It's tax payback time

If you took certain actions in a prior year, you may now have additional taxes due on your 2011 tax return. Here are the details.

HOME BUYER CREDIT: If you bought a home in 2008 and took the first-time home buyer credit, you have another repayment installment due with your 2011 tax return. The 2008 tax credit was just an interest-free loan that you have to pay back over a 15-year period.

ROTH CONVERSIONS: If you converted a traditional IRA to a Roth IRA in 2010 and opted to split the tax due from the conversion between 2011 and 2012, your first half of the tax` is due on your 2011 tax return.

Additional funding keeps "Cash for Clunkers" alive

Congress acted just before its August recess to keep a popular car trade-in program alive. The new Car Allowance Rebate System (CARS) -- formerly called the "cash for clunkers" program -- was extended on August 7 with an additional $2 billion injection of government funds. That means that your auto dealer is still prepared to give you a tax-free discount of up to $4,500 for replacing your current vehicle with a more fuel-efficient model.

But the CARS discount isn't available on all trade-ins. To qualify, you must meet certain requirements. For starters, any car that you're trading in must be a 1984 model or newer. Also, you must have owned, registered, and insured it for the year preceding the trade-in. (The insurance requirement doesn't apply in New Hampshire and Wisconsin.)

On the other side, the sticker price for the replacement car can't exceed $45,000. If your current car has a fuel economy of 18 miles per gallon or less, you must replace it with one with a rating of 22 miles per gallon or more. This entitles you to a discount of $3,500. The discount increases to $4,500 if the difference is ten miles per gallon or more.

This new break may be claimed if you buy the replacement car or you lease it for at least five years, but it's not available for used cars.

Similar subsidies are allowed for trade-ins involving SUVs, vans, and light trucks. For example, if the new vehicle is an SUV with a fuel economy of at least two miles per gallon higher than the trade-in, but less than five, the discount is $3,500. If it has a fuel economy of at least five miles per gallon more than the traded-in vehicle, the discount is $4,500.

How do you determine a vehicle's fuel economy? The government has established a website at www.cars.gov to answer this and other questions about the CARS program. The CARS program is subject to change due to the funding limits, so check this site as needed for updates.

FAQ's on Tax Rebate's

 

As rebate bill heads to Bush's desk, time to talk numbers

The Associated Press

Congress passed an economic-stimulus plan last week that provides rebates.

Who gets a rebate?

Anyone who pays taxes or earns at least $3,000 (including Social Security or veterans' disability benefits), with income-cap limitations.

Who doesn't get one?

People earning less than $3,000; illegal immigrants; singles earning more than $75,000; and couples earning more than $174,000. The caps rise by $6,000 per child.

What do you have to do to get the rebate?

File a 2007 tax return with a Social Security number for each person listed.

How much is the rebate?

Singles get a rebate of at least $300; couples get at least $600. The rebate will be equal to the taxes paid, up to $600 for singles and $1,200 for couples (plus $300 additional per child). The rebate will be cut by $50 for every $1,000 above the income cap of $75,000 for singles and $150,000 for couples.

Should you have any questions about the tax rebates or if you qualify please feel free to contact our office for more information. As always please contact us with any tax, accounting, or financial questions you may have.