If you installed solar equipment or recently insulated your home, you may qualify for two tax credits- the Non-business Energy Property Credit and the Residential Energy Efficient Property Credit. Not all energy-efficient improvements qualify, so make sure that you have the manufacturer’s tax credit certification statement. This statement can usually be found on the manufacturer’s website or with the product packaging.

1. The Non-business Energy Property Credit: If you installed energy-efficient improvements in your home, you may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements include adding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. Please note that if you’ve claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit for 2011. Qualifying improvements must have been placed into service in your principal residence located in the United States before January 1, 2012.

2. Residential Energy Efficient Property Credit: If you installed qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines, you may qualify for this credit, which runs through 2016. The credit is 30% of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. You may generally include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; geothermal heat pumps qualify only when installed on or in connection with your main home located in the United States.

If you’re eligible, you can claim both of these credits on Form 5695, Residential Energy Credits when you file your 2011 federal income tax return. Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar. Finally, you may claim these credits regardless of whether you itemize deductions on IRS Schedule A.

You can find Form 5695 at IRS.gov or order it by calling 1-800-TAX-FORM (800-829-3676).

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Did you know that free tax return preparation assistance is available for eligible military members and their spouses? The Volunteer Income Tax Assistance (VITA) program provides free tax advice as well as tax preparation, filing and other tax assistance to military members and their families.

Here is some helpful information for military members to keep in mind during tax season:

Tax Sites:

Volunteers at military-based VITA sites are trained to help with military-specific tax issues, such as combat zone tax benefits and the Earned Income Tax Credit guidelines.

Bring the following records:

To receive free tax assistance, you should bring the following records to your military VITA site:

• Valid photo identification
• Social Security cards for you, your spouse and dependents or a Social Security number verification letter issued by the Social Security Administration
• Birth dates for you, your spouse and dependents
• Wage and earning statement(s) like Form W-2, W-2G, 1099-R
• Interest and dividend statements (Forms 1099)
• A copy of last year’s federal and state tax returns, if available
• Checkbook for routing and account numbers for direct deposit
• Total amount paid for day care and day care provider’s identifying number
• Other relevant information about income and expenses

Dealing with joint returns:

If your filing status is Married Filing Jointly and you want to file your tax return electronically, both you and your spouse should be present to sign the required forms. If it isn’t possible for both of you to be present, a valid power of attorney that allows tax preparation can be used to sign and file the return.

Special exception:

There is a special exception to using a power of attorney for spouses in combat zones. The exception allows  the filing spouse to e-file a joint return with only a written statement stating the other spouse is in a combat zone and unable to sign.

For more information, review IRS Publication 3, Armed Forces’ Tax Guide, available on the IRS Web site at www.irs.gov or order a free copy by calling 800-TAX-FORM (800-829-3676).

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The tax season is in full swing, and those who haven’t already filed may be starting to panic.

However, there is no need to panic because the IRS offers free assistance online, via telephone and in person.

Here are four resources to help you find the information that you need to file your taxes this year.

1. CLICK: The IRS website at www.irs.gov contains a wealth of tax information. You can even prepare and file your federal tax return at no cost through Free File.  Free File is a service offered by IRS and its partners who offer free tax preparation software and free electronic filing. You must go to www.irs.gov to use Free File. If you have tax questions, you can also check out 1040 Central on the Individuals page for the latest news. You can even check the status of your refund with Where’s My Refund?

2. CALL: Call the IRS Tax Help Line for Individuals, 800-829-1040, to get answers.  To hear pre-recorded messages covering various tax topics or to check the status of your refund, call 800-829-4477. To order free forms, instructions and publications, call 800-829-3676. TTY/TDD users may call 800-829-4059 to ask tax questions or to order forms and publications.

3. GET FREE HELP: Free tax preparation is available through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs in many communities. Volunteer return preparation programs are provided through partnerships between the IRS and community based organizations. They offer free help in preparing simple tax returns for low-to-moderate-income taxpayers. To find a site near you, visit www.irs.gov, or call 800-906-9887. Qualified taxpayers (age 60 or older) can also find help at a local TCE site by visiting www.aarp.org or calling 888-227-7669.

4. VISIT: If you want face-to-face assistance, you can find help at a local IRS Taxpayer Assistance Center. Locations, business hours and an overview of services are available at www.irs.gov. Just go to the Individuals tab and click on the Contact My Local Office link on the left under IRS Resources.

For more information about free services provided by the IRS, review Publication 910, IRS Guide to Free Tax Services available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

You may also contact an accounting and/or tax professional.

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You may be one of the millions of taxpayers who qualify for free tax preparation assistance from IRS-sponsored community-based, volunteer programs. If you earn less than $50,000 per year, or if you are 60 or older, you may be able to take advantage of two programs sponsored by the IRS — the Volunteer Income Tax Assistance (VITA) program and/or the Tax Counseling for the Elderly (TCE) program.

The IRS VITA program offers free tax help to people who earn less than $50,000, and most locations offer free electronic filing. The TCE program offers free tax help to individuals aged 60 or older.

