Questions for the Tax Lady: December 20th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question: I bought a home in 2008 and took advantage of a $7,500 incentive. I recently got a letter saying the money was a 0% interest loan from the government and that I must pay back $500 per year. I can barely pay my bills and have to get food from the good bank. Is there any way to get this lowered or removed?

Answer: You are in good company. Many people who received the First-time Homebuyer Credit in 2008 did not realize they were going to have to pay back the credit. Unfortunately, there really isn’t a work around. Since the IRS considered this an interest-free loan, they will come collecting.

Your best bet is to increase your income tax withholding by $42 a month. I know times are tough, but trust me, $42 a month is a lot less than the interest and penalties that would result from failure to pay back the credit.


Question: Since Obama signed the tax cut deal, does that mean my tax rate is going down next year?

Answer: Isn’t that the question of the week? Everyone is desperately trying to figure out what the tax deal means for them. Here’s the basic breakdown:

The short answer is no, your tax rate will not change. This means your official marginal tax rate will be the same that it was last year. That being said, there are other changes to the tax laws that might affect your overall tax liabilities. The most obvious example is the payroll tax deduction.

The Making Work Pay Tax Credit is gone, however, the tax deal reduced Social Security tax withholding by about 2%, so you might get a better tax break in the long run. If you earn $40,000, you’ll end up saving $800 in payroll taxes.

IRS Paid Out $111 Million in Erroneous Stimulus Tax Breaks

Due to a lack of controls to prevent ineligible taxpayers from claiming the 8,000 first-time homebuyer tax credit, and credits for vehicles, the IRS paid out $111 million in erroneous refunds. The Treasury Inspector General for Tax Administration released these figures, among others, earlier today.

The Wall Street Journal reports

To put the errors in perspective, IRS processed more than $81 billion in claims for stimulus-related tax benefits in 2010, involving upwards of 90 million returns.

About 126,000 of those returns were flagged by TIGTA as including erroneous claims that weren’t caught by the IRS before they were processed. In some cases, the IRS put compliance controls in place during the tax-filing season to catch the errors.

The number of U.S. taxpayers filing returns electronically continued to increase, reaching 72% of all filers in 2010, the report said.

About 8 million people claimed more generous tax credits for college tuition in the stimulus law this year, for a total of $7.1 billion in benefits. Four million took advantage of a tax break for state sales and excise taxes on new-vehicle purchases, for an average tax deduction of $2,048.

Read more here

For a Big Tax Break, Hit the Roof

From Washington Post.com:

Within 15 years, the sun could supply 10 percent of the nation's power needs, according to research by the nonprofit group Climate Action. The White House will be part of any such trend, as President Obama announced the return of solar panels to heat water and supply some electricity for the first family.

The president's move has homeowners wondering whether their roofs should be soaking up rays, too. So how do you go solar?

Your first step is to the Web.

Sites sponsored by the Department of Energy and several solar panel manufacturers offer calculators to give you a sense of whether solar is worth pursuing for your home. You enter your Zip code and electrical needs - either in terms of kilowatt-hours from your utility bill or how much you spend per month on power. The program knows how much sun your area enjoys and which tax incentives are available. It will predict how much money you'd save over 25 years, after which most solar panel warranties expire. (The panels will probably last longer than that, though.)

The program doesn't know much about your particular home, and those details can make a difference. Do you have a south-facing roof? Is your roof shaded by trees you're fond of? You'll need to call in some installers for a reality check.

The North American Board of Certified Energy Practitioners (www.nabcep.org) has a database of trained installers, and that's a good place to start. Choosing an installer is probably your most important decision. "The installer is the one who's going to design your system and actually drill holes in your house," says John Supp of Solar Depot, a wholesaler that supplies local installers.

IRS Issues Guidance on Expanded Adoption Credit Available for Tax-Year 2010

Earlier today the IRS published a new press release with guidance on the expanded adoption credit for the 2010 tax year, which was included in the Affordable Care Act. The IRS also released a draft version of the form that eligible taxpayers will use to claim the newly expanded adoption credit on 2010 tax returns filed next year.

The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply.

In addition to filling out Form 8839, Qualified Adoption Expenses, eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents, detailed in the guidance issued today.

