By a vote of 241-181, the House on Wednesday sent the Senate a bill (HR 4213) to extend through 2010 a $31 billion package of temporary tax credits and other fiscal incentives that benefit a multitude of U.S. businesses, farms, units of government, schools, charities, individuals, nonprofit organizations, religious institutions and other recipients.

The bill uses two measures to pay for itself. One would tax the earnings of hedge-fund managers and certain investment partners as ordinary income rather than capital gains. The other would increase Treasury receipts by cracking down on wealthy Americans who use secret overseas bank accounts to evade taxes.

• A sales tax deduction that mainly benefits people who live in the nine states without a state income tax. The states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. Cost: $1.8 billion.
• An additional standard deduction for state and local property taxes for taxpayers who don’t itemize their deductions. Cost: $1.5 billion
• A deduction of up to $4,000 for college tuition and related expenses. Cost: $1.5 billion.
• A deduction of up to $250 for teachers who spend their own money for books and other classroom supplies. Cost: $228 million.
• A credit that helps businesses finance research and development. Cost: $7 billion.
• Accelerated depreciation for improvements made to leased restaurant and retail property. Cost: $5.4 billion.
• Additional depreciation allowance for businesses that suffer damage from a federally-declared disaster. Cost: $1.4 billion.

Do you know how your state member of Congress voted on this issue of tax break extensions in 2010? Do you know the true tax facts about these bills?

You should!

Source: corsicanadailysun.com, seattletimes.nwsource.com

Federal tax help is now available for American taxpayers for the 2009 federal income tax season. The Internal Revenue Service has updated the 2009 IRS Tax Guide on it’s website www.irs.gov.

Taxpayers can look forward to getting their income tax questions answered and discovering the various tax breaks and deductions available this year. Many of these federal income tax breaks and tax changes are due to the American Recovery and Reinvestment Act of 2009.

The newly revised Publication 17, “Your Federal Income Tax”, is a comprehensive guide that features details on all the new tax-saving opportunities, such as the Making Work Pay credit, the education credit for parents with youngsters in college, the energy credits for homeowners going green, and those for first-time homebuyers.

The 308-page guide provides almost 7,000 interactive links to help taxpayers quickly get answers to their federal tax questions.

Publication 17 has been produced annually by the IRS for more than 65 years and has been available on-line since 1996. As always,, the tax guide is packed with tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, and some basics such as choosing the standard deduction versus itemizing deductions.

To get Publication 17, go to www.irs.gov and enter “17″ in the search box in the upper right corner of the home page or use this link 2009 IRS Tax Guide.

Printed copies of the tax guide will be made available in January 2010. To request a copy or need federal tax help - call 1-800-829-3676.

source: tallahassee.com, irs.gov

The end of the year is approaching but it’s not too late to reduce this year’s tax bill. However you need to be careful not to do anything that will cause you to pay more in 2010 than you would save on your 2009 federal income tax. Here are three year-end tax strategies for individuals from the experts at smartmoney.com

1. Sell Loser Stocks Held in Taxable Accounts

Cut your losses by selling those doggy investments held in taxable brokerage firm accounts. The amount you lose can lower your 2009 tax bill because you can deduct capital losses against your capital gains for the year. If your losses exceed your gains, you’ll have a net capital loss for the year. You can deduct up to $3,000 of net capital loss against your 2009 ordinary income from salary, self-employment activities, alimony received, interest or whatever (the net capital loss deduction limit is only $1,500 if you used married filing separate status). Any excess net capital loss is carried forward to 2010 and beyond and will generate future tax savings.

2. Take the Standard Deduction

If your total itemized deductions are usually close to the standard deduction amount each year, consider the strategy of bunching together expenditures for itemized deduction items every other year. Itemize in those years to deduct more than the standard deduction figure. Then claim the standard deduction in the intervening years. Over time, this drill can save hundreds or even thousands in taxes by significantly increasing your cumulative write-offs. Why?

Because you’ll bag higher itemized deductions in alternating years and relatively generous standarddeductions in the other years. Regardless of what happens with future tax rates, you’ll come out ahead. For 2009, the standard deduction is $11,400 for married joint-filing couples versus $5,700 for singles and $8,350 for heads of households. For 2010, the numbers remain the same — except the standard deduction for heads of households increases ever so slightly, to $8,400.

3. Give to Charities

Thanks to this year’s stock market rebound, you probably have some appreciated shares (currently worth more than you paid for them) that you’ve owned for over a year. If so, consider donating them to IRS-approved charities. You can generally claim an itemized charitable contribution deduction for the full market value at the time of the donation and avoid any capital gains tax hit. On the other hand, don’t donate loser stocks. Sell them, book the resulting capital loss, and give away the cash sales proceeds. That way, you can generally write off the full amount of the cash donation while keeping the tax-saving capital loss for yourself.

Warning: You must itemize deductions to gain any tax-saving benefit from these charitable donation ideas.

source: smartmoney.com - Year-End Tax Prep Strategies for Individuals