Possible 2011 and 2012 Tax Increase

2011 and 2012 possible tax increaseMajor Individual Income Tax Benefits Expiring 12/31/2011:

• Personal tax credits applied against income tax no longer apply

• Higher alternative minimum tax exemptions revert back to extraordinarily-low thresholds

• $250 school teacher expense deduction ends

• Mortgage insurance premium deduction expires

• State and local sales tax deductions expire

• Tuition and related fees deduction end

• IRA to charity tax-free transfers stop

• 2% Social Security tax reduction ends

Major Individual Income Tax Benefits Expiring 12/31/2012:

• Marriage penalty equalization ends

• Dividends taxed at capital gains rates removed, taxed at regular rates now

• Capital gains low tax rates expires

• Removal of itemized deduction phase out for higher income Americans

• Removal of personal exemption phase out for higher income Americans

• Child care deduction limit of $3,000 reverts to $2,400

• Child credit reduces from $1,000 per child to $500 per child

• Low 10% tax bracket for low income Americans is eliminated

• Lower income tax rates and smaller brackets expires

• Refundable adoption credit and reduced deduction

• American Opportunity college education credit expires

• Major reduction in earned income credits and refunds

• Income tax exemption for debt forgiven on home foreclosures and repossessions

• Deduction for student loan interest ends

• Education IRA limit drops from $2,000 to $500

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Tax Scams

IRS Commissioner Douglas Schulman has informed the public that the IRS is not doing outreach due to its workload. Therefore, any e-mails from the IRS in your inbox are definitely a scam and it is your duty to report it. Always verify that you are giving sensitive information to a legitimate source. As reported by the IRS, phishing e-mails from scam artists pretending to be from the agency are most popular, and as the tax season winds down scam artists will be hard at work.

The IRS never sends e-mails! First contact is by mail and then by phone if necessary. If you are ever contacted by the IRS, be sure to get a good tax consultant who will keep you away from IRS tax problems. Regulating tax preparers is scheduled to begin next year, but it has always been the taxpayers personal responsibility to find a good tax consultant and to checking for any signs of fraud.

There are some red flags that can help you to avoid becoming a victim of fraud, or even worse finding yourself being fined or confined to prison. It is a given fact that most people dont enjoy paying taxes. However, it is a non-negotiable by law, and must be paid. It is always easier to pay what is due to avoid complications in the future.

One red flag for poor preparation is if the tax preparer claims that you can get an unusually large refund. Get a second and maybe a third opinion for comparison, just to be sure. The new tax laws will provide many areas for doubts and many will need good tax consultants to embrace the changes. If the preparer’s fee is based on a percentage of the refund, know that this is illegal. Per IRS guidelines, A practitioner may not charge a contingent fee (percentage of your refund) for preparing an original tax return. And remember to never sign a blank form or to sign in pencil.

Reputable tax consultants ask for receipts and facts to determine what deductions are appropriate for you. They will not encourage you to believe falsehoods about voluntary filing or that the government will always do it for you if you don’t file your taxes. In the end, you will have to pay taxes or negotiate an IRS tax settlement.

Scam artists will see the changes that are taking effect at the IRS as an opportunity to find new ways to defraud taxpayers. Some tax consultants may try to encourage you to defraud the IRS. If you suspect fraud, call 800-829-1040 or visit the IRS Web site at http://www.irs.gov.

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Tax Changes: 2011

Income taxes – This year’s rates carry over from last year, but the brackets are a bit higher than last year’s due to inflation adjustments (see table). Expires: end of 2012.

‘Stealth’ income taxes – Affluent taxpayers won’t have deductions clipped by the so-called Pease and PEP limitations. The Pease limit cut 3% of itemized deductions and PEP eroded the personal exemption, which is $3,700 for 2011. Expires: end of 2012.

Investment taxes – Rates continue at historic lows for both long-term capital gains and dividends. For taxpayers in the 15% income tax bracket and below, the rate is zero. For those in the 25% bracket and above, the rate is 15% (see table). Expires: end of 2012.

