Monday, January 4, 2010


It is time once again 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 2009 amounts here at WHAT’S NEW FOR 2009.

The “Most Important Advice You Will Receive This Tax Season!” remains the same as last year. Even more so this year.


Regarding item #2 – click here to check out “THE WANDERING TAX PRO’S DOCUMENTING 2010 DEDUCTIONS”.

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.

If you’ve changed your name in 2009 (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.


The deadline for sending out certain information returns has been pushed back beginning this year. The real deadline is Feb. 16 (February 15th is a legal holiday). The affected forms are:

* 1099-B (Proceeds from Broker and Barter Exchange Transactions)
* 1099-S (proceeds from Real Estate Transactions), and
* 1099-MISC (Miscellaneous Income) if any substitute payments in lieu of dividends or tax- exempt interest, or payments to attorneys are reported on the form.

The February 16 mailing deadline also applies to “Consolidated Reporting Statements” issued by brokerage houses that include the information for all types of Form 1099 on one statement.

And speaking of brokerage “Consolidated Reporting Statements” - because of the rules and rates for “qualified” dividends that have been in effect since 2004, you may 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.

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.

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”.


FYI there is a new online location for my WHAT I NEED Page

Social Security and Railroad Retirement recipients need to tell their tax pro if they received the $250 “Economic Recovery Payment” (ERP) in 2009 (probably early May). If your monthly benefit check is directly deposited to your back account so was the ERP.

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 2009.

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 $8,000. If you purchase a residence in early 2010 you can claim the credit on your 2009 Form 1040, so send your tax pro copies of the Closing Statement if you bought in 2010.

Tax benefits for college expenses have been expanded for 2009 to include required “course materials”, like books, as “qualified expenses”. If you have kids in college, or you were a college student yourself, in addition to the Form 1098-T and Burser’s statements from the school(s) you must also tell your tax pro the amount that was spent in 2009 for books and other “course materials”.

It is especially important to let your tax preparer know if you purchased a new car in 2009. And the energy credit is back for 2009 – and better than before - so give your tax pro the receipt and “manufacturer’s certification” for any energy efficient purchase or improvement for your primary residence.


This advice, for 2007 returns, still applies to your 2009 Form 1040.

By following the above advice you will make your tax filing “less taxing”, and make sure that you pay the absolute least amount of federal, state and local income tax possible for your unique situation for 2009.