Move Your Money: More Americans Considering Smaller Banks

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“There are more benefits to banking with smaller banks and credit unions than people realize.

1. Cost associated with banking is normally less
2. Convenience for the most part is better (expect if you go to an area that does not have a branch: you just have to plan ahead, and we do have debit and credit cards)
3. With Technology today it really does not matter all banks today offer online banking.
4. The majority of small banks remember what is is like to be a normal person. The President and CEO does not make 25 million dollars a year.
5.. To me the most important part is the bank associates, Branch Manager and staff actually know who you are and knows your name. (amazing)

http://firsttaxsolution.com”

More Americans Considering Community Banks

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“To all those that are saying that small banks concoct schemes to increase bank revenue, unfortunately your are so right, but the big difference is that you know who the people in charge at the smaller banks and you do have a voice.

Unlike Bank of America, Wells Fargo, etc., who could care less that you the customer is unhappy.

Smaller banks care more for the most part, and they do want to keep your business.

I am sure as with everything there are some smaller banks that are not very good.

Do your due diligence when looking for and changing banks.

http://firsttaxsolution.com”

Donations for Haiti Relief Paid in 2010 may qualify to be Deducted on Your Tax Return in 2009

Certain Cash Contributions for Haiti Relief Can Be Deducted on Your
2009 Tax Return
Congress passed a new law which allows you to choose to deduct certain charitable contributions of
money on your 2009 tax return instead of your 2010 return. The contributions
must have been made after January 11, 2010, and before March 1, 2010, for the
relief of victims in areas affected by the January 12, 2010, earthquake in Haiti.
Contributions of money include contributions made by cash, check, money order,
credit card, charge card, debit card, or via cell phone.
The new law was enacted after the 2009 forms, instructions, and publications
had already been printed. When preparing your 2009 tax return, you may
complete the forms as if these contributions were made on December 31, 2009,
instead of in 2010. To deduct your charitable contributions, you must itemize
deductions on Schedule A (Form 1040) or Schedule A (Form 1040NR).
The contribution must be made to a qualified organization and meet all other
requirements for charitable contribution deductions. However, if you made the
contribution by phone or text message, a telephone bill showing the name of the
donee organization, the date of the contribution, and the amount of the
contribution will satisfy the record keeping requirement. Therefore, for example, if
you made a $10 charitable contribution by text message that was charged to
your telephone or wireless account, a bill from your telecommunications
company containing this information satisfies the record keeping requirement.

Contact us for more information at www.firsttaxsolution.com

You May Qualify Credit for Qualified Retirement Savings Contributions

For tax year 2009, if you make a contribution to a traditional or Roth IRA or to a qualified employer plan (like a 401(k)), you may be eligible to receive a tax credit of up to $2,000 for the year. To qualify, your adjusted gross income for the year must be less than $27,750 if you are single ($41,6250 for head of household and $55,500 if married filing jointly).

This is one of the very many credits tax payers miss. When filing his or her own tax return without a professional tax preparer.

Your tax preparer will need to prepare form 8880 to reflect this credit. See Irs.gov

contact us for more help. http://firsttaxsolution.com

Is Borrowing from your 401 k plan The Best Solution?

