Tax Law Blog | IRS Tax Attorneys

If you are going to prepare your tax returns yourself, be sure to use a reliable and easy-to-use software program. You can find an overview of prior year software. You should plan on spending about 2 to 3 hours per tax return you need to file.

An experienced tax professional, on the other hand, can help you deal with the IRS. The best way to find a tax pro is to ask your friends, and find a professional with significant experience in preparing back taxes. Good reasons to hire a tax pro: if you need advice on how to handle incomplete tax documentation, or an advocate who will negotiate with the IRS on your behalf.

Either way, you’ll be doing plenty of work yourself, such as tracking down missing information.

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The American Recovery and Reinvestment Act of 2009 expands the first-time homebuyer credit to include purchases made before Dec. 1, 2009.

The IRS announced Feb. 25 that for first-time homebuyers who purchase in 2009, the maximum credit is $8,000 and can be claimed on a buyer’s 2008 federal tax return.

The credit is claimed using Form 5405.

For first-time homebuyers who bought in 2008, the maximum credit is $7,500 and must be paid back over a period of 15 years.

Donald Trump’s casinos, operating under the Trump Entertainment Group of companies, filed for Chapter 11 bankruptcy protection last week.

The bankruptcy petition lists the casino group’s assets as between $10 - $50 million, with estimated liabilities of between $100 - $500 million. According to an exhibit attached to the filing, on December 31, 2008 Trump casinos had approximately $1.74 billion in debt and assets of $2.06 billion. Secured creditors include Donald Trump himself, Morgan Stanley & Co., Franklin Mutual Advisors, LLC, and New York hotel developer Sam Chang.

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Massachusetts Transportation Secretary James Aloisi says the reality of the fiscal crisis facing Massachusetts finally pushed him and Governor Patrick to propose the gas tax. He says, “We’ve got coming, a $165 million operating deficit at the T, which will happen on July 1. If we don’t solve that problem, we’ll have T fare hikes, service cuts, and layoffs. And we’ve got a Turnpike that is very close to having junk bond status.”

Aloisi says Governor Patrick will veto the gas tax hike if it is adopted without Deval’s proposed reforms of transportation agencies. He says that tolls will have to be raised if the gas tax is not approved by the March deadline set by Turnpike Authority lenders.

Massachusetts Governor Deval Patrick delivered his long-awaited decision last Friday. Despite rejecting the idea during his campaign, he proposed a 19-cent a gallon increase in gas taxes.

The number one cheerleader for the gas tax joins Jim Braude on this segment of Newsnight.

Last month, James Aloisi was named Secretary of Transportation. During the Dukakis and early Weld administration, he served at counsel to the Massachusetts Turnpike Authority.

For more information on Governor Patrick’s transportation reform plan CLICK HERE.

A U.S. Virgin Islands economic development group on Friday said it was barring Robert Allen Stanford from a tax incentive program it had previously granted Stanford’s company to build a sprawling corporate campus on St. Croix, according to a Reuters report.

The Virgin Islands Economic Development Authority joins other financial regulators in the United States, the Caribbean and Latin America who have taken similar steps after Stanford, chairman of Houston-based Stanford Financial Group, was accused of “massive ongoing fraud” by the U.S. Securities and Exchange Commission.

“We are cooperating with the SEC,” Percival Clouden, executive director of the Virgin Islands Economic Development Authority, told Reuters by telephone from St. Thomas. “We are temporarily suspending his (Stanford’s) access to our tax incentive program, until the U.S. investigation is resolved.”

Stanford Group Co. broke ground in February 2008 on the construction of what was to be a global management complex in the U.S. Virgin Islands. The 37-acre site, near the Henry E. Rohlsen International Airport in St. Croix, was to house the Stanford companies’ worldwide management functions, according to the company.

The company expected to be finished with the construction by mid-2009.

Reuters reported that Stanford’s U.S. Virgin Islands affiliate applied for local tax breaks in 2006.

The territory’s government approved his application in 2007, but Stanford had not yet received any tax breaks under the program because the government had not yet issued the certificate needed, Clouden said.

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One day after the Justice Department claimed to have struck a blow against Swiss bank secrecy, it became clear yesterday how limited that blow was and how much a $780 million fraud settlement with Switzerland’s largest bank left unresolved.

