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At Instant Tax Service, we’re seeing bigger refunds than ever this year! Lots of new tax credits and deductions went into effect last year, and taxpayers are now starting to see the benefits. With so many new credits and deductions, there’s bound to be one you qualify for.

Check out some of the big ones:

American Opportunity Credit for College Students

Eligible students in their first four years of college can qualify for a tax credit of up to $2,500 to help offset the costs of college tuition and expenses. Tuition and all related fees, included books, can be used to qualify for this credit! The full credit is available to those with a modified adjusted gross income of $80,000 or less for single filers or $160,000 or less for those filing joint. After that, the credit is reduced or eliminated. Even those who owe no tax can get up to 40% of this credit directly refunded to them. That’s up to $1,000 fully refunded back to you from the IRS even if you owe no tax.

Expanded Energy Credits

Always wanted to make your home more energy efficient but needed a little incentive? This was definitely the year to do it! If you weatherized your home this year or bought qualifying alternative energy equipment, you may qualify for one of the two expanded energy tax credits this year.  The Non-Business Energy Property Credit can get you back up to 30% of what you spent on eligible energy-saving improvements of up to $1,500 (in order to get the full $1,500, you’d have to spend $5,000 on improvements). The other big one is the Residential Energy Efficient Property Credit. This one will get you back 30% of what you spent on alternative energy equipment such as solar cells, wind turbines, or fuel cells to power your home. Labor costs are included as qualifying expenses, too!  To see if your improvements qualify, contact your energy equipment manufacturer.

New Vehicle Purchase Sales Tax Deduction

Bought a new car this year? Don’t forget to deduct the state or local sales or excise taxes you paid on the purchase of your new car, truck, motor home, or motorcycle. All vehicles had to be purchased between Feburary 16^th, 2009 and before January 1, 2010 and in order to claim the full credit, the vehicle must have cost less than $49,500. Note that the amount of the deduction is reduced if your modified adjusted gross income is between $125,000 and $135,000 for single filers or $250,000 and $260,000 for joint filers.

Earned Income Tax Credit Expanded

This year’s Earned Income Tax Credit is now available for more workers and their families, too. Those with three or more qualifying children will see a big jump in this credit this year. The Earned Income Tax Credit was designed to help those below certain income limits:

• $48,279 for families with three or more qualifying children
• $45,295 for those with two or more children
• $40,463 for people with one child
• $18,440 for those with no children

Believe it or not, one in six working taxpayers is eligible for this credit. It’s also refundable, so even if you owe no tax, you should see a big check in the mail if you qualify for this credit!

Be sure you’re keeping up on current tax laws this year to ensure that you’re getting the maximum refund you’re entitled to. If you have any questions, visit IRS.gov or contact your local tax preparer.

Wondering where your refund is? Not sure why it’s taking so long? Here’s some tips from the IRS for getting the status of your refund (full article here):

Online Access to Refund Information Where’s My Refund? or ¿Dónde está mi reembolso? are interactive tools on IRS.gov and the fastest, easiest way to get information about your federal income tax refund. Whether you split your refund among several accounts, opted for direct deposit into one account, used part of your refund to buy U.S. savings bonds or asked the IRS to mail you a check, Where’s My Refund? and ¿Dónde está mi reembolso? give you online access to your refund information nearly 24 hours a day, 7 days a week. It’s quick, easy and secure.

When to Check Refund Status If you e-file, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you file a paper return, refund information will generally be available three to four weeks after mailing your return. 

What You Need to Check Refund Status When checking the status of your refund, have your federal tax return handy. To get your personalized refund information you must enter:•

Your Social Security Number or Individual Taxpayer Identification Number

Your filing status which will be Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er)

Exact whole dollar refund amount shown on your tax return

What the Online Tool Will Tell You Once you enter your personal information, you could get several responses, including:

Acknowledgement that your return was received and is in processing.

The mailing date or direct deposit date of your refund.

Notice that the IRS could not deliver your refund due to an incorrect address. In this instance, you may be able to change or correct your address online using Where’s My Refund?

Customized Information Where’s My Refund? also includes links to customized information based on your specific situation. The links guide you through the steps to resolve any issues affecting your refund.  For example, if you do not get the refund within 28 days from the original IRS mailing date shown on Where’s My Refund?, you may be able to start a refund trace.

