1.     Notify the Social Security Administration Report any name change to the Social Security Administration, so your name and Social Security Number will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.

2.     Notify the IRS If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).

3.     Notify the U.S.Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.

4.     Notify Your Employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.

5.     Check Your Withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on IRS.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will even provide you with a new Form W-4, Employee’s Withholding Allowance Certificate, you can print out and give to your employer so they can withhold the correct amount from your pay.

Questions?

sam.cohen@glassjacobson.com

Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

1. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
2. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
3. To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
4. Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers’ Website.
5. Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
6. The improvements must be made to the taxpayer’s principal residence located in the United States.
7. To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.

Questions?

sam.cohen@glassjacobson.com

1. The IRS does not initiate contact with a taxpayer by e-mail.
2. If you receive a scam e-mail claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.
3. Identity thieves get your personal information by many different means, including:
   1. Stealing your wallet or purse
   2. Posing as someone who needs information about you through a phone call or e-mail
   3. Looking through your trash for personal information
   4. Accessing information you provide to an unsecured Internet site.
4. If you discover a website that claims to be the IRS but does not begin with ‘www.irs.gov’, forward that link to the IRS at phishing@irs.gov.
5. To learn how to identify a secure website, visit the Federal Trade Commission at www.onguardonline.gov/tools/recognize-secure-site-using-ssl.aspx
6. If your Social Security number is stolen, another individual may use it to get a job. That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return.
7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.
8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification – such as a Social Security card, driver’s license, or passport – along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.
9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number.
10. For more information about identity theft – including information about how to report identity theft, phishing and related fraudulent activity – visit the IRS Identity Theft and Your Tax Records Page, which you can find by searching “Identity Theft” on the IRS.gov home page.

Questions?

sam.cohen@glassjacobson.com

Many parents who work or are looking for work must arrange for care of their children (under the age of 13) during summer vacation.  These expenses could qualify you for a credit on next year’s tax return.

The Child and Dependent Care Credit is available during the summer (and throughout the rest of the year).  Here are 5 facts you need to know:

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

So, instead of a tax-useless charitable bequest, make a specific bequest to your heirs with a non-biding request that they make the requested charitable contribution. The heir will obtain an income tax charitable contribution deduction which is quite a tax improvement.

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

From August 8th through 14th, qualifying clothing and footwear priced $100 or less will be exempt from Maryland’s six percent sales tax.

“Clothing or footwear” means an article of apparel designed to be worn on or about the human body.

What is exempt?

The sales and use tax is not due on the sale of a qualifying article of clothing or footwear if:

• The sales price of the article is $100 or less; and
• The sale takes place during a period beginning at 12:01 a.m. on Sunday, August 8, 2010 and ending at 12 midnight on Saturday, August 14, 2010.

The exemption applies to each qualifying item selling for $100 or less, regardless of how many items are sold at the same time. For example, if a customer purchases two shirts for $80 each, both items qualify for the exemption, even though the customer’s total purchase price ($160) exceeds $100.

What will not qualify (and be taxed)?

The exemption does not apply to:

• Accessory items, even if they are priced at $100 or less.  “Accessory items” include but are not limited to jewelry, watches, watchbands, handbags, handkerchiefs, umbrellas, scarves, ties, headbands, and belt buckles;
• The first $100 of a more expensive single article or set (as in a suit) of clothing or footwear. For example, if a customer buys a pair of pants costing $110, sales tax is due on the entire $110;
• Any special clothing or footwear primarily designed for protective use or not intended for everyday use.

A list of exempt and taxable items is available on the Comptroller’s Web site at www.marylandtaxes.com, or by calling the Taxpayer Service Section at 410-260-7980 in Central Maryland or toll-free 1-800-MD TAXES from elsewhere.

Questions?

sam.cohen@glassjacobson.com

If the retiree’s move is permanent, it is important that legal domicile be established in the new state. (The exact definition of domicile varies from state to state. In general, domicile is the individual’s true, fixed, and permanent home and the place to which the individual intends to return, even while residing elsewhere. A person may have more than one residence, but can have only one domicile.)

If domicile is not established, the retiree may be subject to income tax as a resident of both the old and new states. Furthermore, if the retiree dies without establishing domicile, both the old and the new states may claim jurisdiction over the retiree’s estate. However, since each state has its own rules relating to residence and domicile, both states may try to impose their income taxes on the retiree even if he has established domicile in the new state, but has not relinquished domicile in the previous state to its satisfaction.

The more time that elapses after the move and the more steps the retiree takes to establish domicile in the new state, the more difficult it will be for the old state to assert that the retiree resides or has domicile there.

The following list includes some steps that tend to establish domicile in a new state:

• Register to vote in the new location.
• File a change of address form with the post office at the old location and change the address on documents, such as tax returns, wills, contracts, insurance policies, passports, and living trust agreements.
• Obtain a driver’s license and register automobiles in the new location.
• Open and use bank accounts in the new location.
• Move items from safe-deposit boxes in the old location to the new location.
• Purchase or lease a residence in the new state. Sell residence in the old state.
• If an income tax return is required, file a resident return in the new state and a nonresident return (or no return, if appropriate) in the old state.
• File for property tax relief under a homestead exemption (if any) in the new state. (The homestead exemption will be discussed later.)
• Move all items that make a house a home such as mementos, heirlooms, sentimental items, trophies, collections, furniture, etc. to the new state.

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than your standard deduction, you can usually benefit by itemizing.

The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2009, they are:

• $5,700 for Single
• $11,400 for Married Filing Jointly
• $8,350 for Head of Household
• $5,700 for Married Filing Separately
• $11,400 for Qualifying Widow(er)

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

1. The Earned Income Tax Credit is a refundable credit for certain people who work and have earned income from wages, self-employment or farming. Income, age and the number of qualifying children determine the amount of the credit. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
3. The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
4. The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver’s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).
5. The Health Coverage Tax Credit pays up to 80% of the health insurance premiums for eligible Trade Adjustment Assistance recipients and Pension Benefit Guaranty Corporation payees. You can complete IRS Form 8885, Health Coverage Tax Credit to claim the credit on your tax return. To determine if you’re qualified, or to find out how to receive the HCTC each month, visit IRS.gov and search for “HCTC.”

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com

Historically, mortgage insurance premiums were not considered the same as interest paid on a mortgage and were not deductible.  However, for a limited period of time, mortgage insurance premiums can be treated as qualified residence interest and deducted.  There are some restrictions:

• Premiums must be paid or accrued for qualified mortgage insurance obtained in connection with acquisition indebtedness on a qualified residence.
• Premiums must be paid or accrued after 2006 with respect to mortgage insurance contracts issued after 2006.

Right now, this provision is limited. Unless it is extended, it will not be available after 2010.

Submitted by Sam Cohen

Questions?

sam.cohen@glassjacobson.com