Consumer Advisory: Terry Goddard Reminds Tenants of Their Legal Rights in Foreclosures

(Phoenix, Ariz. - March 10, 2010) As foreclosures continue at a high rate in Arizona, they impact not only homeowners but also people renting properties that have gone into foreclosure. Attorney General Terry Goddard today provided information about the rights of tenants living in properties that are foreclosed. Last May, Congress passed the "Protecting Tenants at Foreclosure Act" to protect renters who were being forced to immediately leave their homes with little notice when the properties they rented went into foreclosure. The law remains in effect until Dec. 31, 2012. "Everyone deserves to be treated with dignity and respect, especially in housing," Goddard said. "Both landlords and tenants should understand and follow the requirements of the new federal law. All too often consumers can be victimized if they don't understand their rights and responsibilities." Under the Protecting Tenants at Foreclosure Act: -- All tenants must receive a 90-day notice before being evicted as the result of a foreclosure. -- With some exceptions, the law requires that in the event of foreclosure, existing leases for renters are honored to the end of the term of their lease. -- The stated exceptions are for tenants without a lease, tenants with a lease terminable at will under state law, or where the owner acquiring the property will occupy it as a primary residence. In these cases, the tenants must receive a minimum of 90 days notice to vacate the property. -- This law does not affect the requirements of any state or local law that provides longer time periods or other additional protections for tenants. --The new law does not require any agency to issue implementing regulations; these protections apply to foreclosures after May 20, 2009. -- Although no federal or state agency is specifically charged with enforcing the Protecting Tenants at Foreclosure Act, if a landlord tries to evict a renter without following the law, the renter may be able to raise that as a defense in eviction proceedings. For more information about the federal law, please visit http://thomas.loc.gov/. Arizona landlord-tenant laws can be found at www.azsos.gov. For information on foreclosure, please visit the Arizona Attorney General's Foreclosure Resource Center at http://www.azag.gov/consumer/foreclosure/.

IRS Tax Tip 2010-48: Standard or Itemized Deductions

Standard or Itemized Deductions

Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. If you have a choice, you can use the method that gives you the lowest tax.

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than your standard deduction, you can usually benefit by itemizing.

The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2009, they are:

• $5,700 for Single
• $11,400 for Married Filing Jointly
• $8,350 for Head of Household
• $5,700 for Married Filing Separately
• $11,400 for Qualifying Widow(er)

Some taxpayers have different standard deductions The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether an exemption can be claimed for you by another taxpayer. If any of these apply, you must use the Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or 1040 instructions. The standard deduction amount also depends on whether you plan to claim the additional standard deduction for state and local real estate taxes or state or local excise tax on a new vehicle, and whether you have a net disaster loss from a federally declared disaster. You must file Schedule L, Standard Deduction for Certain Filers to claim these additional amounts.

Limited itemized deductions Your itemized deductions may be limited if your adjusted gross income is more than $166,800 or $83,400 if you are married filing separately. This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses of personal use and income producing property, gambling losses and investment interest expenses.

Married Filing Separately When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and should itemize their deductions.

Some taxpayers are not eligible for the standard deduction They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.

Forms to use The standard deduction can be taken on Forms 1040, 1040A or 1040EZ. If you qualify for the higher standard deduction for real estate taxes, new motor vehicle taxes, or a net disaster loss, you must attach Schedule L. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

These forms and instructions may be downloaded from the IRS.gov Web site or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

• Publication 17, Your Federal Income Tax (PDF 2.3MB)
• Schedule A, Itemized Deductions (PDF)
  

