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Kiamichi Tax Center

Help From Obama

March 9th, 2010 at 8:51 am

Back in 2009, we were very worried over the withholding changes that President Obama put into place. Now that tax season is almost over, I can tell you with certainty that the changes were very beneficial to almost all low income taxpayers. The other changes (eic, ctc, etc) were also helpful. The majority of our clients have seen bigger refunds in a time when every extra penny is desperately needed! Thank you, Mr. President!

2010 .::. American Recovery & Reinvestment Act of 2009

January 6th, 2010 at 7:28 pm

The following provisions were made due to the American Recovery & Reinvestment Act of 2009 and the normal Inflation Adjustments that occur each year.  These changes will apply to 2009 and 2010 returns.  Some changes are temporary for these two years alone.

  • Making Work Pay Credit : A credit in the amount of $400 per working individual and up to $800 for married couples may apply to your tax return if your income is over the limit of $6,451.  If your income is below that number, your credit will be figured based on a percentage basis.
  • American Opportunity Credit : Parents and students may qualify for up to $2500 in education credits.  This credit modifies the existing Hope Credit for tax years 2009 and 2010.  Income limits are expanded and required course materials are added to the list of qualifying expenses.
  • Earned Income Credit and Child Tax Credit : EIC is temporarily extended to cover three qualifying children.  The maximum credit is $5657 for three qualifying children.  The earned income formula used in calculating Child Tax Credit was also changed in order to capture more of the lower income families that have not qualified for it in the past.
  • Standard Deduction Increases : Typically the cost of living and other inflation factors will increase the standard deduction on a yearly basis.  This year is no different.  The following will apply for the current season : Single and Married Filing Separate : $5,700; Head of Household : $8,350; Married Filing Joint : $11,400.
  • Unemployment Tax Change : Up to $2,400 of unemployment benefits received in 2009 will not be taxed.  Any amounts remaining over $2,400 will be taxed as usual.
  • New Vehicle Tax Deduction : New car, light truck, van, motor home, and motorcycle purchasers may claim the state or local fees or taxes that are simliar to sales tax regardless of the state’s policies on state sales tax.  This amount can be utilized regardless of whether you itemize on your return or not.
  • State or Local Real Estate Taxes : Amounts paid for real estate taxes may also be claimed on Schedule L without itemizing on your federal return.
  • AMT Exemption Increased for One Year : Married Filing Joint, Qualifying Widows and Widowers : $70,950; Married Filing Separate : $35,475; Single and Head of Household : $46,700.  These amounts will be reduced for the 2010 tax year.
  • Standard Mileage Rates : Business Use – .55 cents per mile; Medical Use – .24 cents per mile; and Charitable Use – .14 cents per mile.
  • Tax Bracket Threshold Change : The threshold separating the 15% and 25% tax bracket is set at $67,900.
  • Dependency Exemption Amount – The current dependency exemption amount is set for $3,650 for each qualifying dependent.  The amount was $3,500 in 2008.

All of the above list can be researched further at the Internal Revenue Service website.

2010 .::. Earned Income Credit Changes

January 6th, 2010 at 2:34 pm

Simplified Explanation

Earned Income Credit is the refundable credit that you receive on two qualifying children on your return.  If your earned income is within the limits and you have qualifying children, you qualify for this credit. If your earned income is within the limits and you have no children, you may also still qualify for this credit.

Publication 596 : Earned Income Credit
Publication 501 : Exemptions, Standard Deductions, and Filing Information

Current Year Changes

Temporarily, the IRS will be using three qualifying children for this credit.  The maximum amount of EIC that can be claimed for three children is $5657.

The beginning point off the phaseout range for the credit for all married couples filing a joint return regardless of the number of children has increased. 

These two changes apply to 2009, 2010 tax returns. 

Explanation by the IRS.

PhaseOut Limits

The EIC credit works on a curve.  Starting at 0, your credit begins to rise with your income.  As you reach the highest amount of credit allowed and your income continues to rise, you begin the phaseout.  This means the credit decreases as your income continues to increase.  Below are the changes made for Married Filing Joint returns.

Situation : Beginning of Phaseout Amount (Max Credit) : Ending of Phaseout (0 Credit)

Married (0 Children) : $12,470 : $18,440
Married (1 Child) : $21,420 : $40,463
Married (2 Children) : $21,420 : $45,295
Married (3 Children) : $21,420 : $48,279

Examples :

Mary & Max are married filing joint with

  • 1 child and make $23040 total earned income for the year.  Their credit will be just under the maximum amount of credit allowed.
  • 1 child and make $41,463 total earned income for the year.  Their EIC amount would be 0 because they make over the limits.

2009 IRS Inflation Adjustments

December 3rd, 2008 at 6:01 am

Every year there are updates to the tax rules that help each of us out. This year the IRS shows they were paying attention to the extremely high gas prices by changing the mileage rates, the standard exemption amounts and more.

2009 Mileage Rates

  • 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

Inflation Adjustments

According to the IRS website:

  • The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
  • The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
  • Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
  • The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
  • The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

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Contacting Okla. Tax Commission

December 3rd, 2008 at 5:48 am

To check on the status of your refund, call one of the numbers below:

  • (405) 521-3160
  • (800) 522-8165 (in-state toll free)

You will need to have the following information on hand when calling the Tax Commission:

  • Your Social Security Number (The first person listed on the return should be the one calling.)
  • The amount of the refund you are expecting.
  • A copy of your Oklahoma Form 511 Tax Return. (This is optional, but if they have any questions you will need to review the form to assist them and understand them.)
  • Pen and paper. It is always crucial to write down anything that they say as well as take down the name of the representative that assists you.

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Get Help Starting Your Own Business

December 2nd, 2008 at 3:49 pm

If you are interested in starting your own business in the state of Oklahoma. Here are a few things to get you started.

You will need to visit the Oklahoma Tax Commission website and download the New Business Packet. This packet is packed with forms and information that will assist you through the entire process.

Click Here To Download The Packet

The IRS is making life easier and easier for new business owners. You may now go online and register for your Federal ID number. It’s completely free.

Click Here To Apply For Your EIN Online

Why should you use a Federal Employer Identification Number? In today’s world, safeguarding your personal information is more and more important. Without an FEIN, you would be forced to use your social security number on all business forms that are visible to many eyes. Obtaining an FEIN will help you to save your credit and your good name in the future.

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KTC : Payment Policy

December 1st, 2008 at 11:20 am

In the prior years, we have allowed people to pay once they received their refunds. This was the outcome :

  • 2007 : Unpaid Tax Preparation Fees : $1700.00
  • 2008 : Unpaid Tax Preparation Fees : $3565.00

Due to the rising costs in supplies and the extra effort we put into keeping our prices as low as we can. We will no longer be allowing a credit line for anyone.

These are your options with our office for payments made to us :

  • Payments can be made at the time of service, or the returns will be held until the payments are made and then sent on to the IRS. We accept cash, check, and money order in office.
  • We offer bank products for the income tax refunds through Santa Barbara Bank & Trust. If you are unable to pay at the time of service, please ask us about the bank products and all associated fees.

We are sorry for any inconvenience this will cause those that have faithfully held up their end of our agreements in the past to pay when the refund comes in, however, it is only fair that we uphold everyone to the same policy.

If you have any further questions regarding this issue, please contact Sarah (Office Manager) at 580-298-6890.

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