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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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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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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Even though your income tax return is not due until April, important tax documents will start arriving in your mailbox. Make this your best tax filing year ever by being organized and getting an early start.

Here are some tips to make the tax-filing process as smooth as possible.

1. Put your records together in one place. Gather up your receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.

2. Watch for your W-2s and 1099s in the mail and put them with your receipts and other supporting documents.

3. Check out Free File. If you made $57,000 or less last year, you qualify to use free tax software. Visit www.irs.gov/freefile to review your options.

4. Plan to use IRS e-file. If you are getting a refund, you’ll most likely receive your refund by direct deposit within 14 days if you e-file. E-file is safe and easy and is now the most common way to file a tax return.

5. Choose direct deposit. When you choose direct deposit, especially when you pair it with e-file, you’ll receive your refund in the fastest possible time. Plus, there’s no chance of a check being lost or stolen. Last year, thousands of refund checks were lost or stolen.

6. Read the Tax Guide. Everything you ever wanted to know about filing your 2011 taxes is in the booklet here: http://www.irs.gov/pub/irs-pdf/p17.pdf

7. Visit the IRS website. www.irs.gov contains forms, publications, tips, videos and FAQs.

8. Consider using a tax professional. Although you will be charged a fee to use their services, qualified tax professionals will ensure that your returns are accurate and that all options for tax deductions and tax credits have been explored.

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Take advantage of the Small Business Health Care Tax Credit

If you are a small business owner with employees who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35% of the premiums paid. Employers with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify.

The maximum credit for tax years 2010 to 2013 is 35% for small business employers and 25% for small tax-exempt employers such as charities. On Jan. 1, 2014, this rate will increase to 50% and 35%, respectively.

You can carry the credit back or forward to other tax years even if you did not owe tax during the year. And since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

Eligibility

To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 a year.

The amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 full-time equivalent employees, or if the average wage is more than $25,000, the amount of the credit you receive will be less.

Claiming the Credit

In order to calculate the credit, you must use Form 8941, Credit for Small Employer Health Insurance Premiums.

If you are a small business, include the amount as part of the general business credit on your income tax return.

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don’t usually do so.

Remember… If you are a small business employer you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

For more information, check out the Small Business Health Care Tax Credit page on IRS.gov.

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Did you know that there is still time take advantage of two home energy credits if you make energy-saving and green-energy home improvements this year?

Homeowners who install energy efficient improvements such as insulation, new windows and furnaces may qualify for the Nonbusiness Energy Property Credit. The credit is more limited than in the past years, but can still provide substantial tax savings.

The rate for the Nonbusiness Energy Property Credit is 10 percent of the cost of qualified energy efficiency improvements, such as energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count.

The credit can also be claimed for the cost of residential energy property, including labor costs for installation. Residential energy property includes certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel.

The Nonbusiness Energy Property Credit has a lifetime limit of $500, of which only $200 may be used for windows. If the total of nonbusiness energy property credits taken in prior years since 2005 is more than $500, the credit may not be claimed in 2011. Qualifying improvements must be made and used in the taxpayer’s principal U.S. residence before January 1, 2012.

The Residential Energy Efficient Property Credit is designed to encourage homeowners to invest in alternative energy equipment.

The credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.  No cap exists on the amount of credit available except for fuel cell property. Generally, labor costs are included when figuring this credit.

Not all energy-efficient improvements qualify for these tax credits, so homeowners should check the manufacturer’s tax credit certification statement before they purchase. Taxpayers can normally rely on this certification statement which can usually be found on the manufacturer’s website or with the product packaging.

Eligible homeowners can claim both of these credits on Form 5695, Residential Energy Credits when they file their 2011 federal income tax return. Because these are credits and not deductions, they reduce the amount of tax owed dollar for dollar. An eligible taxpayer can claim these credits regardless of whether he or she itemizes deductions on Schedule A.

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Claiming credits on your taxes will save you more money than taking tax deductions. A credit is a decrease in the amount you owe the IRS. A deduction is a only a decrease in gross revenue (income) before you figure how much tax you owe.

Here are some of the most common credits taxpayers may be able to take.

1. Education Tax Credits: There is the Hope Credit and the Lifetime Learning Credit. The Hope credit is for college tuition payments for you, your spouse or dependent. You can claim this credit for the first two years of college, for up to $1,650. On the Lifetime Learning Credit, you can claim up to $2,000 every year you, your spouse or dependent are in college.  For more info on these credits, read this post.

2. Adoption Tax Credit: Adopting a child can be very expensive, but you can claim a credit of up to $10,690 for the costs associated with adoption. There are certain rules you must follow in order to qualify for this credit, so you may want to contact a tax professional about your options. There is an income cap of $164,410 to be able to claim this credit.

3. Going Green: For several years now, the government has encouraged taxpayers to use more energy efficient products in in their homes, as well as hybrid vehicles. Energy efficient appliances, windows, water heaters, and solar panels can be a huge credit on your taxes.