The documentation requirements, designed to ensure that taxpayers properly claim the credit, mean that taxpayers claiming the credit will have to file paper tax returns. Normally, it takes six to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. The IRS encourages taxpayers to use direct deposit to speed their refund.

Taxpayers claiming the credit will still be able to use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Tax Credit Bonanza for Small Businesses

From CNNMoney.com:

Across the country, small businesses are talking to their accountants about a hefty tax credit that could make health insurance a little more affordable.

Six months after sweeping health care reform was enacted, the cost of health insurance remains one of the most pressing issues facing small businesses. Premiums typically run 18% higher for small businesses than for larger companies.

The health care law called for the expansion of state-run exchanges aimed at helping small businesses find affordable coverage. But not until 2014. To bridge the gap, the law also established a slew of significant tax credits to small firms starting this year.

The Internal Revenue Service has sent out millions of post cards to business owners and tax professionals alerting them to the tax credit. Business owners are still working to get their heads around the details, but it's a bit of bright news for those who'll qualify.

"That would be fantastic," said John Wilson, owner of Artistic Kitchens and Baths, a cabinetry and interior design business in Southern Pines, N.C. Wilson pays 80% of the cost of insurance for six of his twelve full-time employees. The other six employees opt for insurance through other avenues, such as their spouse's plan. "Health care costs are really, really high and that has been a big, big problem," said Wilson.

Read the original story here

IRS Releases Form to Help Small Businesses Claim New Health Care Tax Credit

According to their newest press release, the IRS released a new form today to help small business owners with the new health care tax credit. Specifically, the document will be used by businesses and tax-exempt organizations to calculate the small business health care tax credit when they file income tax returns next year.

The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.

The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.

Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.

The final version of Form 8941 and its instructions will be available later this year.

The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

California Exhausts $100 Million in Film Tax Credits for Year

Less than three months into the new fiscal year, my home state of California has reportedly already exhausted its entire $100 million film and television tax credit budget. They have provided credits to over 30 different projects already.

BusinessWeek.com reports:

Additional subsidies, designed to keep movie jobs in the state, won’t be available until July 2011, Amy Lemisch, executive director of the California Film Commission, said in an interview. About 45 productions are on a waiting list.

California is competing with states including New York, New Mexico and Louisiana that also offer incentives to attract movie and television production. California offered tax breaks for the first time in fiscal 2010. Demand increased with awareness of the program, Lemisch said.

New York offers $420 million a year in incentives, according to the website for the state’s Office for Motion Picture & Television Development.

The California incentives can cover 20 percent to 25 percent of a movie’s production budget, according to the California Film Commission website.

Read more here

The American Opportunity Credit

Earlier today the Roni Deutch Tax Center – Tax Help Blog posted a new entry explaining the American Opportunity Tax Credit. As the article explains, the new credit is actually just an expansion of the Hope Scholarship tax credit, with a higher maximum and a longer life span.

Credit vs. Deduction

Unlike a tax deduction, which lowers your taxable income, a credit lowers your tax bill (or increases your refund) dollar for dollar. The exact value of a deduction depends on your tax bracket, while credits are a set amount no matter what income bracket you are in.

Value of the Credit

The new credit has a maximum of $2,500 and can also be claimed for up to 4 years.

Eligibility Requirements

According to the IRS only qualifying full-time college students are eligible for the credit. Although it is available for 4 years, the actual amount you are eligible to receive will vary on your income level. Additionally, unlike past credits the American Opportunity Credit is 40% refundable, so even families who do not pay income taxes will be able to take advantage of the tax credit.

Questions for the Tax Lady: July 19th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: I saw in the news that the homebuyers credit was extended. What is the new cutoff to qualify for the credit?

The deadline for closing on home purchases has been extended from June 30 to Sept. 30, 2010. This means that in order to qualify for the credit, the purchase of your home must be completed before September 30^th, 2010. However, as the buyer, you are still required to have entered need to enter into a binding contract by April 30, 2010.

Question #2: Will I have to pay a tanning tax on lotions and supplies I purchase at my local tanning salon?

No. According to the IRS the tax does not apply to spray tans or topical creams and lotions. It is only levied on the actual indoor tanning service.

