Don't sweat it ... update your Tax Preparer NOW!
As we review here, the changes in forms for the next filing season are complex and numerous,
largely because of recent stimulus packages. And, if the past few years is any indication,
there could easily be more bills by year-end that affect tax returns for 2009.
(Congress has not been sympathetic in recent years with the burdens that year-end bills place
on the IRS and tax preparers.) However, HowardSoft is ready with the changes already legislated
and is poised to react quickly to any year-end tax bills, so you needn't worry as long as you
get your update order in NOW. Order securely on-line at howardsoft.com/order.htm
(or phone, fax, or mail us) We accept all major credit cards and personal and business checks.
Professional software at personal prices.
Order Pre-Release to get Regular Release faster!
For the best reliability and security, your initial installation for each tax season must be performed
from a disk you receive from us. When you buy a pre-release you get such a disk in early January. Once installation is complete, you're set for on-line updates the rest of the tax season. This means that you can update your software on-line within minutes of the time we complete another release ... long before disk duplication and mailing are complete.
Expiring soon ... don't let these benefits slip away!
The Stimulus Bill that was passed by Congress in February
(reviewed in the Spring 2009 issue of HowardNews) included a number of
tax breaks that apply to 2009 and 2010. But a few important ones apply only to 2009,
so you must take action now if you want to take advantage of these breaks.
- Homebuyer credit. For qualifying taxpayers who purchase a main home in time, an $8,000 credit is available. To qualify, you must not have owned another main home in the 3-year period before the purchase of this new home. Your purchase must be made in 2009, but completed by November 30, 2009. (The title of the credit is misleading in that it is called the First-Time Homebuyer Credit, whereas the credit is available to former owners as well as long as they had a 3-year hiatus from ownership.) TIP: This credit carries a special provision that allows you to claim credit for a 2009 purchase on your 2008 tax return. That means you can file an amended return now and get a refund NOW!
- Vehicle sales tax. For new vehicles purchased in time, sales tax paid on the first $49,500 of the purchase price is deductible, even if you don't itemize. Your purchase must be made after February 16, 2009 and must be completed by December 31, 2009. If you don't itemize, your standard deduction is raised by the amount of tax paid. And if you do itemize, your deduction is raised at line 7 of Schedule A, whether or not you chose a sales tax deduction at line 5b. (Note that the deduction is phased out for high-income taxpayers.)
- First-year depreciation. The 50% first-year bonus depreciation and first-year section 179 expensing had been set to expire at the end of 2008 but were extended to the end of 2009 instead. After that, the bonus depreciation disappears and the $250,000 limit on expensing falls back to $125,000. You must purchase and place the property in service by the end of the year to benefit from these opportunities for advanced depreciation.
Three forms added to Tax Preparer
e-file transmission software ... 15% off until October 31
Because we did not offer the e-file transmission software in our earlier order forms,
we are extending the discount for early orders to October 31. If you plan on e-filing
ANY returns during the next filing season, you must purchase one of these transmission
packages. However, the cheapest package lets you e-file an unlimited number of returns
for only $5.95 per return, compared with $9.95 per return for the past filing season.
And you may qualify to offer refund authorization loans or have your fee deducted from
your clients' refund. See the e-file section of the on-line order form.
Three forms introduced by the IRS for the next filing season
will be added to your software, all three of which stem from the Stimulus Bill:
- Schedule L. Because the standard deduction for 2009 can be raised by
three separate deductions normally claimed on Schedule A (Itemized Deductions),
the IRS has introduced a new schedule for computing the standard deduction.
This 21-line schedule is used to claim new vehicle sales tax (described above),
up to $500 of state and local real estate taxes, and any net personal disaster losses
(line 18 of Form 4684). Schedule L is being added to all levels of Tax Preparer
for the 2010 filing season.
- Schedule M. A tax credit of up to $400 ($800 for joint filers) is available
for all workers who pay social security tax -- both employees and self-employed taxpayers.
Called the Making Work Pay Credit, it is figured as 6.2% of up to $6,451 of earnings
($12,903 for joint filers), which is the equivalent of a refund for social security tax
paid on that income. However, the credit is reduced by any stimulus payment received for 2009,
so the credit is only $150 for most taxpayers ($300 for joint filers). The IRS has introduced
a new schedule to compute this credit and also to compute an additional credit for government
pensioners who did not receive a stimulus payment for 2009. Schedule M is being added to
all levels of Tax Preparer for the 2010 filing season.
