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This time of year, many of you are completing your tax returns, and I wanted to give you some important information you may want to keep in mind. This email includes some facts about several credits and deductions that qualified taxpayers often forget to claim when they prepare their returns.
Unfortunately, tax season also creates several opportunities for criminals to misuse a victim’s credit or steal from their bank accounts, so I have also included some information on ways to protect your personal financial data from identity theft or fraud when filing your taxes.
Finally, I encourage you to take the short survey on the left side of the page. Hearing your ideas and priorities helps me to better represent you as these issues are addressed in the U.S. Congress.
I hope you find this information helpful. As always, it is an honor to represent you and feel free to contact my office with any thoughts or concerns.
Are You Eligible for a Tax Credit?
Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns. A tax credit is a dollar-for-dollar reduction of taxes owed. Taxpayers should consider their eligibility for the credits listed below:
• Earned Income Tax Credit is a refundable credit for low-income working individuals and families. Income and family size determine the amount of the credit.
• Child and Dependent Care Credit is for expenses paid for the care of children under age 13, or for a disabled spouse or dependent, to enable the taxpayer to work or look for work.
• Child Tax Credit is for people who have a qualifying child. The maximum credit amount is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses.
• Adoption Credit: Adoptive parents may qualify for a tax credit of up to $11,390 for qualifying expenses paid to adopt an eligible child. The credit may be allowed for the adoption of a child with special needs even if you do not have any qualifying expenses.
• Credit for the Elderly or Disabled: This credit is available to individuals who are either age 65 or older or are under age 65 and retired on permanent and total disability, and who are U.S. citizens or residents. There are income limitations.
There are other credits available to eligible taxpayers. Since many qualifications and limitations apply to the various tax credits, you should carefully check the instructions and additional information that is available on the IRS website at www.IRS.gov.
Changes to Tax Law for 2007
Taxpayers should be aware of important changes to the tax law before they complete their 2007 federal income tax forms. New rules affecting deductions, credits and other aspects of your tax filing may present unexpected complications as you prepare your return. Click here for information on some of these changes.
Small Business Expensing
Included in the recently passed economic stimulus law are provisions I introduced that enhance deductions for small business owners investing in new equipment. The Section 179 deduction allows small business owners to write off expenses immediately instead of depreciating these expenses over many years. For 2008, the limit on those deductions will double from $125,000 to $250,000. Please remember that this increase is in effect for equipment bought this year and will be reflected on taxes you file next year.
Identity Theft Affects Tax Records
Identity thieves use someone’s personal data to steal his or her financial accounts and run up charges on the victim’s existing credit cards; but you need to be aware of some other potential areas where this type of fraud may occur as they relate directly to your tax records.
Undocumented workers or other individuals may use your Social Security number to get a job. That person’s employer would report W-2 wages earned using your information to the IRS so it might appear that you did not report all of your income on your return.
An identity thief may file a tax return using your Social Security number to receive a refund. If the thief already filed a return using your Social Security number, the IRS will believe that you already filed and received your refund, and the return you just submitted is a duplicate.
If you receive an IRS notice that leads you to believe someone may have used your Social Security number fraudulently, notify the IRS immediately. Be alert to possible identity theft if you receive an IRS notice or letter stating that more than one tax return for you was filed, or if IRS records indicate that you received wages from an employer unknown to you. If this happens, contact the IRS as directed. Their tax examiners will work with you and other federal agencies to help resolve the problem. The IRS does not initiate requests for personal taxpayer information through e-mail. If you receive this type of request, it may be an attempt by identity thieves to get your private tax information. Click here for more information.
Federal income tax filing deadline is April 15. Be sure to file on time!
March 26, 2008
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