Estate and gift taxes – The system has been overhauled, with a top rate of 35% and one exemption of $5 million per individual for estate, gift and generation-skipping taxes alike. For those who can stand to part with assets, it’s now possible to shift large amounts of wealth. Expires: end of 2012.

The annual exclusion for tax-free gifts remains $13,000 per donor. A giver may make an unlimited number of $13,000 gifts, as long as they are to different individuals. Gifts of tuition and payments for medical care also are exempt.

Payroll taxes – Last year’s big surprise was a temporary two-percentage-point cut in the employee’s share of Social Security taxes, saving a maximum of $2,136 per worker. There is no phase-out, and each partner of a married couple can get the rebate. Expires: end of 2011.

For most workers, this cut will come as an automatic adjustment to withholding. For the self-employed (whose tax rate falls to 10.4% from 12.4%), it will be built into a quarterly withholding worksheet the IRS hopes to release soon, says IRS spokesman Eric Smith.

Alternative Minimum Tax (AMT) – The “patch” enacted by Congress sets the AMT exemption at $47,450 for single filers and $74,450 for married couples, slightly higher than for 2010. Expires: end of 2011.

Roth IRA conversion – The income limit for conversions has been permanently removed, so this year all taxpayers may still convert ordinary IRAs into Roth IRAs. But taxpayers who convert to Roth IRAs in 2011 no longer have the option of deferring conversion income into later years, as was true for 2010 conversions. Those who converted in 2010 do have until next Oct. 17 to decide whether to use this deferral.

Foreign-account reporting – A little-noticed provision enacted last year imposes a new IRS reporting requirement on those with foreign financial assets above $50,000 in 2011. This form is different from the foreign asset report known as the FBAR. It will also apply to some, such as hedge-fund investors, who have been exempt from the FBAR filing, according to Michelle Koroghlanian of the American Institute of CPAs. Details remain unclear, as the IRS hasn’t yet issued regulations.

Medical expenses – Workers with Flexible Spending Accounts (FSAs) may no longer use pretax funds to pay for many over-the-counter medicines—aside from insulin—without a prescription. But FSA funds may still be used for other, nonprescription medical items such as crutches, contact-lens solution or a wig after chemotherapy, if the individual plan allows it, notes Melissa Labant of the AICPA. For a list of what is allowed by law, see IRS Publication 502.

Cost-basis reporting by brokers – As of 2011, brokers must track clients’ purchases of stock, real-estate investment trusts and foreign securities, and then report the original cost to the IRS when the asset is sold. This is an effort to improve tax compliance by investors. The rules for investments in mutual funds, bonds, options and many exchange-traded funds don’t kick in until after 2011. (See Tax Report, Oct. 23, 2010.)

Energy tax credits for homeowners – As part of the December changes, lawmakers extended the “25(C)” credit for energy-efficient improvements, but in a way that will be useful to few. The amount of the credit has shrunk to a maximum of $500 per taxpayer per lifetime, so those who took last year’s $1,500 credit under this provision don’t qualify. The current version expires at the end of 2011, and builders and remodelers may push either to expand it or drop it altogether.

Other changes – Also renewed at the last minute were the $250 deduction for teacher classroom expenses; a deduction for state sales taxes in lieu of the state income tax deduction; and the tax-free donation of IRA proceeds to charity (Tax Report, 12/18/09). They expire at the end of 2011. The American Opportunity Tax Credit of up to $2,500 for education expenses was renewed for 2011 and 2012.

