Forgot to file or did not receive a 2008 Stimulus Payment? You may be able to qualify for a recovery rebate credit through your 2008 tax return

For those that did not file for a 2008 Stimulus Payment , you may qualify for a recovery rebate credit in 2009. Even if you received a 2008 Stimulus Payment, you may qualify if you meet one of the following criteria:

-you did not receive a Stimulus Payment in 2008 or you received less than the
maximum of the 2008 Stimulus Payment
-your gross income was too high or too low
-you gained a qualifying child after you filed in 2008
-you were claimed as a dependent on someone else's return in 2007 but
-you will not be claimed as a dependent on 2008 return
-you received a Social Security number is 2008 and did not have one for
2007


You can get the recovery rebate on your 2008 1040, 1040A or 1040EZ. If you are using a tax software like TaxSmarty - it will ask you a question "did you receive a Stimulus Payment?"; "How much was your Stimulus Payment?" From there, Tax Smarty or your tax software will determine if you qualify for the recovery rebate credit.

NOTE: This is a CREDIT and not a separate check. You will receive this tax credit as part of your 2008 federal return (either increasing your refund or lowering the balance you owe). It's a good deal so don't miss out if you qualify.

Visit www.taxsmarty.com for more free helpful tax tips and information.

Maximize your work-related and self-employed travel deductions

If you are a person who travels significantly for your employer or if you are self-employed, you of course want to maximize your tax deductions related to your business travel or self-employment income. One simple and effective way to track your mileage and other travel-related expenses is to keep a small appointment book/calendar in your vehicle and record all of your business miles driven as you travel for business throughout the year. You can also record any tolls paid, meals and entertainment for business purposes, etc. in your appointment book/calendar in order to make sure you are tracking all of your trips and expenses as you incur them. Many people wait until the end of the year and then they end up scrambling to go back and remember all of their trips and expenses and usually end up missing a significant amount of expenses due to their lack of record-keeping. Recording these things as they occur in this simple manner can save you hundreds, if not thousands, of dollars during any given year. Plus, this will help you immensely in the event that you are audited by the IRS or your state taxing authority since this is another level of documentation that you have in addition to the receipts, itineraries, employer travel schedules, etc. that you should be keeping as well.

Please visit TaxSmarty.com for all of your income tax information, preparation and planning needs.

Did you know you can deduct up to $500 ($1000 for joint filers) for paid real estate taxes if you used the standard deduction?

Did you know you can claim up to $500 deduction for property taxes ($1000 for joint filers) if you DO NOT itemize?

It is absolutely true – for tax years 2008 and 2009 and you don’t itemize deductions (just take the standard deduction) AND you paid real estate taxes you can increase your standard deduction up to $500 single and up to $1000 for joint filers. Those sneaky IRS guys slipped this one in. Just check box 39c on page 2 of your 1040 form or if you are using the 1040A form, look at line 23c.

Check out www.taxsmarty.com for additional free tax planning resources and filing options.

Advantages of contributing to a Roth IRA

Look to contribute to a Roth IRA each year since the earnings from these tax-advantaged savings vehicles are never taxed (unlike traditional IRA's which are taxed as ordinary income at your marginal tax rate at the time you take distributions from your traditional IRA). Also, Roth IRA balances are not subjected to the required minimum distribution rules when you reach 70 1/2 years old. Therefore, if you do not need the money at that time, you can continue to let your money grow tax-free and ultimately leave a larger sum to your decedents if you so choose.


Now for some of the mechanics of the Roth IRA:

You can contribute up to $5,000 ($6,000 if age 50 or over) for 2008 and 2009. Keep in mind that your modified adjusted gross income (MAGI) has to be below $166,000 to contribute the full amounts previously mentioned. If your MAGI is between $166,000 and $176,000, then you can contribute some amount less than the full limit. If your income exceeds $176,000, they you are not eligible to contribute to a Roth IRA for 2009. In 2008, this phase-out range is $159,000 to $169,000.

For single individuals, this Roth IRA phase-out limit is lower: $105,000 to $120,000 for 2009. In 2008, a single individual’s income restriction is between $101,000 and $116,000.

Remember that you still have until April 15 of this year to make a contribution to any IRA account for 2008.