On Wednesday, the department announced that the Swiss banking giant UBS would immediately give up the names of an unspecified number of American clients to avoid prosecution on charges that it helped them use secret accounts to evade U.S. taxes.
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If you missed out on last year’s tax rebate or did not receive the full amount because your income was too high, you may get a second chance. “The Recovery Rebate Credit should not be overlooked,” says Mark Steber, vice president of tax resources for Jackson Hewitt. “You may be due more money when you file your 2008 taxes,” Steber adds.

The first round of rebate checks, which were mailed directly to eligible taxpayers, was based on 2007 tax return information. Rebates are reduced for single taxpayers with more than $75,000 in adjusted gross income. For joint filers, the phase-out begins at $150,000.

If your income has changed since 2007 — perhaps due to a job loss or a reduction in investment earnings — you may qualify for a credit of up to $600 if you are single and up to $1,200 if you are married. Or, if you had a baby or adopted a child in 2008, or if you are a divorced parent who claims a child as a dependent every other year, you may qualify for a tax rebate of up to $300 for an additional child under age 17.

With more than 11 million Americans unemployed, it’s a good bet than many will qualify for additional rebate money, says Mike Martin, president of Mike Martin & Associates in Independence, Missouri.

Any amount you receive based on 2008 tax information would be offset by what you have already received based on your 2007 tax returns. So, for instance, if you are single and received $200 out of the potential $600 rebate, you may be eligible for an additional $400.

The only way to receive a new or additional rebate is to claim the Recovery Rebate Credit on your 2008 tax return on line 70. The IRS provides a two-page worksheet in the 1040 directions as well as a calculator at IRS.gov to help you determine if you are eligible to claim a rebate. If you’re not up to doing the math, you can instruct the IRS to calculate the credit for you by entering “RRC” next to line 70.

If you qualify for a rebate, don’t expect to receive a check in the mail. It will be added to any refund you are due or will reduce any tax bill that you owe.

Even if you already received your rebate check last spring and aren’t entitled to any additional money, you benefit, too. The money you received is not taxable, and if your 2008 income increased about the levels that make you ineligible for a rebate, you don’t have to give it back.

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While hunting for a job most expenses are tax deductable. Some examples are as follows:

* Paper, preparation expenses and printing for your resume.
* Stamps to send out your resume.
* Online expenses to post your resume (on monster.com, for example)
* Fees paid to employment agencies
* Travel to and from interviews.
* Long distance calls to prospective employers.
* Costs of getting a portfolio or other work samples together.

There are some caveats. You can’t deduct the cost of looking for your first job in a particular profession. Sorry new grads, you’re out of luck - it’s just the rule!
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After a frustrating weekend of long, late nights without reaching a budget agreement, the California Senate will go into session this morning and not adjourn until the most controversial part of the budget deal is approved.

“We will put the tax bill on call and we will stay on this floor until we get it done,” said Senate President Pro Tem Darrell Steinberg. “Bring a toothbrush, bring whatever necessities you need to bring because I will not allow anyone to go home to resume their lives.”

Steinberg said he intends to force a vote on a bill that contains the $14.4 billion tax package that’s part of the budget deal that solves a $41 billion budget gap. The budget package also includes nearly $16 billion in spending cuts and $11 billion in borrowing.

California’s top finance official warned state lawmakers Monday that without a budget agreement to fend off the state’s cash crisis, he will begin halting the remaining 276 public works projects that have been allowed to continue despite the state’s dwindling cash supply.

The infrastructure projects, costing about $3.7 billion, include scores of developments in the Bay Area, such as carpool lanes on Highway 580 in the East Bay and Highway 101 in Sonoma County and seismic improvements at UC Berkeley’s Doe Library.

The end result will be tens of thousands of jobs lost as the construction projects come to a grinding halt, Department of Finance Director Mike Genest told a Senate committee hearing on the ramifications of a continuing budget delay.

The committee hearing was called even while legislative leaders and Gov. Arnold Schwarzenegger were trying to salvage their budget agreement, which hit a wall late Saturday when the package fell two votes short of approval in the state Senate.

Sen. Roy Ashburn, R-Bakersfield, abstained, but is expected to vote “yes” on the budget once another GOP senator agrees to support the plan.

Schwarzenegger and legislative leaders continued to cajole two moderate Republican senators on Monday to gain support from at least one of them, but it was unclear whether either Sen. Abel Maldonado, R-Santa Maria (Santa Barbara County), or Sen. Dave Cox, R-Fair Oaks (Sacramento County), would switch his vote to “yes.”