The IRS certifies community volunteers so they can help eligible persons with tax credits, such as the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly. Some volunteer sites have language specialists to assist people with limited English proficiency. More than 12,000 free tax preparation sites are open nationwide this year as the IRS continues to expand its partnerships with nonprofit and community organizations performing these vital tax preparation services.

The American Association of Retired Persons (AARP) operates the Tax-Aide free tax preparation program during the filing season as part of the TCE program. Trained and certified AARP Tax-Aide volunteers help taxpayers with low-to-moderate income, with special attention paid to those 60 and older.

The IRS partners with the military to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. Volunteers are trained and equipped to address military-specific tax issues, such as combat zone tax benefits.

Taxpayers can typically find locations and hours for these volunteer tax preparation services through city information hotlines and local community organizations.  Local VITA site information is also available through a new online tool on the IRS Website – www.irs.gov Taxpayers can search the word “VITA” in IRS.gov and click on the option “Free Tax Return Preparation For You by Volunteers,” followed by ”Find a VITA site near you” to access the tool. Site information is also available by calling the IRS toll-free number 1-800-906-9887. To locate the nearest AARP Tax-Aide site, visit www.aarp.org or call 1-888-227-7669.

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Did you or anyone in your family have significant medical or dental expenses last year?  If you did, you may be able to deduct those expenses when you file your tax return.

The following information will help you consider your medical or dental expenses when you file your tax return.

1. First of all, you must itemize your qualifying medical and dental expenses using Form 1040, Schedule A.

2. On Form 1040, Schedule A, you can deduct medical care expenses that exceed 7.5% of your adjusted gross income for the year.

3. You can include the medical and dental expenses you PAID during the year, regardless of when the services were provided. Make sure you have good receipts or records to prove your expenses.

4. You cannot count any expenses that have been reimbursed to you. Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

5. You may include qualified medical expenses you pay for yourself, your spouse and your dependents. However, check with the IRS or a tax professional if you are divorced or separated because some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.

6. You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

7. You may deduct transportation costs that are essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 2011.

8. Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

For additional information about medical and dental expenses, see Publication 502, Medical and Dental Expenses or Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Some Helpful Links:

• Publication 502, Medical and Dental Expenses (PDF)
• Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (PDF)

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Every year, the IRS announces important changes that all taxpayers should understand before they file. Check out www.IRS.gov to get the most current updates on any new legislation that may affect your tax return.

Here are some of the tax change highlights:

Due date difference – it’s not the 15th this year. This year, you need to file your federal tax return by April 17, 2012. The due date is April 17 because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

New forms for capital gains and losses as well as foreign financial assets. In most cases, you must report your capital gains and losses on the new Form 8949, Sales and Other Dispositions of Capital Assets. Then, you report certain totals from that form on Schedule D (Form 1040). If you had foreign financial assets in 2011, you may have to file the new Form 8938, Statement of Foreign Financial Assets, with your return.

If you converted from a traditional to Roth IRA. If you converted or rolled over an amount from a traditional IRA to a Roth IRA or designated Roth in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

Standard mileage rates. The 2011 rates for mileage are different for January 1 through June 30 than for July 1 through December 31. For business use of your car, you can deduct 51 cents a mile for miles driven the first half of the year and 55 ½ cents for the second half. Medical and moving mileage are both 19 cents per mile for the early half of the year and 23 ½ cents in the latter half.

Alternative motor vehicle credit. You can claim the alternative motor vehicle credit for a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.

Standard exemptions and deductions were increased.

• The standard deduction increased for some taxpayers who do not itemize deductions on IRS Schedule A (Form 1040). The amount depends on your filing status.
• The amount you can deduct for each exemption has increased $50 to $3,700 for 2011.

First-time homebuyer credit. The credit expired for most taxpayers for 2011. Some military personnel and members of the intelligence community can still claim the credit in 2011 for qualified purchases.

Self-employed health insurance deduction. This deduction is no longer allowed on Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).

Health savings accounts (HSAs) and Archer MSAs. The additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses increased to 20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified medical expenses.

Health coverage tax credit. Recent legislation changed the amount of this credit, which pays qualified health insurance premiums for eligible individuals and their families. Participants who received the 65 percent tax credit in any month from March to December 2011 may claim an additional 7.5 percent retroactive credit when they file their 2011 tax return.

Mailing a return. The IRS changed the filing location for several areas. If you’re mailing a paper return, see the Form 1040 instructions for the correct address.

Detailed information on these changes can be found on the IRS website – www.irs.gov.

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Before you file your tax return, you need to have all of your documents gathered together, including all of your W-2 Forms.  If you haven’t received your W-2, here’s what to do:

1. Contact your employer to see if and when the W-2 was mailed.  If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address.  Allow the employer a bit of time to reissue the W-2 to you.

2. Contact the IRS if you do not receive your W-2 by February 14.  You can contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, Social Security number, phone number, plus your employer’s information, dates of employment and an estimate of your wages and withheld federal income tax.  If you aren’t’ sure about the wage and tax estimate information, call the IRS and explain your situation anyway.

