Monday, January 5, 2009

IT’S THAT TIME OF YEAR AGAIN

It is time for me to point you to my “suite” of year-beginning posts. In these posts I tell you how to start the year off right and how to get ready for your annual tax appointment.

As you would expect, the various amounts for exemptions, standard deductions, etc in these posts apply to tax year in which they were written. You can find the appropriate 2008 amounts on the
WHAT’S NEW FOR 2008 Page of my website www.robertdflach.net.

STARTING THE YEAR OFF RIGHT

You should be very careful about item #5. I only recommend this if you have sufficient financial discipline. While this is solid tax advice – it could have disastrous results.
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If you’ve changed your name in 2008 (for example due to marriage or divorce) remember mismatched names and SSNs on your tax return can delay your refund. Click here to find out what to do.
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GETTING READY TO PREPARE YOUR RETURN
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The deadline for sending out certain information returns has been pushed back beginning this year. The real deadline is Feb. 15. The affected forms are:
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* 1099-B (Proceeds from Broker and Barter Exchange Transactions)
* 1099-S (proceeds from Real Estate Transactions), and
* 1099-MISC (Miscellaneous Income). For the 1099-MISC, the 2/15 date applies only if any substitute payments in lieu of dividends and tax-exempt interest, or payments to attorneys are reported on the form. Otherwise, the usual deadlines apply.

A reminder for taxpayers who have brokerage accounts - Because of the rules and rates for “qualified” dividends that have been in effect since 2004, you should again this year receive at least one “Corrected” 1099 statement. Wait a few weeks after receiving the original 1099 information before giving your “stuff” to your preparer.
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A bank may issue one Form 1099-INT for all the accounts – savings, money market and CDs – that belong to the same name and Social Security number. There may be 6 or 7 accounts listed on a 1099-INT. It is important to verify each account listed on the form to make sure all of them belong to you. One of my clients received a 1099-INT last year with someone else’s account, that earned $300+ interest, included in the listing! Had he not carefully checked the form he would have paid close to $100.00 in unnecessary federal and state income tax. If you find an error on a Form 1099-INT go to the bank immediately and request a corrected form.
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Another reminder – According to Internal Revenue Service Revenue Ruling 69-184 you cannot be both a partner in and an employee of the same partnership. A partner cannot receive a salary from the partnership, and should not be given a W-2. If you are a partner who received “guaranteed payments” in 2007 but you receive a 2007 Form W-2 from the partnership you should go to the partnership’s accounting firm, tell them that they FU-ed. Check out my January 2006 post “EMPLOYEE OR PARTNER – THAT IS THE QUESTION”.
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WHAT TO GIVE YOUR TAX PREPARER-
PART I and PART II -
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FYI there is a new online location for my WHAT I NEED Page
If you received an economic “stimulus” rebate check in 2008 the IRS will be sending you a notice that indicates the amount received. Make sure to include this notice in the “stuff” you give your tax professional. He/she needs to know how much of a rebate you got.

Retired Policemen and Firefighters need to provide your tax pro with the amount withheld from your pension for the year for health insurance premiums. This was new for 2007 and still applies for 2008.

If you purchased a personal residence in 2009 give your preparer a copy of both sides of the Closing/Settlement Statement. You may be entitled to a special refundable tax credit of up to $7,500 (actually a loan from IRS).
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As you are gathering your “stuff” to hand over to your preparer it is a good time to review the new stricter documentation rules for cash contributions that started with 2007 donations. Check out my post “
NEW RULES FOR CASH CONTRIBUTIONS.”

SOME ADVICE FOR PREPARING YOUR TAX RETURN

This advice, for 2007 and 2006 returns, still applies to your 2008 Form 1040.

Any questions?

TTFN

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