Solar Power users in New York can knock off up to $5000 in personal taxes if they are using solar power systems for residential heating, cooling, hot water or electricity. The New York State Energy Research and Development Authority (NYSERDA) also offers rebates to photovoltaic installers.

The credit, equal to 25% percent of the cost of equipment and installation, was expanded in August 2005 to include solar-thermal equipment. The solar-thermal provisions apply to taxable years beginning on and after January 1, 2006. The credit is capped at $3,750 for solar-energy systems placed in service before September 1, 2006, and capped at $5,000 for solar-energy systems placed in service on or after September 1, 2006. The credit is non-refundable, but maybe carried over for a maximum of five years.

A solar energy system is any arrangement or combination of components that utilizes solar radiation installed in residences that provides energy for cooling, heating, hot water or electricity. However, the credit may not be used for heating pools or any other recreation applications.

Systems must comply with the 10 kW capacity limit on residential, net-metered solar-energy systems. Legislation was passed in 2007 increasing the capacity limit to 50 kW for condominiums and cooperative housing associations. Members of condominium management associations and tenant stockholders of cooperative housing associations are now allowed to claim a proportionate share of the total system expense towards the tax credit. These changes took effect beginning in the 2007 tax year, but as with other portions of the tax credit, they do not have an expiration date.

Fuel cells installed at a principal residence are eligible for a 20% tax credit, with a maximum credit of $1,500. To qualify, fuel cells must provide a maximum rated base load capacity of 25 kW and must utilize proton exchange membrane (PEM) technology.

The IRS is cautioning taxpayers against new tax frauds disguised as debt payment options on credit cards or mortgages. This new scam may also be marketed as a way to pay for outstanding tax liabilities or reducing taxes. This scam involves filing Form 1099-OID, Original Issue Discount, and/or bogus financial instruments such as bonded promissory notes or sight drafts.

The fraud evolved from the previously known “strawman account” which was supposedly set up by the Department of Treasury for each US citizen to pay for debts and claim withholding credits. These “strawman” accounts have already been reviewed by the courts and foundto be frivolous. The IRS has also addressed these through Revenue Ruling 2005–21 and Revenue Ruling 2004-31, and discredits the use of this position for income tax purposes.

For more information on frivolous schemes, see The Truth About Frivolous Arguments.

Along with this new scam, the IRS renews its warning to taxpayers regarding e-mails and phone calls they may receive that claim to have come from the IRS or other federal agency, which may mention their tax refund or economic stimulus payment. These are almost certainly a scam whose purpose is to obtain personal and financial information — such as name, Social Security number, bank account and credit card or even PIN numbers — from taxpayers and then used by the scammers to commit identity theft. The e-mails and calls usually state that the IRS needs the information to process a refund or stimulus payment or deposit it into the taxpayer’s bank account. The e-mails often contain links or attachments to what appears to be the IRS Web site or an IRS “refund application form.” However genuine in appearance, these phonies are designed to elicit the information the scammers are looking for.

The IRS reiterates that it does not send taxpayers e-mails about their tax accounts. In addition, the only way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return.

Always remember, if something sounds too good to be true, it probably is. For more information on Tax Scams, click Suspicious e-Mails and Identity Theft.

The IRS releases and updates the list of State-Qualified Health Plans for New York to help qualified individuals and their families get their Health Coverage Tax Credit. The list provides information to help you decide which one is most appropriate for you and your family. The list is divided in two, each serving a different purpose.

• State-Qualified Health Plans Available Now

Use this list if you are interested in learning more about the state-qualified health plan options currently available in your state and how to enroll for future coverage. Clicking this link will take you directly to the IRS website where you will find the complete list of available HCTC-qualified health plans.
This list is continually updated as new state-qualified health plans become available. When you call one of these current plans, ask for information about HCTC state-qualified products (they may also be known as TAA health plans).

• State-Qualified Health Plans Offered in 2009

Use this list if you intend to claim the yearly HCTC on your 2009 federal tax return, to verify that you were enrolled in one of the specific state-qualified health plan products available last year on or after the effective date listed. Clicking this link will take you directly to the IRS website where you will find the complete list of available HCTC-qualified health plans.