Finally, a big advantage to a Roth IRA is that you can use this as an emergency fund since you can withdrawal your principal (the amount you've actually contributed to the Roth IRA) at any time without penalty. This will allow you to garner a market rate of return on your emergency funds while possibly building a source of retirement income at the same time.

Please visit www.taxsmarty.com for more helpful tax tips and information.

Missing "cost basis" of stocks could be trouble when preparing your return, but there is help to get your through it. http://taxsmarty.blogspot.com/

Q. What happens when I don’t have a cost basis for my long or short term capital gain stock sale?

A. What a dilemma this is. Many of us have experienced this when we receive a 1099–B form with only the sold date and proceeds listed. We start to get nervous because we just increased our tax liability (sometimes substantially) and may owe the federal government money. No need to panic, however.

First off, if the cost basis (the original dollar amount paid plus any reinvested dividends or capital gains in the case of mutual funds) is not listed – CALL YOUR MONEY MANAGER OR BROKER. They can usually access your cost basis and the date purchased. This is the best course of action.

If you cannot reach them because you are working on your taxes at 11:59 pm on April 15th, you have other options. If you only purchased stand alone stocks at different dates and prices, NOT in a mutual fund, you can use the First In First Out Rule. Hopefully, you have some information on some the original purchase price of stocks and dates. With that information, you can apply these stock prices and dates as your “cost basis”. Warning: you need to use the first date you purchased stocks to compute your gain or loss as short term or long term.

If the missing cost basis information is in a mutual fund, you can use the average basis of the stocks if they were acquired at different times and use this as your cost basis. There are two methods of the average basis: double category and single category. The double category is used for stocks that are long term and short term where you need to average each category out (i.e. one average cost basis for long term and one average cost basis for short term). The single category is when all the stocks in the account are averaged for an overall cost basis since they are all either long-term or short-term sales.

Your off-the-shelf tax software or even your accountant cannot help you with this information. You need to know the cost basis to correctly complete your return. Once you have this information, just add in the information and you are on your way to completing your taxes in a manner that should pass muster with the IRS.

A website that may be helpful to you in researching historical prices is http://bigcharts.marketwatch.com/historical/

Visit www.taxsmarty.com for fee tax resources (including our online tax guide), financial calculators and filing options, including free access to a fillable IRS automatic extension form.

Do I need to claim my stimulus check received in 2008 as income on my tax return?

What do I do with the $600 of Stimulus money I received from the federal government in 2008?

Good news......Nothing! Unlike tax year 2007 where you had to claim your tax rebate, the 2008 stimulus check is tax free. Some tax software programs will ask you to fill in a question on the amount of your stimulus check, but it won’t increase your adjusted gross income (AGI). That is a good thing. So enjoy that money tax free!

"Bunching" of itemized deductions to save $$'s on your federal taxes

If you find that you are always on the cusp of the standard deduction/itemized deduction limit each year, you should work to “bunch” your deductions every other year in order to try and minimize your tax liability every other year. In the off year, you can simply claim the standard deduction since you are entitled to that amount regardless of what your deductible expenses are for that year. The most common and significant itemized deductions are home mortgage interest, property taxes, state and local income taxes, medical expenses, unreimbursed job-related expenses. charitable deductions and casualty losses.

While you don't have much control over the timing of your mortgage interest payments, you do have some control over the timing of property taxes on your personal (and a second) residence since you are typically billed by your County for property taxes in December that are not due until January. Pay this bill a few weeks early and you could push your itemized deductions over your standard deduction amount for that year. While we're talking property taxes, don't forget that even if you cannot push your total itemized deductions over your standard deduction, starting with your 2008 tax return (and recently expanded through 2009), you can deduct up to $500 (single/married filing separately/head of household) or $1,000 (married filing jointly) in property taxes paid on your main or second home over your standard deduction.

The other deduction that you have some control over is the medical deduction since you do have some control over the actual payment of these types of expenses. Unfortunately, it is very difficult to get over the 7.5% of adjusted gross income threshold that you would need to meet to deduct any of these expenses.

In short, taking advantage of additional tax deductions every other year is certainly better than never realizing the savings at all!

For more free tax tips, please visit TaxSmarty's Online Tax Guide.