Consumer Advisory: Terry Goddard Highlights Changes in Credit Card Regulations

(Phoenix, Ariz. - March 9, 2010) Attorney General Terry Goddard today advised consumers about recent changes in federal law that require credit card issuers to disclose more information to customers. These laws also affect how the credit cards are marketed, advertised and managed. Last year, Congress passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which gives consumers additional protections from abusive practices. With the new law in place, it is still important for credit card holders to familiarize themselves with the fine print in their contracts as well as review new provisions set forth by the CARD Act. "In difficult economic times, credit card debt can mount and carve away at family finances," said Goddard. "Even though the new law is a step in the right direction to protect consumers, card holders still should read the fine print in their contracts." Below are a few of the new credit card regulations and protections in the CARD Act: ● Age 21 and Older Requirement - Card companies are no longer allowed to issue a credit card to people under 21 unless they can provide the means to repay the debt or have an adult over 21 co-sign on the account. Additionally, card issuers cannot provide tangible gifts to students on campuses in exchange for applying for credit. ● Exceeding Credit Card Limits - In the past, if you exceeded your approved spending limit, you would not be contacted by the credit card companies, which usually resulted in additional fees to your monthly statement without your knowledge. Now, no over-the-limit fees may be charged unless the consumer has given permission for over-the-limit transactions. ● Required Notice for Interest Rate Changes - Card issuers must give card holders 45-day advance notice in the event of an interest rate change. ● Cardholder Opt-Out - If there are significant changes made to the terms of the account, credit card holders can choose to reject those changes and will have five years to pay off the balance under the original terms. ● Bill Due Dates - Monthly statements must now be mailed or delivered 21 days prior to the due date. Companies were moving up due dates which led to increased late fees. The new requirement should help to eliminate this practice. ● Minimum Payment Disclosure - Card issuers must now disclose in their monthly statements to customers how long it will take the card holder to pay off the bill if only the minimum monthly payment is made. Issuers must also disclose how much the card holder would need to pay every month to pay off the balance in 36 months. ● Double-Billing Cycles Eliminated - Credit card companies can no longer employ two-cycle or double billing when calculating finance charges. A creditor cannot reach back to the previous billing period and consider that cycle's balance when calculating the amount of interest charged in the current cycle. The Arizona Attorney General's Office encourages everyone to visit the AG website, http://www.azag.gov/consumer, for tips about making smarter decisions in the marketplace, at school and at home. You may also visit creditcards.com to view the comprehensive breakdown of the Credit CARD Act of 2009.

Consumer Advisory: Terry Goddard Reminds Seniors to be Aware of Lottery and Sweepstakes Scams

(Phoenix, Ariz. – March 8, 2010) Attorney General Terry Goddard today advised seniors to be aware of lottery and sweepstake scams that are currently on the rise in Arizona. Taking protective measures helps to ensure seniors are not victims. "With many scam artists taking aim at seniors, I want all Arizonans to be armed with the knowledge they need to stay safe and stop crimes before they happen," Goddard said. "Prevention is always better than prosecution. The best defense against scams and frauds are seniors who spot the warning signs and stop those scams before they happen." The scam usually starts with a phone call, a letter, or an email telling seniors that they've won a sweepstakes, lottery, or expensive new car. The phone callers often say they are with the IRS, FBI, U.S. Attorney, Federal Trade Commission or even international businesses. They usually explain to the "winner" that to receive the grand prize they need to pay money to cover taxes or insurance fees. They tell the winner to keep the news of their prize confidential and give instructions to wire the money to a foreign country to claim the multi-million-dollar check. Once the "winner" pays $500, or $1,000 or even $5,000, there will be more phone calls with complex reasons why more money needs to be paid to get the big prize. The Attorney General's Office wants you to be aware of some warning signs to protect yourself against these types of scams: ● If it sounds too good to be true, it probably is. ● Be suspicious of any lottery or sweepstakes mail. Many times these mailings say to send a small amount of money to find out if you are a winner. Most seniors who receive the calls from these scam artists initially responded to something that came to them in the mail. ● Read the fine print. Many of these letters will say you need to send money in order to acquire your winnings. ● Never pay money. No legitimate lottery or sweepstakes company will ask you to pay money. ● Never share your personal information, especially not your Social Security number, bank account, or credit card number. ● Alert Authorities. If you have become a victim, don't be afraid or ashamed to report it. It's your civic duty to make sure others don't become victims of the same scams. ● Scam Alerts. Sign up for the Attorney General's Scam Alerts at www.azag.gov/feed/scams. These alerts allow you to stay ahead of the rapidly changing consumer scams and schemes. Prevention is always better than prosecution. The Attorney General's Office offers Senior Anti-Crime Universities throughout Arizona to help seniors learn to protect themselves against many of these types of scams. The Senior Anti-Crime University is also part of the Attorney General's Senior Sleuths project. Senior Sleuths is a volunteer program to help Arizona seniors protect themselves and prevent others from becoming victims of fraud and abuse. There are several Senior Anti-Crime Universities planned for the coming months. A complete schedule of upcoming events is attached. The Arizona Attorney General's Office encourages everyone to visit the AG website, http://www.azag.gov/consumer, for tips about making smarter decisions in the marketplace, at school and at home.

IRS Tax Tip 2010-46: Top Ten Facts About the Child and Dependent Care Credit

Top Ten Facts About the Child and Dependent Care Credit

Did you pay someone to care for a child, spouse, or dependent last year? If so, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are the top 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.

1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
3. You – and your spouse if you are married filing jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
4. The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
6. The qualifying person must have lived with you for more than half of 2009. However, see Publication 503, Child and Dependent Care Expenses, regarding exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents.
7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.
8. For 2009, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.

Beginning with 2009 tax returns, Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers, has been eliminated. Form 1040A filers will now use Form 2441, Child and Dependent Care Expenses. For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free forms and publications from IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).