This list is updated once per year, most recently as of December 31, 2009. If you were not enrolled in one of these products, your plan does not qualify as a state-qualified health plan and you may not be able to claim the yearly HCTC unless you have another type of qualified health insurance.

Note: The links to health plans listed on these pages will take you to health plan websites for general information. The information listed there may not be specifically related to the HCTC.

The Internal Revenue Service is encouraging small businesses to take advantage of the recent enactment of a federal legislation offering tax-saving opportunities to small businesses by hiring new workers and providing health care to their employees.

The American Recovery and Reinvestment Act of 2009 (ARRA) is expanding and extending the Hiring Incentives to Restore Employment Act (HIRE Act) and the Affordable Health Care Act, offering tax credits and tax deductions, some of which will only be available this year. Small businesses have only a few months to take action and save on their taxes. The following are the key provisions of the new law:

New Health Care Tax Credit Helps Small Employers

The small business health care tax credit, created under the Affordable Care Act, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

The credit takes effect this year and is generally available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small employers that primarily employ low- and moderate-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers. The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.

Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. More information about the credit, including a step-by-step guide and answers to frequently asked questions, is available on the IRS website.

Two New Benefits for Employers that Hire and Retain Recently Unemployed

Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18. In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return.

These tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives generally do not qualify.

Employers must get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. IRS Form W-11 can be used to meet this requirement. Further details, including answers to frequently asked questions, are posted on IRS.gov.

Work Opportunity Tax Credit Aids Employers That Hire Certain Workers

The work opportunity tax credit (WOTC) offers tax savings to businesses that hire employees belonging to various targeted groups. These groups include people ages 18 to 39 living in designated communities in 43 states and the District of Columbia, recipients of various types of public assistance, certain veterans, ex-felons and certain youth workers. The instructions for Form 8850 detail the requirements for each of these groups.

Certification by the state workforce agency is generally required. Normally, a business must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work.

An eligible employer can claim both the WOTC and the new hire retention credit for the same employee. However, an employer may not claim both the payroll tax exemption and the WOTC for the same employee. Therefore, any employer that chooses to apply the exemption to wages paid to a qualified employee may not receive the WOTC on any wages paid to that employee during the one-year period beginning on the employee’s hiring date.

Exclusion of Gain on the Sale of Certain Small Business Stock

An extra incentive is now available to individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009, and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.

COBRA Credit

Employers that provide the 65 percent COBRA premium subsidy to eligible former employees can claim credit for this subsidy on their quarterly or annual payroll tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their payroll tax deposits by the amount of the credit. For details, see the instructions for Form 941.

Becoming a victim of identity theft is certainly avoidable. As identity thieves become more sophisticated about their scams, so should you in recognizing these scams. The IRS issues the following ten things that you should know about identity theft to help taxpayers and general consumers identify scams and avoid falling prey to scammers:

1. The IRS does not initiate contact with a taxpayer by e-mail.
2. If you receive a scam e-mail claiming to be from the IRS, forward it to the IRS at phishing@irs.gov
3. Identity thieves get your personal information by many different means, including:
   • Stealing your wallet or purse
   • Posing as someone who needs information about you through a phone call or e-mail
   • Looking through your trash for personal information
   • Accessing information you provide to an unsecured Internet site.
4. If you discover a website that claims to be the IRS but does not begin with ‘www.irs.gov’, forward that link to the IRS at phishing@irs.gov
5. To learn how to identify a secure website, visit the Federal Trade Commission at www.onguardonline.gov/tools/recognize-secure-site-using-ssl.aspx
6. If your Social Security number is stolen, another individual may use it to get a job. That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return.
7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.
8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification – such as a Social Security card, driver’s license, or passport – along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft
9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number.
10. For more information about identity theft – including information about how to report identity theft, phishing and related fraudulent activity – visit the IRS Identity Theft and Your Tax Records Page, which you can find by searching “Identity Theft” on the IRS.gov home page.

Other helpful links:

Identity Theft and Your Tax Records

Suspicious e-Mails and Identity Theft

Department of Treasury’s Identity theft resource page

Federal Trade Commission’s (FTC) consumer Web site