Visually Impaired Taxpayers Where’s My Refund? is also accessible to visually impaired taxpayers who use the Job Access with Speech screen reader used with a Braille display and is compatible with different JAWS modes.

Toll-free Number If you do not have internet access, you can check the status of your refund in English or Spanish by calling the IRS Refund Hotline at 800-829-1954 or the IRS TeleTax System at 800-829-4477. When calling, you must provide your or your spouse’s Social Security number, filing status and the exact whole dollar refund amount shown on your return.

Refund checks are normally sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back.

Good luck! If you prepared your taxes with a local tax preparation company like Instant Tax Service and did not choose direct deposit, they will call you and let you know when your refund is ready.

Have you lost your past tax return information in a move, a disaster, or… simply lost track of it? The good news is that the IRS has all your tax records available, and all you have to do is ask!

However, if you prepared your tax return with a tax preparer, the best way to get prior year tax returns is to give your tax preparer a call. They can print out your tax information and get it to you quickly. This is a great way to ensure that you always have a backup.  You can also avoid the delays associated with requesting tax return information from the IRS.

Didn’t prepare your tax return with a tax preparer? Contact the IRS at 800.829.1040 and follow the voice instructions to get your tax transcript over the phone. This will get you a transcript of you tax account that shows all of your basic data like type of return, filing status, adjusted gross income, and taxable income. It will also show any adjustments you or the IRS made to your tax return after you filed.

If you need a paper copy of the transcript and filed with a 1040 form, fill out IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript.  It takes about 10 working days to get a copy of your transcript after the IRS receives your request. If you need a whole tax account transcript, that will take up to 30 days to deliver. But the best part is… getting your past tax return information this way is free!

If you need an actual copy of the full tax return exactly as you filed and processed it, however, there is a rather steep $57 fee per tax return.  You can get copies for the current year and up to six past tax years, and it generally takes about 60 days.

There are a few different tax return forms out there used for making this request, so check the IRS website to find out which one is best for your situation.

If you prepared your taxes at Instant Tax Service, we’ll be happy to print out a copy of your tax return. Just call 888.684.1040 to get connected to the store that processed your tax return last year.

Do you want to get your refund faster this year? The fastest way to get your refund is to file your tax return electronically and choose the direct deposit option. Filing electronically and choosing direct deposit can get you your tax refund up to three weeks faster than traditional paper filing.

Don’t have a bank account? No problem! Many tax companies, like Instant Tax Service, offer a “return transfer” or Electronic Refund Check option that allows you to get your tax refund direct deposited into an account opened by a partner bank just for this purpose!

What are the advantages to direct deposit? According to the IRS, more than 73 million taxpayers chose direct deposit in 2009, and here are the reasons the IRS says they did:

1) Security: Thousands of paper checks are returned to the IRS by the U.S. Post Office every year as undeliverable mail. Direct Deposit eliminates the possibility you won’t receive your check and prevents your refund from being stolen.

2) Convenience: The money goes directly into your bank account. You won’t have to make a special trip to the bank to deposit the money yourself.

3) Ease: When you’re preparing your return, simply follow the instructions on your return. Make sure you enter the correct bank account and bank routing numbers on your tax form and you’ll receive your refund quicker than ever.

4)  Options: You can also deposit your refund into multiple accounts. With the split refund option, taxpayers can divide their refunds among as many as three checking or savings accounts and up to three different U.S. financial institutions. Use IRS Form 8888, Direct Deposit of Refund to More Than One Account, to divide your refund among different accounts. A word of caution: some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your Direct Deposit will be accepted.

Want more information? Contact your local tax preparer or check our IRS Publication 17 (Your Federal Income Tax).

Do you want to know more about how to get education tax credits? The American Recovery and Reinvestment Act of 2009 made BIG changes to education tax credits! Do you qualify?

Check out what the IRS has to say:

American Opportunity Credit (AOC) – This credit changes the existing Hope Credit for tax years 2009 and 2010. That means the Hope Credit is now available to a more taxpayers, including many with higher incomes (and those who owe no tax!). You may be able to take a credit of up to $2,500 for qualified education expenses paid… for each student in your household who qualifies!  If you don’t owe any tax, remember that up to 40% of this credit may be refundable. Remember, the only way to claim this credit is to file a tax return (even if you aren’t required to), so be sure to file!

