Am I required to file a Federal Income Tax Return?

Many people will file a Federal income tax return even though the income on the return was below the filing requirement. The questions below will help you determine if you need to file a Federal Income Tax return or if you need to stop your withholding so you will not have to file an unnecessary return in the future.

Occasionally, individuals have one-time or infrequent financial transactions that may require them to file a Federal Income Tax return. Do any of the following examples apply to you?

• Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?
• Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?
• Were you self-employed with earnings of more than $400.00?
• Did you sell your home?
• Will you owe any special tax on a qualified retirement plan (including an individual retirement account (IRA) or medical savings account (MSA)? You may owe tax if you:
  
  • Received an early distribution from a qualified plan
  • Made excess contributions to your IRA or MSA
  • Were born before July 1, 1936, and you did not take the minimum required distribution from your qualified retirement plan.
  • Received a distribution in the excess of $160,000 from a qualified retirement plan.
• Will you owe social security and Medicare tax on tips you did not report to your employer?
• Will you owe uncollected social security and Medicare or Railroad retirement (RRTA) tax on tips you reported to your employer?
• Will you be subject to Alternative Minimum Tax (AMT)? (The tax law gives special treatment to some kinds of income and allows special deductions and credit for some kinds of expenses.)
• Will you owe recapture tax?
• Are you a church employee with income in wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security or Medicare taxes?

2009 Standard Mileage Rates Announced by IRS

On November 24, 2008 the Internal Revenue Service issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

Federal Tax Credits for Energy Efficiency

On October 3, 2008, President Bush signed into law the “Emergency Economic Stabilization Act of 2008.” This bill extended tax credits for energy efficient home improvements (windows, doors, roofs, insulation, HVAC, and non-solar water heaters). Tax credits for these residential products, which had expired at the end of 2007, will now be available for improvements made during 2009. However, improvements made during 2008 are not eligible for a tax credit.

The bill also extended tax credits for solar energy systems and fuel cells to 2016. New tax credits were established for small wind energy systems and plug-in hybrid electric vehicles. Tax credits for builders of new energy efficient homes and tax deductions for owners and designers of energy efficient commercial buildings were also extended.

Home Improvements

Home improvement tax credits are available for home improvements “placed in service” from January 1, 2009 through December 31, 2009. Any qualified home improvements made in 2008 are not eligible for the tax credit.

Home improvement tax credits are available for insulation, replacement windows, non-solar water heaters, and certain high efficiency heating and cooling equipment. See chart. The maximum amount that a taxplayer may claim from all of these tax credits combined is $500 over the lifetime of the tax credit (2006, 2007 & 2009).

If you are building a new home, you do not qualify for the tax credits for “eligible building envelope components” (windows, doors, insulation, roofs) or “qualified energy property” (HVAC & non-solar water heaters). However, the tax credit for photovoltaics, solar water heaters, small wind systems and fuel cells is available for homeowners building new homes. More.

The Internal Revenue Service (IRS) guidance for consumers: IRS Notice 2006-26 .

Where's My Stmulus Check?

If you missed the Oct. 15 deadline for filing an income tax return for a economic stimulus payment, don't worry. You can receive a payment in 2009 by filing an income tax return when the filing season opens in January. The IRS will have more information shortly.

Also, if you filed a tax return for an economic stimulus payment in 2008 and have not yet received a payment, check out Where's My Stimulus Payment?