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Payroll Tax Cut

President Obama’s deal keeps the lower personal income, dividend and capital gains rates enacted under President George W Bush the same for at least the next two years. What’s new is a 2% reduction in social security payroll taxes for one year.
If Obama is ‘going Clinton’ then it is hugely constructive for the economy,” said Steve Cortes, founder of Veracruz LLC. “Once it was evident that Clinton would move to center and play ball with GOP, S&P soared in 1995 after 1994 mid-terms.”
In speeches recently, Bernanke had called for a strong “fiscal” response. It couldn’t come at a better time for the Fed Chairman, who has been under fire for announcing a second round of Treasury purchases to keep interest rates low. The full purchase of the $600 billion the Fed is planning to buy may not even be necessary if this stimulus takes hold, investors said.
President Obama’s first attempt at economic stimulus at the beginning of 2009 was largely Keynesian in nature and was forced through Congress. It contained minor tax cuts but was heavily loaded toward spending on infrastructure and education and extending unemployment benefits.
To be sure, this new compromise is not a done deal yet. Both party leaders now need to discuss the finer details with their members and then the Senate will likely vote first, followed by the House. During these further discussions, you could have some strong protests from Democrats. The payroll tax cut, in particular, could become a target of an income limit in the final bill, according to FBR Capital Markets (FBCM).
So, what do you think about the proposed payroll tax cut? Will it help in the long run or will it only drag out an even longer economic recovery?

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Why Tax Return Preparation and Filing Will Be Worse Than Usual

Congress is preparing a parting gift for us: a 2011 tax-filing season fiasco at least as trying as the one in 2007.

by Jim McTague for WSJ Barrons online

It’s already fairly certain that 2010 tax refunds for millions of filers will be delayed by many weeks, because Congress is waiting so late in the year to patch the alternative minimum tax to prevent it from snagging 20 million to 27 million new taxpayers.

One of Two Sure Things

Circumstances might become more taxing if Congress doesn’t reach a deal on the extension of the low Bush brackets—35%, 33%, 28%, 25%, 15% and 10%. If the Bush brackets expire, withholding taxes in tax-year 2011 would shrink paychecks across the board, literally taking away milk money for families in the $40,000 range. The new brackets would be 39.6%, 36%, 31%, 28% and 15%.

BILL AHERN, A SPOKESMAN for the Tax Foundation, reminded me last week that Congress waited until just before its Christmas break in 2007 to pass an AMT patch for that year. What happened? The IRS needed about 11 weeks to reprogram its computers to reflect the changes, which delayed filings and, consequently, some refunds. Once again, it looks as if Congress will wait until the last minute.

The first issue Senate Majority Leader Harry Reid will tackle when Congress returns from the Thanksgiving holiday is food safety, which could eat up the entire week. There are only four weeks left on the 111th Congress’ legislative calendar. On top of this, members of Congress who lost their seats or who are retiring or moving up in seniority are expected to be packed up and ready to move from their Capitol Hill offices the first week of December. Under such circumstances, how much serious work can they get done?

Reid hasn’t scheduled any action on taxes yet, which is worrisome. If tax legislation is to move quickly, it will start in the Senate, not the fractious House. How, you may wonder, can the debate begin in the Senate, given that the Constitution requires all revenue proposals to originate in the House? Because the Senate is sitting on five unrelated tax measures from the House, any of which could be amended with AMT language and/or Bush tax-cut language, according to GOP lobbyist Richard Hohlt. The Senate could pass the amended bills, then send them to the House for a concurring vote.

There is no doubt Congress will enact an AMT patch. Otherwise, between 20 million and 27 million middle-income people will be snagged by the higher tax this year. The pitchforks would be out—again! But passing a patch just in the nick of time has real-world consequences. IRS Commissioner Douglas Shulman, in a Nov. 5 letter to several members of Congress, warned, “If an AMT patch is not enacted until late this year, it is likely that the IRS would need to delay the ability of millions of AMT taxpayers to file their returns and access any refunds that may be due.” Shulman further warned that if the 111th passed the buck to the 112th, which would have to fix the AMT retroactively, then collections would be totally gummed up.