Hope Credit – The Hope Credit benefits those paying for the first two years of qualifying tuition and related expenses. This credit may be worth even more if at least one qualifying student attended a school or university in a Midwestern disaster area.  For these students, there is an expanded definition of qualifying expenses and the credit is worth up to $3,600! Note, however, that unlike the American Opportunity Credit, the Hope Credit is not refundable. So it can reduce your taxes to $0, but won’t be refunded to you.  Remember that you can’t take the American Opportunity Credit and Hope Credit on the same tax return, so figure out the one that applies best to your situation.

Lifetime Learning Credit – For 2009, taxpayers may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas!) for qualifying education expenses paid for students enrolled in eligible educational institutions. There’s no limit on the number of years you can claim the lifetime learning credit for each student, and no limit to the number of students. Keep in mind that you can’t claim the Hope, American Opportunity and Lifetime Learning credit for the same student in one year, though.

For more information about these credits (and others!) click here.

There’s been a lot of talk about the Alternative Minimum Tax (AMT) being applied to a wider range of income levels these days, but how do you know if the AMT applies to you or if you should pay it? And… what is it?

The Alternative Minimum Tax is a tax that some people have to pay in addition to regular income tax. The idea behind this tax was to prevent those with very high incomes from avoiding taxes by using tax breaks and benefits that could allow them to avoid paying taxes all together, or allow them to pay very little tax.

For better or worse, however, the AMT now applies to a broader range of taxpayers, and may now apply to those with lower incomes as well. How does the AMT work?

The AMT gives you an “alternative” way to calculate the minimum amount of tax you’re required to pay for someone in your income bracket. If you’re already paying at least that much each year, you don’t have to worry about the AMT. However, if the tax you currently pay is below the AMT minimum, you will need to begin paying the AMT.

These means that some people are actually required to pay the Alternative Minimum Tax. The best way to find out if it applies to you is to use the IRS’s Alternative Minimum Tax calculator. It will ask you a series of short questions about your situation and should be completed in 5-10 minutes.

Find out more about the Alternative Minimum Tax at IRS.gov, or contact your local tax preparer.

The tax code seems to change – and change big – every year, and 2009 is no exception. Take a look at some of these 2009 tax changes the IRS made this year and how they could affect you:

1)      ARRA (American Recovery and Reinvestment Act): This is the big “stimulus” bill everybody was talking about last year. Good news is, many of the tax breaks and credits put into place last year have been extended into this year and/or can be claimed on your 2009 tax return. Some of the biggest winners will be those who purchased a new home (credit up to $8,500), new car (sales tax credit), made energy efficient upgrades to their homes (check with the product manufacturer), and students paying for college expenses (up to $2,500 per student!). And if you received unemployment last year, the first $2,400 you received is tax free.  How’s that for tax cuts and credits?

2)      Standard Deduction Increase: Most taxpayers will see a standard deduction increase this year. Good news for those of you who don’t itemize! The standard deduction for married couples filing jointly and qualifying widows and widowers is $11,400. For singles and married filing separate, it’s $5,700, and for heads of household, the standard deduction is $8,350. It’s a nice little boost for folks in every bracket this year.  You can also claim an additional deduction based on the real estate or local excise tax you paid to purchase a new vehicle after February 16^th, 2009 and can increase your deduction by the amount of the state and local real estate taxes you paid during the year. If you suffered disaster losses in a federally declared disaster, you can also add your net disaster losses to your standard deduction. This can really make a difference to that deduction amount, so be sure you’re including everything you’re entitled to!

3)      Standard Mileage Rate Change: In 2009, the standard mileage rate you can claim as a deduction changed to 55 cents per mile for a business use vehicle and 24 cents per mile for using a vehicle in a deductible-eligible move or for use during necessary medical transportation. Did you know there’s also a mileage deduction if you’ve loaned out your vehicle for use by a charitable organization? The standard mileage rate for loaning out your vehicle for use by these organizations remains at 14 cents a mile.

You can find out more about 2009 tax changes at IRS.gov, or ask your local tax preparer.

Do you qualify for the Earned Income Tax Credit, or EITC? The EITC can make a BIG difference in your refund amount this year. It could be worth up to $5,657!

Here are some tips from the IRS on how to know if you qualify for the Earned Income Tax Credit (EITC).