In an apparent attempt by Schwarzenegger to turn up the heat on the Legislature, layoff warning notices will go out to 20,000 state workers today as the first step toward lopping 10,000 jobs from the state payroll.

The governor last week threatened to send out the notices on Friday, but decided against it when it appeared the Legislature would approve a compromise budget. But with the deal in limbo after failing to garner enough GOP votes in the Senate, the layoff notices will have to go out, said Aaron McLear, a spokesman for Schwarzenegger.

The budget agreement contains nearly $16 billion in cuts, $11 billion in borrowing and more than $14 billion worth of temporary tax increases that all but a few Republican lawmakers have criticized as the deal killer.

But as the budget impasse hit day 103 on Monday, state finance officials said they would have to pull the plug on the public works projects that have been allowed to continue thus far.

In December, state finance officials said the state’s fiscal crisis was so dire that they needed to halt financing for 5,600 construction projects across the state. Then last month, they agreed to exempt 276 projects that were either too far along in construction or would cost the state too much to halt and restart later.

Now, those projects would have to be halted as well, Genest said.

Will Kempton, director of Caltrans, said about $1.8 billion worth of transportation projects would have to be suspended.

“Without a budget, implications can be catastrophic, absolutely catastrophic for our program,” he said at the Senate committee hearing. “We need a budget very, very quickly.”

Stopping and restarting construction could also cost the state additional $300 million to $400 million in the way of closing off and securing construction sites and even paying contract penalties to subcontractors, Genest and Kempton said.

Danny Curtin, director of the California Conference of Carpenters, said that with the recession, public works projects are the last remaining haven for construction workers.

“Right now, the construction industry has no other work that they can contemplate,” he said at the Senate committee hearing. “We would have a depression in this industry almost instantly. What’s keeping the industry afloat is public works projects.”

But at least one Republican lawmaker argued that the latest budget proposal would hurt businesses and cause even more job losses.

“New taxes will result in lost jobs,” said Sen. Dennis Hollingsworth, R-Murrieta (Riverside County). “Are we really going to get increases in jobs at the end with this budget?”

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Tax litigation sure can be a confusing process. When involved, one doesn’t have much choice, but to contact a tax attorney immediately.

A state proposal to add a 4% tax for downloading movies and music will also apply to Internet porn.

Gov. Paterson recently suggested the so-called iPod tax to help close a $15 billion budget deficit, but few realized the levy would also apply to XXX-rated material.

The skin industry denounced the move as a cheap political stunt.

“The last thing any of us need isan additional tax,” said Steven Hirsch, the CEO of Vivid Entertainment Group and self-proclaimed King of Porn. “These are very difficult times and nobody can afford to lose even one customer.”

The new tax technically isn’t a sin tax, since it applies to all “digitally delivered entertainment services.”

It would also apply only to businesses located in New York State, leaving some to wonder if companies would relocate to avoid the tax.

A manager at DVD Video in Times Square said porn lures tourists to New York and helps boost the economy.

“When the tourists come, they come to us to buy things. We want to bring people here. We will make money, which is good for everyone,” the manager said.

A cashier at World of DVD in Times Square said business has been falling during the past year.

“Customers already say they have no money,” the cashier said.

Conservatives railed against the tax, but for a very different reason.

“By taxing it you’re legitimizing it,” said New York Conservative Party Chairman Michael Long, adding that government shouldn’t profit from porn. “If you’re taxing it - how can it be wrong? I don’t know how you can sink much deeper.”

State officials defended the proposed tax and said it has nothing to do with legitimizing porn.

“This is simply bringing the tax code in line with technology,” said Matt Anderson, a spokesman for the state Division of the Budget.

“Regardless of whether or not an item is purchased at a brick-and-mortar store or online, it would be treated consistently.”

Paterson also said last night that the rich will “share in the sacrifice” of closing New York’s budget gap.

Paterson, in language almost identical to that used by supporters of the so-called millionaire’s tax, said the wealthy will not be spared.

“Every New Yorker will share in the sacrifice to get this budget balanced,” he told the New York State Association of Black and Puerto Rican Legislators.

Paterson has previously argued that spending cuts - not a new tax on the wealthy - should be the priority. His spokesman said the governor’s new comments did not represent a shift in his position.

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