in company-mandated training,” George Hanson, the lead attorney in the case, said in a release. Hanson is a lawyer with Kansas City-based Stueve Siegel Hanson LLP.

“It appears that H&R Block is playing fast and loose with the concept of an employment relationship and considers these tax professionals employees only when it suits the company’s interests, but not when it comes to paying them for the required 24 hours of training between tax seasons,” he said. “H&R Block can’t have it both ways.”

The lawsuit was filed as a nationwide collective action, which means other H&R Block tax professionals may be eligible to join the lawsuit and seek unpaid wages from the past two or three years, along with damages and attorney fees.  If you are a current or former H&R Block associate and have been subject to these aforementioned mandatory training sessions you may be eligible to join this class action suit.  For more information, you can contact George Hanson of Stueve Siegel Hanson LLP, the lead attorney in this case.

Source: Kansas City Business Journal

In an effort to slash over $700,000 from their budget, NY State has eliminated the mailing of form 1099-G (Statement for Recipients of State Income Tax Refunds) to New York taxpayers.  1099-G’s are issued to taxpayers that receive NY State refunds–which are considered taxable income on the following year’s income tax return.

In the absence of this form, taxpayers (especially those that self-prepare their returns) run the risk of neglecting to include their previous state refund on their 2009 tax return this year, which could result in a delayed refund and potential penalties and/or interest as it could take years for the IRS to notify taxpayers of errors. Furthermore, NY State has delayed many refunds over the last year and a lot of NY taxpayers have yet to receive their 2008 refunds.  In this case, one would NOT have to claim their 2008 NY refund on their 2009 tax return.  Very confusing, I know.

All returning R&G Brenner clients will not have any problems relating to this as our tax software was specifically programmed to carry over the necessary information to your 2009 tax returns.  However, for non-clients that would like to obtain 1099-G information, you can do so by:

1. Getting it online by CLICKING HERE
2. Calling (866) 698-2946

Source: NY Department of Taxation and Finance