The Price of Saving Fuel

We may soon see more “green” vehicles on the road. According to Kiplinger.com, a survey by Capital One Auto Finance found that a third of their participants would likely purchase a green vehicle as their next auto purchase. People are considering one of the alternative-energy vehicles for a number of reasons, including the high price of gas. Some also want to do their part to help the environment, such as our air quality. But no matter the reason, most green vehicles qualify for tax deductions—and this alone is a great reason to buy one. However, you should know you'll pay an average of $5,500 more for a 2010 hybrid than for its gasoline-engine counterpart.

One way to see whether it pays to buy a green vehicle is to calculate the five-year ownership costs. What are your long-term savings at the pump as well as tax credits for the many green vehicles? When we compared the ownership costs of hybrids versus conventional vehicles in early 2009, gas prices we’re hovering just above $2 a gallon, and few hybrids earned back their extra cost with savings at the pump. But with gas now closer to $3 and with more eco-friendly vehicles on the market, you can more often save green by buying green.

The Kiplinger.com article updated calculations, pitting 19 hybrids and 11 diesels against comparable gas-engine vehicles. The numbers assume that you drive 15,000 miles a year and that regular gasoline is $2.85, premium is $3.15 and diesel is $3.08, with a 3.5% annual increase for each fuel. The math also includes depreciation, maintenance and repairs, and it assumes you finance the vehicle with a five-year loan after a 15% down payment. Don’t forget to account for federal tax credits for vehicles that still qualify for them; they've expired for Ford, Honda, Lexus and Toyota hybrids. (If you're hit by the alternative minimum tax, the credit won't help you, so your payback time will be a bit longer.)

Winners and losers according to Kiplinger.com: Diesels pay back their premium more often than hybrids do. Over five years, every diesel except one -- Volkswagen's Golf TDI -- costs less to own than the comparable gas-engine model. The savings range from $307 on the BMW X5 35d to $6,082 on the Mercedes-Benz GL350 Blue-Tec (the $60,825 diesel GL is priced $1,000 below the gas-engine GL450 and has a tax credit of $1,800). Among hybrids, you're more likely to be on the losing end of the deal as long as a gallon of gas still costs about $3. You'll save the most buying the super luxury Mercedes-Benz S400 hybrid ($92,475). It beats the S550 by $6,764 over five years -- mainly because it costs $3,650 less than the S550 and carries a tax credit of $1,150. But in general, the more expensive a hybrid, the less likely it will save money over its gas-engine sibling. For example, the biggest losers are the Chevrolet Tahoe and GMC Yukon hybrids (both about $52,000) -- which would cost you $10,000 more than their gas-engine comparables over five years -- and the Lexus LS 600h L ($109,675), which would cost a whopping $41,428 more to own.

I recently wrote a blog on the topic, 10 Vehicles that Still Qualify for a Federal Tax Credit. Check it at http://ronideutch.blogspot.com/.

10 Vehicles that Still Qualify for a Federal Tax Credit

Unfortunately, many of the federal tax credits for popular hybrids – such as the Toyota Prius – expired quite a while ago. However, although a handful of vehicles no longer qualify for the tax incentives, there are plenty of energy efficient automobiles that can still result in a decent tax credit.

To assist the readers of my blog looking to invest in a hybrid vehicle, please enjoy the following list of 10 vehicles that are still eligible for the IRS credit. I have provided information as to the amount of the credit and basic information on each automobile.

1. 2010 BMW Active Hybrid X6 – Credit: $1,500

The 2010 Active Hybrid X6 BMW boasts superb fuel efficiency while maintaining the speed and class of a regular BMW. Although the vehicle does not have the best fuel efficiency rating or the lowest price tag, the vehicle is being marketed towards consumers who want an efficient luxury vehicle that can go from 0 to 60 in less than 6 seconds. The BMW Active is listed at $88,900 and qualifies for a federal tax incentive of $1,550.

2. 2010 Audi A3 TDI – Credit: $1,300

The 2010 Audi A3 TDI is a clean diesel SUV with the same capabilities as any typical sports utility vehicle; it also seats seven. Since the automobile uses diesel fuel, drivers can claim a tax credit for this car of up to $1,300. The Audi A3 TDI is one of the first of its kind, and was even awarded the 2010 Green Car of the Year award from Green Car Journal.

