Here is some updated information on recently discussed topics -
* Well it seems that one of my questions has been answered with regard to the economic “stimulus” rebate.
In my Monday posting “Something To Think About” I asked if the rebate amount allowed on the 2008 Form 1040 can be used to offset self-employment tax. The answer is “yes”! It appears that the strategy discussed in the post is “workable”.
The current draft version of the 2008 Form 1040 (as of 7/1/2008) indicates that the “Recovery rebate credit” adjustment, determined by using a worksheet that will be included in the instruction booklet, is entered on Line 71 (Page 2) under the category of “Payments”. So it is treated the same as withholding, estimated tax or the Earned Income Credit.
If you received a 2008 rebate check that is more than you will be entitled to based on the information on your 2008 tax return, i.e. you were overpaid, then the amount on this Line 71 would be “0” and not a negative number.
Of course this draft of the 1040 is not the final one. There will have to be additions to the form for the provisions of the recently passed housing bill – i.e. the first-time homebuyer credit and the additional standard deduction for real estate taxes. This draft version also does not have lines for the “adjustment to income” for educator expenses or tuition and fees, as these “above-the-line” deductions have not yet been extended for 2008.
We can only hope that Congress will get off their arses and pass the “extenders” in time for the deductions to be included on the final 2008 Form 1040 and 1040A. This must be done by October!
FYI, you can click here to check out the current “draft” copies of other IRS forms.
* Here is some more information on the credit for “first-time homebuyers” that was included in the recently passed housing bill –
· The credit does not apply if you purchase the residence from a “related party” – i.e. a spouse, an ancestor, or a lineal descendant.
· If you are building the principal residence you must occupy the residence by the July 1, 2009 deadline in order to qualify for the credit.
· The home must be located in the United States for the purchase to qualify for the credit.
· If the purchase of your residence is financed by a mortgage provided with tax-free financing you do not qualify for the credit.
· Married couples who claim the credit on a joint return are treated as each claiming one-half (1/2) of the total credit allowed – in case of a subsequent death or divorce.
· With regards to the three-year “look-back” period – according to the NATP analysis of the bill “If the individual is married, neither the individual nor his spouse may have had a present ownership interest in a principal residence during that three-year period.”
· I mentioned in my initial post that if you make a qualifying purchase in calendar year 2009 (by July 1st) after you have filed your 2008 tax return you can file an amended 2008 return to claim the credit. To clarify, if you make a qualifying purchase in, say, January or February of 2009, before filing your 2008 tax return, you can claim the credit for the 2009 purchase on your 2008 Form 1040.
TTFN
* Well it seems that one of my questions has been answered with regard to the economic “stimulus” rebate.
In my Monday posting “Something To Think About” I asked if the rebate amount allowed on the 2008 Form 1040 can be used to offset self-employment tax. The answer is “yes”! It appears that the strategy discussed in the post is “workable”.
The current draft version of the 2008 Form 1040 (as of 7/1/2008) indicates that the “Recovery rebate credit” adjustment, determined by using a worksheet that will be included in the instruction booklet, is entered on Line 71 (Page 2) under the category of “Payments”. So it is treated the same as withholding, estimated tax or the Earned Income Credit.
If you received a 2008 rebate check that is more than you will be entitled to based on the information on your 2008 tax return, i.e. you were overpaid, then the amount on this Line 71 would be “0” and not a negative number.
Of course this draft of the 1040 is not the final one. There will have to be additions to the form for the provisions of the recently passed housing bill – i.e. the first-time homebuyer credit and the additional standard deduction for real estate taxes. This draft version also does not have lines for the “adjustment to income” for educator expenses or tuition and fees, as these “above-the-line” deductions have not yet been extended for 2008.
We can only hope that Congress will get off their arses and pass the “extenders” in time for the deductions to be included on the final 2008 Form 1040 and 1040A. This must be done by October!
FYI, you can click here to check out the current “draft” copies of other IRS forms.
* Here is some more information on the credit for “first-time homebuyers” that was included in the recently passed housing bill –
· The credit does not apply if you purchase the residence from a “related party” – i.e. a spouse, an ancestor, or a lineal descendant.
· If you are building the principal residence you must occupy the residence by the July 1, 2009 deadline in order to qualify for the credit.
· The home must be located in the United States for the purchase to qualify for the credit.
· If the purchase of your residence is financed by a mortgage provided with tax-free financing you do not qualify for the credit.
· Married couples who claim the credit on a joint return are treated as each claiming one-half (1/2) of the total credit allowed – in case of a subsequent death or divorce.
· With regards to the three-year “look-back” period – according to the NATP analysis of the bill “If the individual is married, neither the individual nor his spouse may have had a present ownership interest in a principal residence during that three-year period.”
· I mentioned in my initial post that if you make a qualifying purchase in calendar year 2009 (by July 1st) after you have filed your 2008 tax return you can file an amended 2008 return to claim the credit. To clarify, if you make a qualifying purchase in, say, January or February of 2009, before filing your 2008 tax return, you can claim the credit for the 2009 purchase on your 2008 Form 1040.
TTFN
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