Congress has known all year that it needed to address both the AMT and the Bush tax cuts. However, House Speaker Pelosi and Senate Leader Reid postponed the debate due to party politics. Neither could convince enough Democratic colleagues to buy the Obama administration’s class-warfare rhetoric and hike taxes on the wealthy while keeping them at current levels for everyone else. Pelosi and Reid dared not hold a vote on the matter for fear it might inadvertently give the GOP a significant legislative victory ahead of the midterm election.

Post election, you have to wonder how they can possibly hold together a caucus that includes more than 60 members swept from office by an angry voter backlash sparked by the policies of the leadership.

MEANWHILE, BACK IN THE REAL WORLD, payroll departments are awaiting word from the Treasury on the exact amount of taxes they will be required to withhold from employee paychecks in 2011. The tables generally are released in mid-November, but they are being held this year because of the unresolved issue of the Bush tax cuts. Experts have been predicting that at some point the Treasury will have to assume the Bush tax cuts expire and issue new tables, because payroll departments require two to three weeks on average to program their computers with new data.

But the Treasury doesn’t seem hurried.

“We understand that businesses and payroll processors need at least a few weeks to implement new withholding tables, and we are hopeful that Democrats and Republicans in Congress will work together to extend tax cuts for 98% of American families and provide the middle class the tax relief they need in these tough economic times,” said Treasury spokesman Sandra Salstrom.

Hope? Democrats and Republicans in the 111th haven’t worked together in two years. Why assume a Kumbaya moment now? My advice: Assume the worst, and take some profits and income in 2010. And plan for less take-home pay in the first part of 2011.

E-mail: jim.mctague@barrons.com

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The Bush Tax Cuts: Expiration Will Affect Everyone

Wondering whether you should accelerate income into 2010 to lock in a known tax rate now instead of an uncertain or possibly higher tax rate next year?


Should you defer any tax deductions until 2011 so those deductions will offset next year’s income at presumably higher rates?


There are several tax breaks that expire at the end of 2010.

The advice here is to take the tax break while you can.

  • Energy efficient home improvement credit expires at end of 2010. Certain types of energy-efficient home repairs can result in a federal tax credit. Replacing windows, doors, and replacing HVAC system and installing new insulation all count towards this tax credit.
  • Hybrid vehicle tax credit expires for all models.
  • Guaranteed 15% maximum rate for long-term capital gains. For 2011, the top rate might go back to 20% for long-term gains. Qualified dividends lose their preferred tax rate and revert back to being taxed at ordinary income tax rates.
  • Child and dependent care tax credit will be reduced starting in 2011. For 2010, the child care credit is available for the first $3,000 of day care expenses for one child and the first $6,000 of day care expenses for two children, with the maximum tax credit set at 35% of expenses. For 2011, the credit will be limited to the first $2,400 of expenses for one child and $4,800 of expenses for two children, with the maximum credit being 30% of expenses.
  • Child tax credit at $1,000 per child. For 2011, the child tax credit will revert to $500 per child.
  • Computers as a qualified expense for section 529 college savings plans expires at the end of 2010.
  • Earned income credit for third child ends in 2010. For 2011, the EIC will be based on at most two children.
  • Student loan interest deduction is scheduled to change. Beginning in 2011, interest paid on a student loan will be deductible only for the first 60 months of repayment, and the phase out range will start at $40,000 (or $60,000 for married couples filing jointly).
  • American Opportunity tax credit for undergraduate education expires at the end of 2010. It will revert back to being the Hope credit for the first two years of undergraduate education.
  • Making Work Pay tax credit expires at the end of 2010.

Click on this link to estimate your 2011 income tax

Benjamin Franklin wrote that “nothing is certain but death and taxes,” but that is only half-true. There is absolutely nothing dead-certain about taxes this year.

Unless Congress acts soon, almost all of the “Bush tax cuts” and credits that were enacted in 2001 and 2003 will expire at the end of this year. Most financial analysts and Washington insiders say they don’t expect that to happen. But if it does, you — the American taxpayer — are in for a tax hike. A big one.

