BTB Tax Update - December 2009

Newsletter Topics: (click on the topic title below to jump directly to the topic)

Recent IRS News
IRS recommendations for registering paid preparers
Worker, Homeownership & Business Assistance Act 2009
Standard IRS Mileage Rates for 2010
BTB Income Tax Planner Software 2009

Recent IRS News
Revised 1040X - The 1040X has been revised and should be easier to complete.  The estimated release date for this revision is January 20, 2010.

Homebuyer Credit – Form 5405 - The final version of the Form 5405 is not yet available.  The expected release date is 01/20/2010.  A taxpayer who purchases a home after Nov. 6 must use the new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.

Homebuyer Credit - New Documentation Requirements – There are new, more stringent documentation requirements when filing for the Homebuyer Credit. For homes purchases after November 6, 2009 purchasers must attach a properly executed settlement statement to their return.  Taxpayers purchasing a replacement residence and claiming the $6500 will be required to provide verification when they submit the 5405 that they resided in their previous residence 5 consecutive years.  The revised instructions for the Form 5405 will spell out the acceptable documentation. These revised instructions have not been released yet.

Economic Recovery Payment and SSA- We have confirmed with Social Security that the SSA-1099 will not have any reference to the $250 Economic Recovery Payment that recipients received earlier this year.

It will not be included in the total benefits nor will it be stated separately. Social Security recipients, however, should have received a letter from SSA at the time the payment was deposited into their bank account. If taxpayers are not certain they received the payment, they can call SSA at 800-772-1213.

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IRS Recommendations for Registering Paid Preparers – Part I Topic
To bring immediate help to taxpayers this filing season, the IRS announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.

Based on the results of the Return Preparer Review released on January 4, 2010, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:
•    Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
•    Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
•    Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
•    Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct.

Note: None of the changes are effective for the immediate filing season beginning January 2010. The IRS plans to implement the registration requirements in 2011.

The full text of the report is available at http://www.irs.gov/pub/irs-utl/54419l09.pdf

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Worker, Homeownership & Business Assistance Act 2009

On November 6, President Obama signed the Worker, Homeownership & Business Assistance Act of 2009. Even though the new law was passed after the Part II book was printed, we will still cover the new material during our seminar. In addition, we have attached a PDF file to the newsletter so you have a hard copy for your office. The new law includes:
- The extension and expansion of the first-time homebuyer credit
- The new e-filing requirements for tax return preparers in 2011
- The extension of the 5-year NOL carryback provisions
- The increased penalties for late filing of partnership and S corporation returns

Click the following link for a PDF copy of the Worker, Homeownership & Business Assistance Act of 2009

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Standard IRS Mileage Rates for 2010
The new IRS mileage rates for 2010 have been announced:
- 50 cents per mile for business miles driven;
- 16.5 cents per mile driven for medical or moving purposes; and,
- 14 cents per mile driven for charitable purposes.

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BTB Income Tax Planner Software

2009 BTB Income Tax Planner Software is available to help you organize your tax preparation details and stay on top of your work.  It is only $129 for new purchasers and $99 for renewing purchasers. Click here to purchase or for more information.

To view past BTB Tax Updates, visit the Back to Basics Income Tax Seminars' Newsletter Archives

Our Instructors:

Thomas Zoeller EA, CFP, MST	James Hockenberry EA	John Geigel JD, CPA	Jaye Tritz EA, CFP, ChFC

Disclaimer
This publication is distributed with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional advice and assume no liability in connection with its use. Tax laws are constantly changing; are subject to differing interpretation; and the facts and circumstances in your particular situation may not be the same as those presented here. Therefore, we urge you to do additional research and make sure that you are fully informed and knowledgeable before using the information contained in this publication.

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