Under the American Recovery and Reinvestment Act of 2009, Congress created the so-called Energy Star tax credit.  Basically, this is for improvements to your house. 

If you use Energy Star products, you may get a tax credit for up to 30% of the cost.  And, like any new tax break, there are some limitations (in some cases, the credit is capped at $1,500).  You can find more information at energystar.gov.

Here are of the eligible improvements:

• Biomass stoves
• Hvac systems
• Insulation
• Roofs
• Water Heaters
• Windows and doors
• Geothermal heat pumps
• Small wind turbines
• Solar energy systems

Alas, online criminals are rampant.  And yes, they are targeting taxes.

Basically, these criminals will send emails — which appear to be from the IRS.  They will request personal information, which can ultimately be used to do things like steal your identity.  In fact, opening an email may launch malicious software on your computer.

Keep in mind that the IRS does not use email when communicating.  Instead, it uses phone calls and letters.

With sky-high budget deficits, the IRS is under lots of pressure to find new tax revenues.  And it looks like one of the sources will be on employment taxes.

In fact, the IRS has set the goal to audit 6,000 companies over the next three years and has already begun training agents.

Also, it looks like small businesses will be a main target.  After all, it is common to hire people as contractors, which avoids payroll taxes.  Unfortunately, noncompliance could result in heavy penalties and interest.

Other areas of focus include:  expense reimbursements, corporate credit cards and personal use of autos.

According to a report from the IRS, roughly 1.4 million people did not claim refunds for the 2006 tax season.  In fact, the total amount comes to $1.3 billion.

The reason for this:  simply put, people did not file their returns.

If you think you qualify, you will need to file a return by April 15th.  And, you must mail it in.  The good news is that there will be no penalty for filing.

Question:  Thank you for your helpful advice regarding my 2009 business taxes.  I plan to use this advice and file very shortly.  However, my wife and I are going through a separation.  I am thinking of filing a separate return and since my business is a sole-proprietorship, do you recommend a separate or joint filing.  My business income was under $30K.  My wife’s income was $40K.  Please advise.

Answer:  Very sorry to hear about that….
 
As for filing separate, it usually makes sense if one spouse makes substantially more than the other — in terms of getting tax savings.  But, one way to find out is to do a return for both filing statuses.
 
Some other things to consider when filing separate:
 
1.  Many deductions/credits are not available (child/dependent care, IRA contributions, qualified education loan interest deduction, etc).
2.  If you live in a community property state, you are likely required to split the income on your returns (unless you lived apart for the whole year).
3.  Both spouses must either itemize or claim the standard deduction.
 
Now, some people file separately because they think their spouse may be engaging in tax fraud.  Keep in mind that if you sign a joint return, there is joint and several liability.