Here’s what it will mean to you:

— The standard percent rates — the baseline percentage of your income that goes to the government — will universally rise from 10 percent to 15 (for lowest-income earners), from 25 percent to 28, from 28 percent to 31, from 33 percent to 36, and from 35 percent to 39.6 percent (for highest-income earners).

Indexing of the alternative minimum tax (AMT), which ensures that taxpayers who benefit from itemized reductions and/or credits pay a separately calculated minimum tax, will expire.

Taxes on capital gains and dividends will increase, potentially costing investors an estimated $35 billion annually.

Married couples who saw their standard deduction raised to that of double the single amount will go back to paying higher rates, at a cost of roughly $32 billion a year.

— Expanded tax credits like the child tax credit, which previously increased to $1,000 from $500, will expire, costing American families an estimated $26 billion a year.

— The already-expired estate tax would revert back to 2009 levels, translating to a minimum estimate of $26 billion to heirs and heiresses.

— The personal exemption phase-out (PEP), which allowed high-income filers to deduct the full value of their personal exemptions and itemized deductions, will expire, potentially costing wealthy households about $21 billion.

For the family of four bringing in a combined income of $75,000, the expiration of all Bush-era tax cuts will amount to a tax increase of $2,143 next year, according to the Tax Foundation’s 2011 Income Tax Calculator.

A family of four earning $150,000 would see its income tax burden increase by $4,510 to $23,150, according to the Tax Foundation.

Single filers, meanwhile, would see their taxes rise by $605 at the $50,000 income plateau and by $1,355 at $75,000. A single filer earning $150,000, including $15,000 in long-term capital gains, would pay an extra $3,269, with a total tax liability of $28,340.

A single parent of one child earning $25,000 would see his tax liability rise by $955, decreasing his tax refund of $1,856 to just more than $900. A low-income family of five earning a total of $45,000 would see their taxes increase by $2,538, equating to a total tax liability of $1,028.

An upper-middle income family of four with two earners pulling in $150,000, including $15,000 in long-term capital gains, would see their taxes increase by $3,802.  That family’s total tax burden? Roughly $21,600.

A high-income family of four, meanwhile, with a combined income of $300,000 and $20,000 in itemized deductions, would see their taxes jump by more than $11,000 if Congress allows all of the Bush-era tax cuts to expire. That equals a total tax liability of $68,392.

For even higher earners — such as a married couple with no children making $420,000 in total income and with $20,000 deductions apiece for state and local taxes, mortgage interest and charitable contributions — that total tax liability grows to $106,815, or an increase of more than $16,600 from 2010.

Further up the income ladder, a married couple earning $700,000 in wages with $300,000 worth of long-term capital gains and qualified dividends and $95,000 in deductions for mortgage interest and state/local income taxes would see their tax share grow by $61,206.

Finally, a retired married couple with a combined income of $60,000 — including $10,000 in qualified dividends, $25,000 in Social Security benefits and $10,000 in 401(k) distributions — would see their tax liability increase by $2,676.

“A lot of people like to paint the Bush tax cuts as having only benefited the rich, which is not true — you can simply look at the estimates.” said Mark Robyn, a staff economist for the Tax Foundation

Citing estimates from the Office of Management and Budget, Robyn said letting the Bush-era tax cuts expire only for high-income people would raise $630 billion over 10 years, compared to $3 trillion during the same period if all the tax cuts were to expire.

One of the biggest tax cuts for middle-income earners was the creation of the 10 percent bracket, which will rise to 15 percent.  The doubling the child tax credit to $1,000 will expire  –  a dollar for dollar increase in your tax liability.


Victor Quinn, Senior Partner, Quinn & DeLuca, LLC
(From an article by Joshua Rhett Miller for  FoxNews)
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New Home-Buyer Credit…What the IRS giveth…the IRS taketh back!

