Archive for 26. January 2010

Work for Pay Credit - How much did you receive?

This credit is available in 2009 and 2010.  According to IRS instructions, taxpayers who received the $250 economic stimulus payment in 2009 (Social Security recipients, SSI, railroad retirement and Veteran’s Disability or Pension benefits) must reduce the Form 1040 credit by this amount.

The math is simple BUT we forsee a few problems.  Since the check is probably directly deposited, many taxpayers are going to say “don’t know if I received it”.  YUP, that’s what they will say.  Then the question is, how do we know for sure when preparing a return (and trying to avoid preparer penalties)……

IRS instructions say if you “if you do not know” you should personally contact the Social Security or the paying agency.  IRS nor Social Security has any electronic link to obtain this information (we had a link for the Economic Stimulus Rebate in 2009 for 2008).

Here is a link to more specific information on the IRS website Making Work Pay Questions and Answers: Economic Recovery Payments

Work for Pay Credit 2009 & 2010

Depending on your AGI (Adjusted Gross Income - that is the bottom line of the first page of your personal Form 1040), you may be eligible for a $400 credit ($800 if married filing joint). 

For 2009, if your filing status is Single, Head of Household or Married filing separate, the phase out of the credit begins at $75,000 and ends at $95,000.  That means if you made less than $75k, you get the whole $400.  If you made $95k, you get none.

If your filing status if Married Filing Joint, the phase out begins at $150k and ends at $190k.

We do not know at this time whether the AGI restrictions will be exactly the same for 2010.

You MAY have already received up to $250 of the credit if you are a recipient of Social Security, SSI, railroad retirement, Veteran’s disability compensation or pension benefits.

LLC to be taxed as a Corporation?

Until you know you are going to stick with it (no offense, many clients try stuff and change their mind), I would not consider the extra paperwork involved with having the NEW LLC taxed as a corporation.  You can find more information on our website for Sub S Corporations www.USATaxHelp.com and also the why you really want at least an LLC as a business entity.

 If you know for sure you are continuing, then the “S” corp election for the LLC is usually an excellent decision.  Seriously, read the two handouts on our main website for “S” Corps and LLC’s at www.USATaxHelp.com

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