3. Even if you did not receive a W-2 form, you still have to file your tax return or request an extension to file by April 17, 2012.  If you have not received your Form W-2 in time to file your return by the due date, and you have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible.  There may be a delay in any refund due while the information is verified.

4. You may receive your missing W-2 after you file your return using Form 4852, there fore the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

Form 4852, Form 1040X and instructions are available on this website or by calling 800-TAX-FORM (800-829-3676).

Here are some helpful links:

• Form 4852, Substitute for Form W-2, Wage and Tax Statement
• Form 1040X, Amended U.S. Individual Income Tax Return and instructions

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Are you one of the individuals who is eligible for the Earned Income Tax Credit? This credit can be a financial help for people who earn $49,078 or less in 2011. Four of five eligible taxpayers filed for and received their Earned Income Tax Credit (EITC) last year.

Here are some facts and tips about the EITC.

1. Each year of your life can bring big changes. Just because you didn’t qualify for the EITC last year doesn’t mean you won’t this year, because as your financial, marital or parental situations change, your ability to qualify may change, too.

2. If you qualify for the EITC, your credit could be worth up to $5,751. EITC not only reduces the federal tax you owe, but could result in a refund. The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,240 last year.

3. You must file a federal income tax return and specifically claim the credit – even if you are not otherwise required to file- if you are eligible to claim the credit. Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.

4. If your filing status is Married Filing Separately, you do not qualify for EITC .

5. You must have valid Social Security numbers for yourself, your spouse (if you are filing a joint return) and any qualifying child listed on Schedule EIC.

6. You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.

7. Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements, as well as dependency rules.

8. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.

9. It’s easy to determine whether you qualify by using the EITC Assistant, which is an interactive tool available on the IRS website.

10. Free help is available at Volunteer Income Tax Assistance sites to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software will figure the credit for you. To find a VITA site near you, visit the IRS.gov website.

For more information about the EITC, see IRS Publication 596, Earned Income Credit. You can download this publication – available in English and Spanish – from this website or order it by calling 800-TAX-FORM (800-829-3676).

Here are some helpful links:

• EITC Assistant
• Earned Income Tax Credit

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Are you one of the individuals who needs to repay the First-Time Homebuyer Credit? If you’re not sure, you can use an online look-up tool on the IRS website to check if you have a repayment obligation.

Here’s a link to the online lookup tool that will help you determine this information: https://sa1.www4.irs.gov/irfof-fthb/

Also, here are some tips to help you look up information about your First-Time Homebuyer Credit:

1. Determine if you need to repay the credit. If you bought a home in 2008 and claimed the First-Time Homebuyer Credit, the credit is similar to a no-interest loan and must be repaid in 15 equal annual installments that began with your 2010 return. Also, anyone who sold their home, or stopped using it as their main home, may have to repay the entire credit whether their home was purchased in 2008, 2009 or 2010.

2. The First-Time Homebuyer Credit Tool will provide critical account information to help you report your repayment obligation on your tax return. To access the online tool you will need:
-Social Security number
-date of birth
-complete address

If you file a joint return, you will only be able to access your portion of the First-Time Homebuyer Credit account information.

3. The online tool will show the original amount of the credit, annual repayment amounts, total amount paid and the total balance left to be paid. You will be able to print your account page to share with your tax preparer and keep for your records.

4. To repay the First-Time Homebuyer Credit, add the amount you have to repay to any other tax you owe on your federal tax return. This could result in an additional tax owed or a reduced refund. To repay the credit, you report the repayment on line 59b on Form 1040, U.S. Individual Income Tax Return. If you make an installment payment, you do not need to attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, to your tax return. However, if you are repaying the credit because the home stopped being your main home, you must attach Form 5405.

You can access the First-Time Homebuyer Credit Look-up Tool at any time, day or night.

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Are you a small business owner or are you self-employed?  If you are, you probably have questions about taxes for your particular situation.  You can check out the IRS’s Small Business and Self-Employed Tax Center on the IRS website.

The IRS’s one-stop shop offers a variety of resources and online tools to help small businesses and self-employed individuals by providing resources such as:

• A-Z Index for Business, a fast way to find information
• Small business forms and publications
• Online applications for an Employer Identification Number
• Employment tax information – federal income tax, Social Security and Medicare taxes, FUTA and self-employment tax
• Tax-related news that could affect your business
• Small business educational events
• IRS videos for small businesses

Did you know that there is also a Tax Calendar for Small Business Taxpayers?  The Tax Calendar for Small Businesses and Self-Employed – Publication 1518 – is available online or as a printable PDF file. This 12-month calendar containts information on general business taxes, IRS and Social Security Administration customer assistance, electronic filing and paying options, retirement plans, business publications and forms, and common tax filing dates. Each page highlights different tax issues and tips that may be relevant to small-business owners, with room on each month to add notes, state tax dates or business appointments.  You can also download the tax events into your calendar or subscribe to the tax calendar events.  The calendar provides the small business owner with a ready resource for meeting their tax obligations.

If you have other questions about your tax obligations, you might want to contact a tax professional.

Daniel Stoica Accounting Professional