Two years have already passed since you accepted the $7,500 first time home buyer tax credit in 2008 and it is time to start paying it back.  This repayment of the credit applies only to those who closed on their homes after April 8, 2008, and on or before December 31, 2008.  Unlike some past credits, this one must be repaid over a 15-year period. As a result, the new tax credit works like an interest free loan. You take the full credit on your 2008 return, and then repay the credit amount in equal payments over 15 years, with no interest charges.

Is Your Money Pit the IRS' Cash Trough?

However, due to amendments in the law, homebuyers who closed on their homes after January 1, 2009 and before Sept., 30, 2010 qualify for an $8,000 one-time credit against their income tax for 2009 or 2010 and if you closed during 2010, you can take the credit either on your 2010 return or amend 2009 to take the credit there.  2008 example:If a taxpayer is allowed a $7,500 first-time homebuyer credit in 2008, the taxpayer must recapture the credit amount by adding $500 to your tax liability starting in 2010 and the following 14 years.

NOTE: If a taxpayer disposes of the principal residence for which a first-time homebuyers credit was allowed before the end of the 15-year recapture period, the remaining credit repayment amount is added to the income tax liability of the taxpayer for the year of sale.  It is not allowed capital gains treatment, but taxed t your ordinary income rate.In the case of an involuntary conversion (foreclosure), recapture is not accelerated if a new principal residence is acquired within a 2-year period. No amount is recaptured after the death of the taxpayer.

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Tax Deadlines to Plan For

December 31, 2010. Many retirement tax moves must be made by the end of the calendar year. Contributions to 401(k) and 403(b) plans need to be deposited by Dec. 31, 2010, to qualify for a tax break this year. Workers can defer taxes on up to $16,500 in an employer-sponsored retirement account in 2010, a limit that jumps to $22,000 for employees age 50 or older this year.
Seniors were able to skip taking required minimum distributions from retirement accounts in 2009. But retirees over age 70 1/2 must take distributions from their pre-tax IRAs and 401(k)s this year by Dec. 31, 2010. Those who fail to withdraw the correct amount must pay a 50 percent tax penalty and regular income tax on the amount that should have been withdrawn.
Investors who wish to convert a pre-tax IRA to a Roth IRA or a traditional 401(k) to a Roth 401(k) in tax year 2010 must initiate the conversion by Dec. 31, 2010. Those who convert to a Roth in 2010 have the option to pay the income tax on the transfer this year or pay tax on 50 percent of the conversion amount in 2011 and the second half in 2012. In future years, all of the income tax will be due in the year of the transfer. Many people have already begun to utilize this one-time tax perk. Financial services firms including Bank of America Merrill Lynch and Vanguard have reported a significant uptick in conversions this year. Nearly 100,000 retirement savers converted traditional IRAs to Fidelity Roth IRAs in the first half of 2010, four times more than were rolled over during the same time period in 2009. The removal of income limits for Roth IRA conversions this year also contributed to the increase in transfers

March 1, 2011. The simplest way to convert a traditional IRA to a Roth IRA is to have the trustee of your current account roll it directly into the new account. However, if you have an IRA distribution made out to you, you have about two months to deposit the full amount withdrawn into a Roth IRA before you will incur any early withdrawal penalties. “The money doesn’t necessarily have to go in the Roth in 2010, but you need to convert it within 60 days of the withdrawal,” says IRA expert Ed Slott, founder of irahelp.com and author of Stay Rich for Life!: Growing & Protecting Your Money in Turbulent Times. If you receive the distribution on Dec. 31, 2010, you have until March 1, 2011, to deposit your money in a Roth IRA and have the transfer qualify as a 2010 conversion.

April 1, 2011. Seniors who turn 70 1/2 in 2010 have the option to delay their first required distribution until April 1, 2011. However, retirees who delay the 2010 distribution until next year must take two IRA withdrawals in 2011: the 2010 withdrawal by April 1, 2011, and the 2011 withdrawal by Dec. 31, 2011.