3. Chevy Volt – Credit: $7,500

Although the Chevy Volt has not hit sales floors yet, there is already a lot of anticipation of its upcoming release. The vehicle has an electric motor – powered by lithium ion batteries – and the car can travel 40 miles on a single charge. Although an official price has not been announced, experts predict it will be priced around $40,000, which would correlate with a tax credit of $7,500.

4. Tesla Roadster – Credit: $7,500

The most significant federal tax credits are available for plug-in electric vehicles, such as the Tesla Roadster. The credit amount may not seem as significant compared to the Roadster’s steep $109,000 price tag. However, many states including California are offering additional incentives for taxpayers who buy or lease a Tesla Roadster.

5. 2010 Mercedes Benz ML450 Hybrid – Credit: $2,200

The 2010 Mercedes Benz ML450 is another hybrid offering drivers a luxury car that can be driven on only electricity, only gasoline, or an efficient combination of the two. The small scale SUV gets around 24 miles per gallon and qualifies for a $2,200 federal tax credit.

6. 2011 Nissan Leaf – Credit: $7,500

The 2011 Nissan leaf is among the most affordable electric vehicles. It has not hit the market yet, but according to reports it can travel 100 miles on a $3.00 charge of electricity. The leaf will arrive at Nissan showrooms across the country this December. The MSRP should be around $32,780 before the credit, and the vehicle will also qualify for a $5,000 Californian clean vehicle rebate.

7. 2010 Chevrolet Tahoe Hybrid – Credit: $2,200

The Chevy Tahoe Hybrid has an MSRP of $51,185, however if you purchase one before December 31^st then it will qualify for a $2,200 federal credit. The vehicle averages 21 miles per gallon. Although the Tahoe is not the most efficient vehicle on my list, considering its size the mileage is still impressive.

8. 2010 GMC Sierra Hybrid – Credit: $2,200

If you need to drive a truck that can haul items, but are looking for a way to cut your fuel expenses, then you should consider the 2010 GMC Sierra Hybrid. The truck is best for city drivers, who can benefit from a 21 mile per gallon average. Additionally, the Sierra has a $38,710 MSRP and will qualify for a $2,200 federal tax credit.

9. 2010 Mercedes Benz GL350 BlueTec – Credit: $1,800

Car buyers looking for clean-diesel technology as well as enough room for the whole family should look to the Mercedes Benz GL350 BlueTec. The vehicle also boasts impressive safety features such as a fuel system shutdown in the event of an accident. Although the price is a bit high at $60,825, the GL350 does qualify for a $1,800 tax credit.

10. 2010 Cadillac Escalade Hybrid – Credit: $2,200

Energy conscious Cadillac Escalade fans can now get the full-sized luxury SUV they love, in the form of an efficient hybrid. With a base MSRP of $51,185, the automobile boasts a 5-star crash rating, and 3-row seating. It also qualifies for $2,200 federal incentive if you purchase before the end of the year.

Affordable Care Act Provides Expanded Tax Benefit to Health Professionals Working in Underserved Areas

Here is some good news for health care professionals who received student loan relief under certain state programs that reward those who work in under-served communities. If this is you, the IRS has announced you may now qualify to receive a special tax break.

The Affordable Care Act went into effect last year (2009); it expands the tax exclusion received by health professionals under loan repayment and forgiveness programs. Prior to this new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible under the Public Health Service Act qualified for a tax exclusion.

Basically, the Affordable Care Act expands the prior tax exclusion to include any state loan repayment or loan forgiveness programs that were created to increase the availability of health care services in under-served areas or in “health professional shortage areas” and the Act makes this exclusion retroactive to the 2009 tax year.

If you are a health care professional serving in one of these areas or participating in these programs and have reported income from repaid or forgiven loan amounts on their 2009 returns (possibly after receiving a Form W-2, Wage and Tax Statement, or Form 1099a) you may be due a refund.