4. Retirement Savings Tax Credit: The government gives tax credits to taxpayers who earn less than $25,000 as a single filer and $50,000 as joint filers while they put money in a retirement credit. The credit can be up to $1,000 depending on how you filed.

There are many other credits for which you may qualify. Talk to a tax professional to find out which credits you can claim.

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For many taxpayers, tax time can be daunting and tedious. Most of us don’t really like doing our taxes, but there can be a silver lining when we find out we’re getting a big refund. Many taxpayers aren’t aware of the deductions they can take to save themselves a lot of money. Read on for a list of deductions that you can take.

Common Tax Deductions

1. Deductible Taxes: You can take deductions on your state and local income taxes, foreign income taxes, real estate taxes, and property taxes. For taxpayers who sold their home and purchased a new one last year, they can deduct the property taxes on both homes for a larger deduction. They can also claim pre-paid property taxes.

2. Deductible Interest and Points: Mortgage interest, home equity loans and student loan interest can be deducted. Any discount points that resulted in a smaller interest rate on your mortgage can be deducted, as well. Certain refinancing fees may be deducted, as well. Pre-payment penalties, pro-rated interest and pre-paid interest on your mortgage can be deducted.

3. Charitable Contributions: Included in these deductions are cash and non-cash donation to non-profits. You will need to keep your receipts. For non-cash donations, you can deduct the “fair market value” of the item you donated.

4.  Business Use of Home and Car: For the self-employed, you can take a deduction on anything that is used exclusively for your business. Office supplies, any memberships, gas, and mileage can be deducted. Part of your mortgage, property tax, and certain utility bills, such as internet and telephone, can also be deducted. You will have to keep your receipts and keep records of your travel expenses if it is part of your business.

5. Other Deductions: The following deductions can’t be placed in the above categories, but they can save you money. You can claim the child tax credit if you have qualifying dependents. You may also claim retirement savings and medical costs that were paid out-of-pocket. You can claim some educational costs like tuition and books. If you have property loss that wasn’t covered by your insurance that was due to fire or weather damage, you can claim those expenses. If you move more than 50 miles from home for a new job, you can deduct those expenses. The entire move isn’t deductible, but some expenses are.

Although this isn’t a complete list of deductions you take or credits you can claim, it’s a good starting point. Consult with a tax professional for more deductions and credits to get the maximum amount you’re entitled to.

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The tax filing extension deadline is quickly approaching, and the IRS, along with the Department of Health and Human Services, are reaching out to small businesses and professional service providers and asking them to take a look at the new Small Business Health Care Tax Credit to find out if they are eligible.

IRS Commissioner, Doug Shulman says, “As the filing deadlines approach, we want to make sure small business owners don’t leave any money on the table. Small businesses that offer health insurance should learn about this credit and claim it if they are eligible.”

The Small Business Health Care Tax Credit is part of the Affordable Care Act, which was put in place last year. Small businesses that pay half of the health insurance premiums for their employers may qualify for the tax credit. The credit is designed to assist small companies and tax-exempt businesses that have 25 or fewer employees with an average income of less than $50,000.

Small businesses have 2 tax filing deadlines that are coming up:

-September 15: Businesses that file each calendar year and have requested to file on September 15^th can claim the small employer health care credit on the 8941 Form and claim it as a general business credit on the 3800 Form when they file their taxes.

-October 17: Sole proprietors, partners and S-corporation shareholders who file the 1040 and ask for an extension will be able to file by October 17^th. They must use the 8941 Form and claim the credit on the 3800 Form, which is shown on line 53 on their 1040 Form.

Tax-exempt companies that file each calendar year, and asked for an extension will have until November 15^th. They will use the 8941 Form and claim the credit on the 990-T Form, Line 44f.

These deadlines are quickly approaching and businesses are planning for the tax year while the IRS works with their new partners, who are:

-The tax software industry: They are working to upgrade access to information to educate and notify small businesses about taxpayers who are eligible for this credit.

-Insurance agents, brokers and carriers: They work with small employers to guarantee that workers how receive health insurance are aware of the benefits of this credit. The Department of Health and Human Services has mailed over 2,000 agents and brokers regarding the credit.

-Small business and tax practitioner: They will give several webinars and other opportunities to learn about this credit.

More information can be found via social media like the IRS’s YouTube channel. The videos are in English, Spanish and American Sign Language. Emails and tweets will also be sent to small businesses and tax preparers.

The IRS wants to remind small businesses about the filing deadlines and will give details regarding the credit, such as:

-Businesses that have already filed their taxes may claim the credit.

-Businesses without tax liability this year can still benefit.

-Businesses that couldn’t use the credit in 2010 can claim it in the coming years.

The HHS has provided more information about this credit. Interested parties can find this information at http://www.healthcare.gov/news/blog/smallbusiness09072011.html.

Even more information about qualifying for this credit can be found at irs.gov and by searching for the Small Business Health Care Tax Credit for Small Employers.

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