April 15, 2011. IRA contributions for the 2010 tax year must be made by April 15, 2011. Many people wait until the last minute to make their deposits. Almost half (45 percent) of all IRA contributions are made in the 28 days leading up to the tax deadline, and a quarter of new IRAs are opened in April, according to Fidelity IRA data. If you make a contribution between January 1 and April 15, 2010, you should tell the financial institution whether you want the contribution to apply to the 2010 or 2011 tax year. “I actually tell my accountant that I want to make my contributions count as deferred income for 2010,” says Bedda D’Angelo, a certified financial planner and president of Fiduciary Solutions in Durham, N.C., about her typically last-minute April IRA contributions. If you do not specify which tax year you want the contribution to apply to, the bank can assume the contribution is for the current year. Early tax filers can claim a traditional IRA contribution before the deposit is actually made, but the money must be there by the due date of your return.

October 17, 2011. If you wish to undo a 2010 Roth IRA conversion, you have until Oct. 17, 2011, to move your money back to a traditional IRA. To do this you will need to amend your 2010 tax return and subtract the amount that you put back in the pre-tax account from your 2010 gross income

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Focus On Being More Self-Centered

No Not You!!!

In order for your services to appeal to clients, they must focus on fulfilling their needs.  This requires you to be dedicated to running a client-centered practice.

You’re familiar with the importance of good customer service.  You wouldn’t frequent a business that is disrespectful or oblivious to your needs and desires. You know what you like.  You wouldn’t think of buying a one-size-fits-all shirt or blouse.  The same applies to your clients or prospects –  why would they hire you to provide a  solution that ignores their unique needs? They want to feel as if your services are customized to suit their specific goals.   How do you do that?  Well, you must step back from your practice and look at it from a client’s perspective. When you do that, ask yourself the following three questions:

1. How will these services enhance my business?
Your clients aren’t interested in what you do.  They’re interested in how it will benefit their business. While you may submit a detailed tax return, they would rather your ability save them money in taxes – not that’s appealing!  Decide how to differentiate yourself.  Not only provide accurate, timely service, which is a given, but learn so much about your business clients as to be able to “talk their language” and let them know your concerns go beyond the ordinary.  Facilitate the management’s ability to improve it’s internal processes and to build relationships within the organization.   Concentrate your efforts on collecting knowledge of the business, including the staff, processes, history, education, contacts – anything that brings value to the business and improves its image.  Gathering this information, and if necessary, imputing it into a usable database, not only engenders good will, but helps you gain insights into their operation.

2. How much will it cost me?
While we’d like to think that clients are first interested in our services and second interested in our fees, that’s certainly not the case anymore.  Especially when you’re working with small business owners, they want to save as much money as possible, even when it comes to their taxes – and your fees. When faced with this issue it’s often most effective to present them a per-project estimate rather than an hourly fee. They imagine those hourly fees adding up much more quickly than they actually do. When they can see how much the entire project might cost them (for example, a flat tax preparation fee), they’re generally more subdued and can see just how valuable your services are.  You’ll most likely hear, “that’s about what I figured,” rather than “I’ll have to talk to (x) or I’ll get back to you…”

3. Do you offer any complementary services?
When you’re low on time or too tired to drive around, you can probably appreciate the convenience of a super store that has everything from groceries to pharmaceuticals to clothes to hardware. Your clients are just as interested in convenience as you are, and if you asked them they would probably admit they would prefer to have all their financials managed by the same individual.  Bookkeeping services are the perfect complement to tax services. Not only would your current clients find your new services appealing, but you would be more likely to attract more prospective clients with the convenience of a one-stop financial shop.

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First-Time Homebuyer Credit: Members of the Military and Certain Other Federal Employees

The government is doing what it can to stimulate the economy by any means possible. In doing so, the First-Time Home Buyer Credit has been extended but this article will concentrate on the Credit for Military Personnel and how to qualify.VAO TAX NEWS
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

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