Here’s some additional information released by the IRS:

• Those who believe they qualify for this relief may want to consult their state loan program offices to determine whether the program is covered by the new law.
• Health care professionals who have not yet filed for 2009 need not report eligible loan repayment or forgiveness amounts when they file. Those who have already filed may exclude eligible amounts by filing Form 1040X, Amended U.S. Individual Income Tax Return. This form can be downloaded from this website. Individuals filing Form 1040X to claim this exclusion should write “Excluded student loan amount under 2010 Health Care Act” in the Explanation of Changes box.
• Health care professionals may request an employer or other issuer to provide a Form W-2c, Corrected Wage and Tax Statement, or 1099 and may attach the corrected form to the Form 1040X. However, the Amended Tax Return Form 1040X may also be filed without attaching a corrected W-2 form.

Home builders' index dives after tax break expires

The word on the street is U.S. homebuyers are becoming more and more pessimistic about the recovery in home building. As marketWatch.com indicates, the housing market index dived to 17 in June from 22 in May. The index was lower than the 21 that was expected by economists surveyed by MarketWatch, and was the lowest since it hit 15 in March. The five-point drop was the most since November 2008.

A setback was inevitable and expected in the two months or so following the expiration of the homebuyer tax credit. However, Marketwatch.com reported the dramatic decrease in consumer activity and the job market may have more to do with the drop in index. "It all comes down to the job market," wrote Jennifer Lee, a senior economist for BMO Capital. "The housing market and the economy need the steady creation of jobs."

Read more of the article here.

Film Credits Losing Their Appeal

Hollywood handouts may soon be a thing of the past. For decades some states have been offering “film credits” to entice directors to shoot movies within their borders. The theory behind this is that film production will boost the local economy and create jobs for local residents. And Hollywood certainly enjoys the preferential tax treatment.

Unfortunately, according to The Tax Foundation, these credits do not pay off for the state. The credits are often overly generous -- Michigan offered a 42% production credit -- and stimulate far less economic activity than proponents claim. Any jobs that are created are temporary in nature and do not lead to any long-term betterment for residents.

According to the Tax Policy Blog, Michigan, Iowa, Arizona, and New Jersey are all suspending their film tax credits. Considering the dire state of many states’ economies and budgets, I would not be surprised to see more states following suit.

Read more about film tax credits here and see Hollywood’s response here.

Without Tax Credit, US Home Demand Keeps Slumping

For the fifth week in a row home loan applications have declined in the US, showing signs of the effect the federal tax credit had on the housing market. According to this story from Reuters.com loan applications dropped to the lowest levels since 1997.

Demand for loans to purchase houses fell 5.7 percent in the week ended June 4 to the lowest level since February 1997, even after adjusting to account for the Memorial Day holiday.

Home buyers have been on hiatus since many rushed to sign purchase contracts ahead of the April 30 deadline for up to $8,000 in federal tax credits.

"It's very worrying," said Paul Dales, U.S. economist at Capital Economics in Toronto, said of the degree of payback from more than a year of federal buyer tax incentives.

"We have to face the unfortunate fact that the housing market really isn't out of the woods yet," he added. "At a time when the economic recovery is still looking fairly fragile it won't be a good thing if people are moving less and spending less on buying new durable goods like fridges and sofas."

U.S. Sets Application Window for Drug Tax Credit

From Reuters.com:

Small U.S. drugs and biomedical research firms will have a one-month window to apply for a new $1 billion tax credit for research into new therapies, according to guidance issued by the U.S. Treasury Department on Friday.

The two-year tax credit, created under this year's landmark health care legislation championed by President Barack Obama, aims to accelerate research into new therapies and projects that reduce medical costs.

Firms with less than 250 employees can apply for the credit, which covers up to 50 percent of qualifying research costs up to $5 million annually, from June 21 to July 21, the Treasury said. The credits can be applied to expenses incurred in 2009 and 2010.

Decisions on qualifying projects, which will be evaluated by the Department of Health and Human Services, will be issued by Oct. 29, the Treasury said.

"This new tax credit will help advance research to find life-saving treatments and help U.S. companies lead the way in innovative medical discoveries," Treasury Secretary Timothy Geithner said in a statement.

Top College Savings Plan

With the cost of going to college increasing more and more each year, parents and grandparents need to start saving now. Many students and families are faced with the tough decision of how to pay for higher education—it is a tragedy when families have to make the decision not to attend college due to the inability to afford tuition cost. I have always been an advocate for making it possible for young people to attend college—I have personally sent five young adults to college! The best way to ensure your loved one gets a college education is to save for the expense. A 529 savings plan is recommended as a great investment for your future college plans.

