http://blog.pappastax.com/index.php/2010/03/17/irs-uses-twitter-facebook-and-google-street-map-to-catch-tax-cheats/#more-15343

The link will take you the Tax Lawyers blog site where a full summary of the article can be found. These statistics are an eye opener and really shows the unjust burden of the Top 1% of income earners in the US have to bear.

Here are some of the Highlights:

• The top 1% of taxpayers paid 40.4% of all taxes collected by the federal government. This is the highest rate in modern history.
• The share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined.
• the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.

If you have any questions concerning your personal tax situation or would like to discuss how we can help you save on your taxes please contact our office.

Respectfully,

Michael Dolezal CPA

Yesterday President Obama signed a $24 billion economic stimulus which included an extension of the first-time homebuyer credit which will extend the credit through April 30, 2010.  The bill extends the $8,000 tax credit for home buyers who are buying their first home. The bill also offers a $6,500 tax credit to homeowners who have lived in the current residence for at least five years and are seeking to purchase a new residence.

The eligibility requirements for the $8,000 tax credit were left unchanged with the signing of the bill, and still require first-time home buyers to have not owned a principal residence in the prior three years.

Eligibility for the $6,500 tax credit requires the taxpayer have lived in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their “new” principal residence.

Income limits were increased under the extension. Homebuyers who file single or head-of-household now can claim the full credit if their modified adjusted gross income is less than $125,000, an increase from $75,000 from the original tax credit.

Those filing married saw income limits increase to $225,000, an increase from $150,000 based on the original tax credit.

A partial credit is given in the event a single/HOH taxpayer income exceeds $125,000 and is phased-out when income reaches $145,000. Respectively those filing married with incomes between $225,000 and $245,000 will be given a partial credit.

The effective date of the tax credit extension begins for home purchased after November 6^th and before May 1 2010. But, homes subject to a binding sales contract by April 30^th, 2010, will qualify for the tax credit provided closing occurs by July 2010. All homes under a price of $800,000 qualify provided they are used as a principal residence.

If you have any questions regarding the first-time home buyer credit or your tax situation please contact our office.

On October 20^th, NAR’s Vice President, Ron Phipps addressed the Senate Banking, Housing and Urban Affairs Committee. Phipps commented that the home buyer tax credit has had an impact with increasing sales in recent months and projects 5.1 million home sales for the year, nationally. He noted, “But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,”

Although congress is leaning to extend the credit, the Obama administration is concerned about the cost of extending the credit.

Another concern of the administration has been the scrutiny the program has received for fraudulent claims. The IRS has opened 107,000 exams of questionable claims, and have identified 167 criminal schemes involving the tax credit since enacted in February 2009.

Several versions of credit extension remain in debate. House Majority Leader Steny Hoyer-D-MD, favors extending the credit through the end of the year. A bipartisan effort proposal would extend the credit an additional six months, extend the credit to all homebuyers, and raise the income limitation caps to $150,000 for individuals and $300,000 for those filing jointly. This version has been stalled due to congressional politics as the republicans have tried to attach the extension amendment to the recent unemployment bill, which the democrats do not favor.

With the current credit expected to expire on November 30^th, 2009 it is likely the administration and congress will pass an extender bill which will most likely extend the credit through May 2009, although I believe the final version will not include the amendment to extend the credit to all homebuyers.

Call me for more information about First Time Home Buyers Tax Credit, or if you have questions regarding your tax situation or real estate concerns, please contact our office.

Article by LINGLING WEI in the Wall Street Journal Online.

Commercial real-estate loans are going sour at an accelerating pace, threatening to cause tens of billions of dollars in losses to banks already hurt by the housing downturn.  Read More

To put a historical perspective to the current economy and housing market, the last recession in the early 2000’s the housing market continued to see increased sales. The recession of the 1990’s, housing only saw moderate declines in sales.

If there is a positive side of this current economy, it is the fact that housing remains very affordable, achieving levels unseen since the 70’s.
An overabundance of housing inventory and continued foreclosure filings will continue to hold prices stagnant, until such factors as consumer confidence and unemployment turn the corner in this economy.

With a new potential housing stimulus package for 2009, coupled with current market incentives to purchase a home, a decrease in unemployment or an increase in consumer confidence could be the catalyst to housing recovery.

For more information regarding the housing market or to find related articles, please check out my website at www.cpaneeds.com.

Respectfully,

Michael Dolezal, CPA, Realtor©

 On October 3^rd, President Bush signed into law The Emergency Economic Stabilization Act of 2008.  The law termed as a “financial bailout”, includes over 100 tax provisions and $150 billion in tax breaks over 10 years, with the majority of the relief outlaid in 2008 and 2009.  Listed below, are the tax provisions which relate to individuals and businesses.

Extended Exclusion for Home owners- The bill extends the temporary rule for the cancelation of indebtedness income.  The Mortgage Forgiveness Debt Relief Act of 2007 excluded up to $2 million of indebtedness secured by a principal residence. The current bill extends this provision from the end of 2009 to 2012.

AMT Provisions- The bill included several provisions to address the AMT trap which has caught up with more and more taxpayers as the AMT exemption has not been updated for inflation. The bill increase the exemption amount under AMT, $69,950 for married couples filing jointly and surviving spouses, $46,200 for single taxpayers, and $34,975 for those filing married and separate. The AMT provision also allows taxpayers to take personal credits to reduce AMT liability; it also removes the limitation on taking personal credits against regular tax liability.

State and Local Sales Tax Deduction- The bill extends the provisions created in the American Jobs and Creation Act of 2004, which allowed taxpayers to deduct state and local sales tax expense in lieu of state and local income taxes. The new law makes the deduction retroactive in 2008 and extends the deduction through year end 2009.

Higher Education Tuition Deduction- Bill extends the above the line deduction through year end 2009. It allows for the deduction of education expenses for the taxpayer, spouse, or dependent.

Additional Standard Deduction for Property Taxes- The new bill extends the additional standard deduction for real estate taxes for non-itemizing taxpayers through 2009. The maximum deduction is $500 for single taxpayers and $1,000 for joint filers.

Tax-Free Distributions from IRAs for Charitable Purposes- The new law permits taxpayers to distribute, tax-free, from IRAs for charitable purposes up to $100,000 through year-end 2009.

Research Tax Credit- The new bill extends the research tax credit to amounts paid or incurred in 2008 and 2009. New bill also raises the credit from 12% to 14%.

Leasehold and Restaurant Improvements- The bill provides qualifying restaurant improvements and leasehold improvements will be eligible for 15-year recovery rather than a 39-year period for two more years. Also Congress authorized a 15-year recovery period for certain improvements to retail space.

Energy Efficiency and Property- The bill extends several energy efficiency and energy property tax incentives.  The Commercial Building deduction under Code Sec. 179D is extended through year end 2013. The residential energy efficient property credit is extended though year end 2016, along with adding incentives for residential small wind and geothermal and allowing taxpayers to use the credit to offset AMT.

If you have any questions feel free to contact me to discuss any of these provisions which may have an impact on you or your business.

Michael Dolezal, CPA