1)      Even if you didn’t qualify for the EITC last year, you should look into again this year (again: it’s worth big money!). Any time your financial, marital, or dependent situation changes, your eligibility for the credit may change as well. Check out the EITC rules every year just to make sure.  You can use the IRS’s EITC assistant to see if you may be eligible, or visit your local tax preparer. They should be able to answer all your questions if you find the rules a little confusing.

2)      In order to qualify for the EITC, you must actually file a federal tax return! Even if you’re not required to file a tax return because you do not meet the income threshold for your filing status, you will not receive the amount of the credit unless you file a tax return and claim the credit. So file a tax return… and file early!

3)      Note that in order to claim the credit, your filing status cannot be Married Filing Separately, and you MUST have a valid Social Security Number. You and your spouse (if filing jointly) and any qualifying dependents that you claim must also have valid Social Security Numbers in order to receive the EITC.

4)      You may not have made a lot of money last year, but you must have earned something in order to qualify for the credit. Earned income comes from someone who pays you wages or – if you’re self-employed – income you receive from contracting your services to others. In some cases, disability income may also allow you to qualify for the EITC.

5)      There are also special rules for the U.S. military deployed in combat zones. Military members can include nontaxable combat pay as earned income for the EITC. Good news: even if you elect to do this, the combat pay is still not taxable!

Again, if you have any questions about whether or not you qualify, check out the online EITC Assistant.  Be sure you claim all the credits you qualify for and get back the money you’re owed. If you qualify this year, you could be getting back a bundle!

Did you file your taxes early, thinking you had all your paperwork in order… only to receive a new W-2 or student loan interest statement in the mail?

No problem! It’s not too late to get your tax return corrected. How do you do it? Simple. Just fill out and file an amended tax return. It’s called form 1040X and you can download it here or visit the local office where you had your taxes prepared. Trust us – it’s not as scary as it sounds.

Filing an amended return – a 1040X – allows you to correct any errors made on your tax return and collect any refund amount that may be due to you. So what kind of circumstances would warrant filing an amended tax return?

According to the IRS, you should file an amended tax return if you find errors in how you reported your filing status, dependents, total income, deductions, or credits. For example, if you receive a W-2 or 1099 after you’d already filed your taxes, or if realized – too late – that filing Single and filing Head of Household aren’t the same thing(!), you should file an amended tax return to correct the error.

For simple mistakes like math errors, you shouldn’t have to worry about filing an amended tax return. When it comes to simple math errors, the IRS is able to (and often does!) correct minor mistakes.   If you’re still worried, you can always give the IRS a call to make sure the error was corrected.

It’s also important to remember that if you’re filing an amended tax return that is going to net you a bigger refund, you should wait until you’ve received the refund for the first tax return before you complete the 1040X and filing the amendment. It makes record keeping much easier.

For those who owe, filing the 1040X as soon as possible is your best bet. This will help you limit any interest or penalty charges from the IRS if your payment comes in late. Remember that even if you file for an extension, you will accrue interest on any tax not paid by the due date! (that’s April 15^th, for those keeping track!)

For more IRS tax tips about amended returns, click here.

Severe losses in Haiti this month have brought to mind America’s own losses during hurricane Katrina, 9/11, and other regional disasters.  Though the U.S. has yet to experience a national disaster as severe as Haiti’s in recent memory, we are still a large nation prone to earthquakes, flooding, hurricanes, tornados and other acts of nature which we have no control over.

Are you protected in case of disaster? What protections does the government offer in the event of a disaster?

The IRS offers tax breaks for casualty, disasters, and theft losses in certain instances.  Taxpayers can claim casualty and theft losses on Form 4684: Causalities and Thefts. Section A should be filled out for individual’s casualty and theft losses, while section B should be used for business or income-producing property losses.

The 2008 National Disaster Relief Act changed some of the tax rules related to losses from federal disasters.  These changes allow taxpayers to claim net disaster loss deductions even if they do not itemize their tax returns. There is no upper or lower qualifying limit for the taxpayer’s adjusted gross income.

If you live in the Midwest and qualify for the Heartland Disaster Relief Act, the entire amount of the unreimbursed loss is deductible if you itemize your tax return. For more information about the Heartland Disaster Relief Act, read the IRS’s Publication 4492-A: Information for Affected Taxpayers in the Midwestern Disaster Areas.