Links:

• Publication 503, Child and Dependent Care Expenses (PDF 167K)
• Form W-10, Dependent Care Provider's Identification and Certification (PDF 31K)
• Form 2441, Child and Dependent Care Expenses (PDF)
• Form 2441 Instructions (PDF 32K)
• Publication 17, Your Federal Income Tax (PDF 2,075K)
• Tax Topic 602

Tax Tip 2010-45: Ten Facts about Claiming the Child Tax Credit

Ten Facts about Claiming the Child Tax Credit

The Child Tax Credit is a valuable credit that can significantly reduce your tax liability. Here are 10 important facts from the IRS about this credit and how it may benefit your family.

1. Amount - With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17.
2. Qualification - A qualifying child for this credit is someone who meets the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence.
3. Age Test - To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2009.
4. Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
5. Support Test - In order to claim a child for this credit, the child must not have provided more than half of their own support.
6. Dependent Test - You must claim the child as a dependent on your federal tax return.
7. Citizenship Test - To meet the citizenship test, the child must be a U.S. citizen, U.S. national, or U.S. resident alien.
8. Residence Test - The child must have lived with you for more than half of 2009. There are some exceptions to the residence test, which can be found in IRS Publication 972, Child Tax Credit.
9. Limitations - The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.
10. Additional Child tax Credit - If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

For more information, see IRS Publication 972, Child Tax Credit, available at the IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Form 8812, Additional Child Tax Credit (PDF 56K)
• Publication 972, Child Tax Credit (PDF 128K)
• Form 1040 (PDF 176K)
• Form 1040 Instructions (PDF 1,101K)
• Form 1040A, U.S. Individual Income Tax Return (PDF 136K)
• Form 1040A Instructions (PDF 428K)

IRS TAX TIP 2010-44: Ten Facts about Mortgage Debt Forgiveness

Ten Facts about Mortgage Debt Forgiveness

If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

• Form 982
• Form 1099-C

IRS Tax Tip 2010-43: Five Important Tax Credits

You might be eligible for a valuable tax credit. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are even refundable, which means you might receive a refund rather than owe any taxes at all. Here are five popular tax credits you should consider before filing your 2009 Federal Income Tax Return:

1. The Earned Income Tax Credit is a refundable credit for certain people who work and have earned income from wages, self-employment or farming. Income, age and the number of qualifying children determine the amount of the credit. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
3. The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
4. The Retirement Savings Contributions Credit, also known as the Saver's Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver's Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).
5. The Health Coverage Tax Credit pays up to 80% of the health insurance premiums for eligible Trade Adjustment Assistance recipients and Pension Benefit Guaranty Corporation payees. You can complete IRS Form 8885, Health Coverage Tax Credit to claim the credit on your tax return. To determine if you're qualified, or to find out how to receive the HCTC each month, visit IRS.gov and search for "HCTC."

There are other credits available to eligible taxpayers. Since many qualifications and limitations apply to the various tax credits, taxpayers should carefully check their tax form instructions, the listed publications and additional information available at IRS.gov. IRS forms and publications are also available by calling 800-TAX-FORM (800-829-3676).

Links:

• 1040 Central
• Publication 596, Earned Income Credit (EIC) (PDF 281K)
• Publication 972, Child Tax Credit (PDF 128K)
• Publication 503, Child and Dependent Care Expenses (PDF 167K)
• Saver's Credit
• Health Coverage Tax Credit
• Form 1040 Instructions (PDF 1,101K)

YouTube Videos:

Earned Income Tax Credit - English | Spanish | ASL

IR-2010-024: IRS Has $1.3 Billion for People Who Have Not Filed a 2006 Tax Return

Videos:

Haven't Filed a Tax Return in Years?: English | Spanish | ASL

Washington — Unclaimed refunds totaling more than $1.3 billion are awaiting nearly 1.4 million people who did not file a federal income tax return for 2006, the Internal Revenue Service announced today. However, to collect the money, a return for 2006 must be filed with the IRS no later than Thursday, April 15, 2010.

The IRS estimates that the median unclaimed refund for tax-year 2006 is $604.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury.

For 2006 returns, the window closes on April 15, 2010. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund. Though back-year tax returns cannot be filed electronically, taxpayers can still speed up their refunds by choosing to have them deposited directly into a checking or savings account.

The IRS reminds taxpayers seeking a 2006 refund that their checks will be held if they have not filed tax returns for 2007 or 2008. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2006. For example, most telephone customers, including most cell-phone users, qualify for the one-time telephone excise tax refund. Available only on the 2006 return, this special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. For details, see the Telephone Excise Tax Refund page on IRS.gov.

In addition, many low-and-moderate income workers may not have claimed the Earned Income

Publish Post

Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2006 were $38,348 for those with two or more children, $34,001 for people with one child and $14,120 for those with no children. For more information, visit the EITC Home Page.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 1-800-TAX-FORM (1-800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2006, 2007 or 2008 should request copies from their employer, bank or other payer. If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by calling 1-800-829-1040, or by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS.