A reminder on 2009 laws that are still good in 2010

  ·         TheAmerican Opportunity Tax Creditis in effect for both 2009 AND 2010. This credit gives a tax break to those parents and students withcollege costsand expands and renames the former "Hope Credit". Forty percent of this credit is refundable (not an option with the Hope Credit) so be sure to gather all education costs paid in 2010 with your tax papers for filing of your 2010 tax return. ·         The IRS is cracking down on charitable contributions (donations) and requiring more substantiation of the donation. Be sure to keep all receipts. Cash donations of more than $250 require a receipt from the donee. For lesser amounts, your canceled check will serve as a receipt. Fornon-cash donations,a signed and dated receipt from the organization if required. An itemized list compiled by the taxpayer is required withvalues(and best if backed up with photos). The item must be in good used condition and if worth more than $500 you need to have it appraised.Keep good records! ·        Keeping good records saves stress at tax time. No one wants to think about taxes all year long but being diligent about keeping good records saves you $$$money$$$ at tax time and especially if you are audited. Millstone recently had a rather large audit for a client and the record keeping was impeccable. This made the audit go very smoothly and with much less for Millstone to do (meaning smaller bills from us!). You should keep anything that supports your tax return for at least 3 years. This includes bills, invoices, canceled checks (or check imaging), mileage logs, and credit card statements/receipts. ·         The NonbusinessEnergy Credithas been extended into 2010. This means if you purchased an energy improvement item such as insulation, windows, heating and air systems, you could receive a 30% credit of the cost on your tax return up to $1500. This $1500 is a total for both 2009 and 2010 so if you reached your full credit amount in 2009 you will not be able to use it again on your 2010 tax return. The item must be manufacturer certified as energy efficient. ·         A reminder about yourSS Benefits. Check your yearly SS benefit statement and be sure the wages eligible for SS calculation match your gross wages for that tax year. If there is an error you will need to bring your tax return and or W-2 to the SS administration to fix your records. This is very important to ensure you are getting the full amount of benefits that you are entitled to. Many people feel it is best to keep your tax returns or W-2s until you start drawing SS. ·        2011 Flexible Spending Accountrules have changed. You will no longer be able to spend FSA money on over the counter medications starting 01/01/2011. Many people use the extra money on their FSA for over-the-counter meds so that they don't lose the money all together as it is only good for so long. You will need to keep this in mind when calculating how much you want your employer to deduct from your paycheck for FSA funds as you don't want to deduct more than you can spend on medical bills in 2011.