Where's My 2nd Stimulus Check??

So, we had a call come in last week asking about a supposed 2nd stimulus check. After further inquiry, we realized that our client was referring to the Making Work Pay Credit. However, the rumor mill has been referring to it as a second stimulus check. So, let's clear the air and get it right...

The Making Work Pay Credit isn't another free refund check. It equates to a refundable tax credit of up to $400 for individuals and up to $800 for married filing jointly taxpayers. In the scheme of things, this money is received throughout the year by way of lowered tax withholding rates. This lower withholding typically amounts to approximately $16-35 per bi-weekly paycheck. However, particular taxpayers who fall into any of these following groups should review their W-4 to ensure enough tax is withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers and pensioners.

Failure to adjust your withholding could result in potentially smaller refunds or may cause you to owe tax rather than receive a refund next year.

If you're unsure about whether you're on track or not, there is a withholding calculator on the IRS website that can help you compute your proper tax withholding. If the result suggests an adjustment is necessary, you should submit a new Form W-4 to your employer. And, for our self-employed clients, you will need to adjust the amount of your quarterly tax payments.Of course, if you need help with this form, give us a call or shoot an email.

In addition, for those of you that have claimed or are claiming unemployment benefits in 2009, the first $2,400 of those benefits are tax-free for federal income tax purposes. However, anything over that amount, we STRONGLY advise that you consider having taxes withheld. We have seen so many people end up owing large amounts of money due to this slight negligence. The Employment Security Commission technically cannot advise you one way or another because "taxes aren't their thing." Well, taxes are our thing, so consider yourself warned...

Remember, your questions and comments are what will make this blog more valuable and worthwhile! Feel free to post your questions or comments here, or you can give us a call at (866) 510-5477 or via email info@proctortaxprep.com.

PATP Tax Talks: Summertime Childcare Expenses

Summertime Childcare Expenses

Here in Charlotte, the temps average out around high 80s to low 90s, so it's a telltale sign that summer is here! And, many of our clients who work or are on the hunt for their next work assignment this summer must make some sort or childcare arrangements for their chaps during the summer vacation. (PATP disclaimer 1: this info will only apply if your chaps are under the age of thirteen)

Of course, we would like to inform you all that the Child and Dependent Care Credit (the technical IRS term) is not only available for expenses incurred during the hot and hazy days of summer, but also throughout the rest of the year. We would like to share a few facts with our valued clients about a tax credit available for these childcare expenses.

1. Yes, the cost of day camp can count as an expense towards the child and dependent care credit. However, expenses for overnight camps do not qualify. So, yes, if they spend the night, you can cancel the idea of counting it. Trust me, I love sending my kids overnight to places, but I want you all to know that IRS has no love for you on this one...:(

2. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you may be eligible to get some tax benefit if you qualify for the credit.

3. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income. If you don't work, you don't get the credit. And, for the married folks, BOTH parents must have positive income! Otherwise, IRS feels that the non-working spouse can care for the kids while the other is out working. Again folks...I'm speaking as the tax man, so please don't shoot the messenger.

4. You may use up to $3,000 of the unreimbursed expenses(not paid/reimbursed using Flex Spending funds) paid during the year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit. (Disclaimer 2: the maximum credit amount is $6,000.)

Remember, your questions and comments are what will make this blog more valuable and worthwhile! Feel free to post your questions or comments here, or you can give us a call at (866) 510-5477 or via email info@proctortaxprep.com.

Welcome to PATP Tax Talk Tuesday

So, we've decided to make our entrance into the world of blogging. Beginning today (July 14th), we will post a topic relating to the topics of taxes, bookkeeping, or payroll. If there's a subject or question that you would like feedback on, please don't hesitate to submit it to us and we'll post it on the blog for discussion. Without any further ado, here is the first post:

What should I do if I receive a notice from the IRS?

It’s a piece of mail that most people dread: a letter arrives from the IRS — and it’s not a refund check! Don’t panic; many of these letters can be dealt with easily and without much added stress. The IRS sends millions of letters and notices to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry. And usually, a quick call to your preparer will allow them to work on your behalf to resolve the matter.

If you receive a correction notice, you should review the correspondence and compare it with the information provided on your return.
•If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
•If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to aid in resolution of the matter. And, please be sure to keep copies of any correspondence with your records. It's you against the Feds...who you think is going to win this battle if you don't have your documented proof?

Remember, your questions and comments are what will make this blog more valuable and worthwhile! Feel free to post your questions or comments here, or you can please feel free to contact us at (866) 510-5477 or via email info@proctortaxprep.com.