- Form 8936. A tax credit for the purchase of a plug-in electric vehicle is now
available for 2009 through 2011, for both businesses and individuals. The amount of credit
can be as high as $7,500 for passenger cars, and applies to more vehicles than the original
bill thanks to the Stimulus Bill. Form 8936 is being added to the Premium Level of Tax
Preparer for the 2010 filing season.
Along with the addition of the above three forms, two forms are being dropped
because they are now obsolete. Form 8901 was formerly used to identify non-dependents for whom
you claim the child tax credit, but the credit is no longer available for non-dependents.
Form 8271 was formerly used for reporting the tax shelter registration numbers for all tax
shelters in which the taxpayer was involved, but this reporting is no longer required.
Significant changes in many forms
The IRS has already released advance drafts of nearly all the forms we
support in Tax Preparer. This is possible because the traditional late-comers
like the AMT patch and renewal of popular credits had already been enacted for 2009 by mid-February,
and Congress is now busy with the health care debate. Here's a quick review of what you can expect
in the new forms:
64-bit Vista requires additional software to run Tax Preparer!
Tax Preparer is fully compatible with the standard 32-bit Windows Vista operating system.
However, many newer computers are equipped with a 64-bit operating system to take advantage
of their 64-bit processors. Unless you take the special steps detailed in our Customer
Service Memo titled Running Tax Preparer under 64-bit Vista, you will not be able to
install nor run Tax Preparer on your machine. You must first install virtual machine
software like Virtual Box (which is free), install a 32-bit operating system with small
memory needs like Windows XP (which is widely available at a low price) in the Virtual
Box window, then install Tax Preparer while Windows XP is running. You'll then be able to
run Tax Preparer without affecting any other programs, since Virtual Box with Windows XP
uses only a fraction of your computer's memory, and only while running Tax Preparer.
For more information, see our Customer Service Memo CSTP0801
on the topic.
- Form 1040. In addition to the usual indexing with inflation for the worksheets, EIC tables, and tax tables in the instructions, the form itself reveals a number of significant changes:
- The first $2,400 of unemployment compensation received is excluded from income for 2009, so line 19 is reworded so that only income above that amount is reported there.
- Credit from Schedule R no longer has its own line on Form 1040, but must now be claimed as a write-in credit at line 53c.
- Education credits now include a refundable component, so the traditional education credit is claimed at line 49 and the new refundable credit is claimed at the new line 66.
- The child tax credit at line 51 no longer applies to non-dependents, so the reference to Form 8901 is removed and the form is now obsolete.
- A new Making Work Pay credit is now claimed on Schedule M and reported on the new line 63.
- The recovery rebate credit applied only to 2008, so that credit is removed from line 70 of Form 1040.
- Schedule AThe schedule has been expanded to two pages and is no longer combined with Schedule B in the IRS printing of the form. Specific changes include:
- The new deduction for vehicle sales tax (explained on page 1) is reported on line 7, replacing the deduction for personal property tax.
- The deduction for personal property tax no longer has a line of its own, but must now be claimed as a write-in deduction at line 8.
- A second page is added for an 11-line worksheet whose sole purpose is to determine the entry for vehicle sales tax at line 7.
- Schedule J. This schedule has also been expanded to two pages. Line 2 has been expanded to a 3-part line by including specific information about capital gains included in the new line 2a (equivalent to the former line 2). While calculations are unaffected, this change has caused Schedule J to expand to two pages, eliminating the familiar look of the schedule, which has remained the same for many years.
- Schedule L. This is a new schedule for computing the standard deduction for some taxpayers, as detailed on page 1.
- Schedule M. This is a new schedule for claiming the Making Work Pay credit, as detailed on page 1.
- Form 6251. The form reflects the AMT patch that was tacked onto the Stimulus Bill, so no last-minute surprises are expected, unlike the last two years.
- Form 8863. This form is greatly modified with the addition of the new American Opportunity Credit to the traditional Hope and Lifetime Learning Credits, and a provision for 40% of the new credit to be a refundable credit. As a result, the form has grown to two pages and its results are now reported in two places on Form 1040: line 49 for the non-refundable portion of the credit and line 66 for the refundable portion of the credit.
- Form 8901. This form is now obsolete because non-dependents no longer count for the Child Tax Credit.
More information on ordering
See separate chart for other details. The Order Form for the 2010 filing season refers to a separate chart for details on what’s included at each level of Tax Preparer. You can see the latest version of this chart on-line at www.howardsoft.com/compare.htm to help you decide what to order.