Small Business Advice Blog
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April 10, 2010
Current Tax-Related Issues
Some people have come to me asking about two different topics which are current to the up coming 15th deadline for taxes. Because of the time constraint on these two issues, I have decided to write another blog between my regular Saturday blogs to cover issues.
First, the Home Buyer Tax Credit…
There are 2 options:- First-time Home Buyers
- How Much is the Credit?
- 10% of the home’s purchase price up to $8,000
- Who is considered a First-Time Home Buyer?
- Definition of a First-Time Home Buyer – Someone who has not owned a “Principal” residence three years prior to the new purchase
- Does it have to be repaid?
- Only is the home is sold or you stop using the home within three years from the initial purchase of the home
- What is the max price of the house that applies to this credit?
- Your new home must be priced under $800,000
- What is the time frame?
- The new home must be purchased between January 1, 2009 and April 30, 2010
- Are there income limits?
- Yes. Homes purchased between 1/1/09 and 11/6/09 the limits are $75,000 for single taxpayers and $150,000 for married filing jointly taxpayers
- Homes purchased between 11/6/09 and 4/30/10 the limits are $125,000 for single taxpayers and $225,000 for married filing jointly taxpayers
- Move-up or Repeat Home Buyers
- Who is eligible?
- You must have owned AND lived in your previous home for five consecutive years out of the last eight years
- Does it have to be repaid?
- Only is the home is sold or you stop using the home within three years from the initial purchase of the home
- How Much is the Credit?
- 10% of the home’s purchase price up to $6,500
- What is the max price of the house that applies to this credit?
- Your new home must be priced under $800,000
- What is the time frame?
- The new home must be purchased between January 1, 2009 and April 30, 2010; however, if the contract is signed before April 30, 2010, it will still qualify only if the purchase is completed by June 30, 2010
- Are there income limits?
- Yes. Homes purchased between 1/1/09 and 11/6/09 the limits are $75,000 for single taxpayers and $150,000 for married filing jointly taxpayers
- Homes purchased between 11/6/09 and 4/30/10 the limits are $125,000 for single taxpayers and $225,000 for married filing jointly taxpayers
Second, Tax Extensions
Yes the tax extension can give you more time to get your tax return into the IRS. The date is pushed back to Oct 15th; HOWEVER, this does NOT keep you from penalties and/or interest if you owe taxes to the IRS.Due Date for ALL tax payments: April 15, 2010
Late Payment Penalty
See the actual clip from the IRS on this situation below.
Interest
You will owe interest on any tax not paid by the regular due date of your return. This is April 15, 2010, for a 2009 calendar year return even if you qualify for the 2-month extension because you were out of the country. The interest runs until you pay the tax. Even if you had a good reason for not paying on time, you will still owe interest.
Late Payment Penalty
The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by the regular due date. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%.The late payment penalty will not be charged if you can show reasonable cause for not paying on time. Attach a statement to your return fully explaining the reason. Do not attach the statement to Form 4868.
You are considered to have reasonable cause for the period covered by this automatic extension if at least 90% of your actual 2009 tax liability is paid before the regular due date of your return through withholding, estimated tax payments, or payments made with Form 4868.
Carter Services Plus offers accounting services, bookkeeping services, payroll services, training, marketing advice, tax preparation services, and consulting among various other financial services. Please feel free to call us to set up a FREE consultation to review your current financial situation or to find out if we are the right fit for you.