Individuals who participate in a 401(k) plan sometimes borrow from their
plan. While you may justifiably feel squeamish about taking out a 401(k)
plan loan, it can actually make good sense in appropriate
circumstances?assuming it is paid back on time. For instance, in today's
tough economy, plan loans can be a source of much-needed cash when bank
loans are unavailable or prohibitively expensive.
401(k) plan loans are generally economical and easy to obtain. In
particular, a 401(k) plan participant with less-than-stellar credit or
tapped out credit lines may find it much easier and cheaper to borrow from
their 401(k) plan than from a commercial lender.
401(k) plan loans provide participants with access (within limits) to
their 401(k) plan dollars without incurring income tax liabilities and the
10% premature withdrawal penalty tax. The 10% penalty tax generally applies
to withdrawals before age 59 1/2, however, exceptions are available. In
essence, the participant (borrower) pays interest to himself or herself when
taking out a plan loan.
401(k) plan loans are only permitted if the plan document allows them,
and many plans do. The maximum amount that can be borrowed is generally the
lesser of $50,000 or 50% of the participant's (borrower's) vested account
balance. Most 401(k) plan loans are secured exclusively by the participant's
vested account balance (although other forms of security, such as a lien
against the participant's home, are sometimes seen).
At least two major potential pitfalls are associated with 401(k) plan
loans. First, the participant's account balance is irreversibly diminished
if the loan is not paid back. Second, the federal income tax consequences
are harsh for failure to pay back a plan loan according to its terms, and
the loan will usually have to be repaid in full soon after the employee
leaves the job for any reason. Such failure to repay the loan can result in
a deemed distribution of the unpaid loan balance that triggers a federal
income tax hit (possibly a state income tax hit, too). In addition, the
dreaded 10% premature withdrawal penalty will generally apply unless the
participant is age 59 1/2 or older.
Interest paid on a loan secured by the participant's (borrower's) 401(k)
plan account balance is nondeductible if any of the account balance used to
secure the loan is attributable to elective deferrals (i.e., elective salary
reduction contributions the employee signed up for). This is true regardless
of how the loan proceeds are used and regardless of the existence of other
security for the loan, such as the participant's home. Since 401(k) account
balances will almost always include at least some elective deferral dollars,
interest on loans from such plans will usually be nondeductible.
In most cases, borrowing from your 401(k) plan should only be done when
funds are not available elsewhere. But, during this difficult economic time,
it may be prudent to do so. But, for me use this as the last resort.

Please contact us if you have questions on the tax ramifications of
401(k) plan loans or other tax compliance or planning issues.
www.firsttaxsolution.com

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Home Office Deduction Are you taking Advantage

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Generally, you cannot deduct items such as mortgage interest and real estate taxes as business expenses. However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. Even then, your deduction may be limited. Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home.

To qualify to deduct expenses for business use of your home, you must use part of your home:

*

Exclusively and regularly as your principal place of business (defined later),
*

Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business,
*

In the case of a separate structure which is not attached to your home, in connection with your trade or business,
*

On a regular basis for certain storage use (see Storage of inventory or product samples, later),
*

For rental use (see Publication 527), or
*

As a daycare facility (see Daycare Facility, later).

Additional tests for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus:

*

Your business use must be for the convenience of your employer, and
*

You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.

If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.

Exclusive Use

To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. The area used for business can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition.

You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes.

Example.

You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Your family also uses the den for recreation. The den is not used exclusively in your profession, so you cannot claim a deduction for the business use of the den.
Exceptions to Exclusive Use

You do not have to meet the exclusive use test if either of the following applies.

*

You use part of your home for the storage of inventory or product samples (discussed next).
*

You use part of your home as a daycare facility, discussed later under Daycare Facility.

Storage of inventory or product samples. If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. However, you must meet all the following tests.

*

You sell products at wholesale or retail as your trade or business.
*

You keep the inventory or product samples in your home for use in your trade or business.
*

Your home is the only fixed location of your trade or business.
*

You use the storage space on a regular basis.
*

The space you use is a separately identifiable space suitable for storage.

Example.

Your home is the only fixed location of your business of selling mechanics' tools at retail. You regularly use half of your basement for storage of inventory and product samples. You sometimes use the area for personal purposes. The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business.
Regular Use

To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use. You must consider all facts and circumstances in determining whether your use is on a regular basis.
Trade or Business Use

To qualify under the trade-or-business-use-test, you must use part of your home in connection with a trade or business. If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use.

Example.

You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. You do not make investments as a broker or dealer. So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home.
Principal Place of Business

You can have more than one business location, including your home, for a single trade or business. To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. To determine whether your home is your principal place of business, you must consider:

*

The relative importance of the activities performed at each place where you conduct business, and
*

The amount of time spent at each place where you conduct business.

Your home office will qualify as your principal place of business if you meet the following requirements.

*

You use it exclusively and regularly for administrative or management activities of your trade or business.
*

You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. However, see the later discussions under Place To Meet Patients, Clients, or Customers or Separate Structure for other ways to qualify to deduct home office expenses.
Administrative or management activities. There are many activities that are administrative or managerial in nature. The following are a few examples.

*

Billing customers, clients, or patients.
*

Keeping books and records.
*

Ordering supplies.
*

Setting up appointments.
*

Forwarding orders or writing reports.