These savings plans do not get taxed federally and many states also give a state income-tax credit for having one. Check whether your state offers a tax break and take advantage of it. To escape federal taxes on the distribution, you must use the 529 savings to pay for qualified educational expenses such as tuition, books, fees, room and board. Don’t worry, the 529 accounts are flexible. If your child doesn’t want to go to college, you can transfer funds to another family member without losing the tax benefits. If you do need to withdraw the money and use it elsewhere please know you will pay taxes on the distribution and a 10% penalty on the earnings. Buy a 529 savings account directly from your state and you will avoid paying commissions or adviser fees. According to Klipinger.com more than 60% of investors put their 529 money on autopilot by choosing age based portfolios.

IRS Offers Details on New Small Business Health Care Tax Credit

Back in April 2010, the IRS stated they sent post cards to millions of small businesses to alert them to the new Health Care Tax Credit. Even if you didn’t receive a post card, your small business may still be eligible. Also, if a small business is receiving state health care tax credits they may also qualify for full federal tax credit.

Paying for your employers to have health insurance, when you are a small business, can be a financial strain. The Health Care Tax Credit, part of the Affordable Care Act was designed to encourage small employers to offer health care insurance for the first time or to maintain coverage they already have. This new tax credit aims to ease the financial burden for small businesses while helping to get their employees properly insured or help them stay insured.

To provide new guidelines to help small businesses determine whether they are eligible for the new health care tax credit, the IRS issued a new form, Notice 2010-44. There is also a 3 step form that might be easier to use, to determine your small business’ eligibility. You can find that form here.

The credit is available to small businesses that pay at least half the cost of single coverage for their employees in 2010. For tax years 2010-2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax exempt organizations.

If you are a small business employing 10 or fewer full-time employees you will get the maximum credit. Keep the following information in mind:

Eligibility Rules

• Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• Average annual wage. A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit

• Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

If you are still unsure as to whether your business qualifies for any of these tax credits please contact a tax professional who can determine your eligibility for you. Don’t miss out on this important credit!

New Rules Making Tax-Credit Closing Deadlines Tough to Meet

From The WashingtonPost.com:

For thousands of home buyers who scrambled to meet the April 30 federal tax-credit deadline for completed contracts, a new challenge is looming: Can they nail down their mortgage financing and get to closing before the program terminates?

As a result of toughened underwriting standards, confusing new federal disclosure rules, appraisal regulations and a long list of other potential obstacles, meeting that deadline could be harder than expected. In fact, mortgage industry leaders say some buyers who are seeking the tax credits won't get a cent because the clock will run out on them.

Under the extended first-time purchaser and repeat buyer credits -- the former carries an $8,000 maximum amount, the latter $6,500 -- all deals must close by June 30. This shouldn't be a problem for buyers who have already submitted their applications or who apply and are approved in the coming week or two, lenders say.

But credit-seekers who assume that closings can be done in less than 45 days -- as was often the case in recent years -- might be in for an unpleasant jolt. And if a borrower's needed turnaround time from application to settlement is 30 days or less, even the most resourceful lenders might not be able to deliver.

Tax credit end not deterring US homebuyers

While the homebuyer’s tax credit certainly gave the real estate market a jump, according to a new survey, the end of the credit may not be an end to increased sales. Consumer confidence in the housing market has increased along with home prices, which as this Reuters article explains, are both a good sign for the future of real estate.

Among consumers shopping for homes, 65 percent said the end of the tax credits will have little or no effect on their interest in purchasing a home, according to the survey, which was conducted by Prudential Real Estate and Relocation Services, part of Prudential Financial (PRU.N).

But 90 percent of the consumers believe that the tax credits have helped both first-time home buyers and the U.S. housing market overall.

Eligible borrowers must sign contracts by April 30 and close on their loans by June 30 to qualify for the tax credits, which include $8,000 for first-time buyers and $6,500 for home owners buying a new residence.

Consumers remain unsure about the direction of the housing market, but are optimistic about real estate values, with 46 percent expecting prices in their area to increase over the next year. Just 12 percent expect prices to decline, the survey found.