Monday, May 21, 2012

Residential Energy Efficient Property Credit


This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; geothermal heat pumps qualify only when installed on or in connection with your main home located in the United States.
Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.

If you're eligible, you can claim this credit on Form 5695, Residential Energy Credits when you file your Federal income tax return. Also, note this is a tax credit and not a deduction, so it will generally reduce the amount of tax owed dollar for dollar.  Finally, you may claim this credit regardless of whether you itemize deductions on IRS Schedule A.


brad@mcarthurco.com
704.544.8429



Wednesday, May 16, 2012

What Do You Really Pay In Taxes?


One of the few certainties of life is that everyone pays taxes. Income and property tax are just part of the picture. When you pay a utility bill, rent a room and pump gas into your car, you also pay taxes. So how do all of the taxes you pay affect your bottom line? The AICPA's new tax calculator, Total Tax InsightsTM, gives the public a clearer view at no cost. Check out your tax life at http://www.totaltaxinsights.org/.

brad@mcarthurco.com
704.544.8429 

Monday, May 7, 2012

What should I do if I receive an IRS notice?


The IRS sends millions of letters and notices to taxpayers for a variety of reasons. Many of these letters and notices can be dealt with simply, without having to call or visit an IRS office.  One the most important things to keep in mind is to NOT automatically pay the amount due without fully understanding what the Notice states and what options you have available to you.  However, it is just as important to deal with the Notice in a timely manner.  The fact that it might be unpleasant or time consuming is not a valid excuse to ignore an IRS Notice.  The IRS is serious about its deadlines and the longer you neglect the required action, the more serious your issue may be come.
The IRS specifically lays out the following eight facts in Tax Tip 2012-73:

1. There are a number of reasons why the IRS might send you a notice. Notices may request payment, notify you of account changes, or request additional information. A notice normally covers a very specific issue about your account or tax return.

2. Each letter and notice offers specific instructions on what action you need to take.

3. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

4. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

5. If you do not agree with the correction the IRS made, it is important to respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left of the notice. Allow at least 30 days for a response.

6. Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right of the notice. Have a copy of your tax return and the correspondence available when you call to help the IRS respond to your inquiry.

7. It’s important to keep copies of any correspondence with your records.

8. IRS notices and letters are sent by mail. The IRS does not correspond by email about taxpayer accounts or tax returns.

When all else fails, the best route is to contact your CPA and work with them to determine the best course of action.  

brad@mcarthurco.com
704.544.8429