Moving? You might be in for a tax deduction

Jason Hutto, Licensed Taxpayer Representative

Are you self-employed or a wage earner that has recently moved to a new home due to a new job? You could be entitled to a tax break! Job-related moves can be quite costly, but certain moving expenses related to a change in your principal workplace can be tax deductible, if you meet two separate tests.

The distance you are moving and the amount of time you spend working on the job will have a major impact on whether you qualify for the tax break.  Moves that are only short hops and jobs that are short-term or part-time generally do not qualify.  However, if you can satisfy the distance and time tests, then job-related moving expenses you incur may be tax deductible.

To determine if you meet the distance test, the new job site you want to deduct the moving expenses to must be at least 50 miles farther from your former home than your previous job site was. For example, if your old job was 10 miles from your former home, your new job must be at least 60 miles from that home.  If you did not have an old workplace, the new workplace must be at least 50 miles from your old home.

The time test requires you to either work full-time as an employee in the general location of your new home for at least 39 of the 52 weeks following the move you want to deduct moving expenses on your tax return for.  If you are self-employed, you must work full-time as a self employed individual for both 39 of the 52 weeks and 78 of the 104 weeks immediately following the move you want to deduct moving expenses on your tax return. This tax requirement can be met either with one job or through a series of full-time positions.

Military personnel do not have to meet the time/distance tests if the move was due to a permanent change of station (PCS).  However, you should keep in mind the tax deduction is available for unreimbursed moving expenses for a change of residence if the move is made in conjunction with changes in the location of your job.  Since the military reimburses many moving expenses, military members should be careful to take the deduction on unreimbursed expenses only.

Deductible moving expenses include the cost of moving your personal effects and household goods to your new home, storage expenses up to 30 days after the move, and travel expenses, including lodging, to your new home.  The cost of meals while traveling, temporary living expenses, or house hunting expenses before or after the move are not deductible.

For more information on deducting moving expenses, you can read Publication 521, Moving Expenses on the IRS’ website, http://www.irs.gov or by calling 800-TAX-FORM.

Jason Hutto has been with JK Harris for five years.  He became an Enrolled Agent in 2006 and is now a Licensed Taxpayer Representative. Jason is a member of the National Association of Enrolled Agents and an Associate Member of Charleston’s Chapter of the South Carolina Association of Enrolled Agents.

First-time homebuyers can earn tax credit from IRS

Troy Sholl – Licensed Taxpayer Representative

Buying your first home can be a very exciting time. And now the IRS is putting even more excitement into the venture with a First-time Homebuyers Tax Credit.

There is a little bit of a catch, however. The First-time Homebuyers Tax Credit being offered by the IRS, in all actuality, is a 15-year interest-free loan that does need to be repaid. The credit is part of the Housing and Economic Recovery Act of 2008 and is available on home purchases made after April 8, 2008, and before July 1, 2009.

The credit is 10 percent of the actual purchase price of the home, up to $7,500. This means that the $7,500 credit will apply to most home sales, except when the purchase price is less than $75,000. In that case, the credit would be 10 percent of the actual purchase price.

And the First-time Homebuyers Credit is for just that, first-time homebuyers. Investment and rental properties, second homes or vacation homes do not qualify. Also, if you are married, the homeownership history of both you and your spouse is checked. What that means is that if you have not owned a home in the last three years but your spouse has, the tax credit would not apply.

Some income guidelines also apply. For instance, an individual taxpayer with an adjusted gross income of $75,000 or more, or a married couple filing jointly with an adjusted gross income of $150,000 or more, will not qualify for the tax credit.

Now, back to the issue of repayment. You will pay the IRS $500 per year over 15 years. This repayment will begin with the second tax year after the tax credit is claimed. So if you claimed the credit on your 2008 tax return, you will need to begin paying the IRS with your 2010 tax return.

For more information on the First-time Homebuyers Credit, you can visit http://www.irs.gov or http://www.federalhousingtaxcredit.com.

Troy Sholl is an attorney who works as a Licensed Taxpayer Representative in the Special Assistance Group with JK Harris. He holds a Juris Doctorate from the University of Pittsburgh and is a member of the Florida Bar.

Installment agreement helps solve tax problems for Washington man

Luther Steele was unpleasantly surprised to receive an IRS notice telling him he owed $4,012.11 in back taxes.  Steele didn’t know he had claimed the wrong number of exemptions on his pay and his employer had not been taking enough taxes out of his paychecks.  This is a common error, and often times a costly one when it does catch up to you.

Mr. Steele came to JK Harris to assist with this back tax problem.  His case specialist helped him through his situation and got him set up on an Installment Agreement.  The IRS allows taxpayers to pay their tax debt in smaller, more manageable amounts.  The amount of the payment and the number of payments the taxpayer will make is determined by the amount owed, divided into equal monthly payments, plus a one time user fee.

Mr. Steele wrote to let us know that having tax problems was extremely stressful, but thanks to our company, his life is now much better.  This is what we like to hear and why we do what we do.  Our job is to ease the burden of frustration and stress, so that the tax problems at the root of it all can be alleviated.

October 15th deadline nears for filing for a stimulus payment

Peter Hukki, Enrolled Agent

With the month of October comes the quickly approaching deadline to file for you stimulus payment.  Tax returns must be filed by October 15th in order to receive your payment this year as no payments will be made after December 31, 2008.  According to the IRS, there are still millions of dollars in unclaimed payments.

How do you know if you qualify?

If you:

- are in the majority of taxpayers filing a return in 2007, you will most likely qualify, subject to a phase out at certain income levels.
- have a valid Social Security number and an income tax liability or you have qualifying income of at least $3,000 and
- your qualifying income comes from any combination of earned income, and/or  certain benefits from Social Security, Veterans Affairs or Railroad Retirement and
- you cannot be claimed as a dependent on anyone else’s tax return.

If you meet these guidelines, you should plan to file for your stimulus payment as soon as possible.

You didn’t qualify to receive a stimulus payment in 2008?  If you did not meet these guidelines but your situation changed during 2008, you may be able to take the credit on your 2008 return.

For more information on the stimulus payment, visit www.irs.gov.

Peter Hukki is an Enrolled Agent for JK Harris and Company, LLC. He has been an EA since 1974 and is also a practicing Tax Practitioner, completing tax returns for individuals, corporations, trusts, partnerships and estates.

Welcome back to the JK Harris family!

It has been a little more than two years since Cheryl Drum left our JK Harris family to start a family of her own. Now, I am pleased to announce, she has returned to JK Harris as our Tax and Production Trainer.

Cheryl’s duties include training new employees in their specific duties, as well as teaching them many other aspects of the company and the industry itself. She is also teaching Tax Preparation and Enrolled Agent classes with our current employees who want to further educate themselves and move up the company ladder.

She initially came to us in August of 2003 as a Licensed Taxpayer Representative in our Special Assistance Group and then moved on to be an LTR Manager. She earned her Enrolled Agent card in 2002.

Prior to joining the JK Harris family, Cheryl was a Tax Specialist, Trainer and Office Manager at a large Charleston tax company. And, she holds a Bachelor of Science degree in Industrial Management from Clemson University.
I am so excited to have Cheryl back in the fold. Having worked with us before, she knows the JK Harris processes very well. And she was immediately placed into the fire, training a new class on her very first day back.

Welcome back, Cheryl!