Michael Gray, CPA's

Real Estate Tax Letter

March 4, 2009

© 2009 by Michael C. Gray
ISSN 1930-0387

A monthly report focusing on tax issues for the homeowner and real estate investor.

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Tax season is here! Make your appointment now!

There is less than a month and half before April 15.

To have us prepare your income tax returns, start with the online Tax Notebook organizer. Call Dawn Siemer at 408-918-3162 for instructions to get started. We also have a paper organizer, if you prefer. We still need your documents (W-2s, 1099s, receipts for donations) to prepare your income tax returns.

We can prepare most income tax returns using information provided online and by mail. If you wish a personal meeting, please call Dawn Siemer at 408-918-3162 to schedule an appointment. Our calendar is filling up fast!

We expect to file for extensions when we receive clients’ tax information after March 15.

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Corporate due date for calendar year returns is March 16.

The due date for 2008 calendar year corporate income tax returns, including for S corporations, is March 16. Although many corporations will apply to extend the due date for their income tax returns, there is no extension for paying the tax. That means they need to have a pretty good estimate of what their income is before that due date. Now is the time to get those extension computations in process with your tax return preparer.

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President Obama enacts tax legislation.

The stimulus bill that President Obama signed on February 17, 2009 includes significant tax legislation and other incentives. The tax hikes for high-income taxpayers discussed during his campaign for office have been postponed until after 2010.

Here are just a few highlights:

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President Obama’s budget revealed.

President Obama released his "Budget Overview For Fiscal Year 2010 of the United States Government" on February 26.

Here are a few features of the tax provisions in the budget.

Bear in mind this budget is a proposal. I expect there will be arguments in Congress about many of the provisions.

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Uncle Sam giveth and Uncle Arnold taketh away.

California was facing a $40 billion budget shortfall. The legislature finally approved a budget with steep spending cuts and tax increases.

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Watch recovery rebate credit on 2008 income tax return.

Some taxpayers who didn’t receive an advance cash payment of the recovery rebate credit based on their 2007 income tax returns may find they are entitled to the credit on their 2008 income tax returns because their income has declined, so the credit isn’t phased out. See the worksheet on page 63 of the 2008 federal individual income tax return instructions.

You will need to know how much you received as a stimulus payment to compute the credit. At www.irs.gov, search "How much was my stimulus payment?" to find out the amount received. Here’s a link you can use: https://sa2.www4.irs.gov/irfof/IRServlet?app=IRACTC&selectLanguage=en.

The IRS has said that getting the recovery rebate credit wrong can delay receiving your tax refund.


Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

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Dear readers:

Many of your questions relate to the sale of a principal residence. We have an article at our web site, "Could your residence be the ultimate tax shelter?" (www.realestateinvestingtax.com/residence.shtml) where you should be able to find the answers to most of these questions.

Many other questions relate to short sales and foreclosures. See our article on that subject at www.realestateinvestingtax.com/shortsale.shtml

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Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

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