http://www.irs.gov/newsroom/article/0,,id=234882,00.html?portlet=7

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By WebCPA Staff (www.AccountingToday.com/NEWS  from June 21, 2010 )

Health care professionals who have received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 federal income tax returns, as well as an annual tax cut going forward, according to the IRS.

   IRS COMMISSIONER, DOUG SHULMAN

The provision, which was mandated under the Affordable Care Act, was announced last week by the IRS. “Doctors and nurses who choose to practice in underserved areas make a great contribution to their local communities,” said IRS Commissioner Doug Shulman in a statement. “By expanding the tax exclusion for student loan forgiveness, the Affordable Care Act provides an even greater incentive to practice medicine in areas that need it most.” The act included a change in the law, effective in 2009, that expands a tax exclusion for amounts received by health professionals under loan repayment and forgiveness programs. Prior to the new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible for funding under the Public Health Service Act qualified for a tax exclusion. The Affordable Care Act expands this tax exclusion to include any state loan repayment or loan forgiveness programs intended to increase the availability of health care services in underserved areas or health professional shortage areas, and makes this exclusion retroactive to the 2009 tax year.

Health care professionals participating in these programs who have reported income from repaid or forgiven loan amounts on their 2009 returns, possibly after receiving a Form W-2 or Form 1099, may be due refunds. Those who believe they qualify for this relief may want to consult their state loan program offices to determine whether the program is covered by the new law.

Health care professionals who have not yet filed for 2009 need not report eligible loan repayment or forgiveness amounts when they file. Those who have already filed may exclude eligible amounts by filing Form 1040X, Amended U.S. Individual Income Tax Return. The form can be downloaded from this website or obtained by calling the IRS toll-free at (800) TAX-FORM. Individuals filing Form 1040X to claim this exclusion should write “Excluded student loan amount under 2010 Health Care Act” in the Explanation of Changes box.

Health care professionals may request an employer or other issuer to provide a Form W-2c, Corrected Wage and Tax Statement, or 1099, and may attach the corrected form to the Form 1040X. However, the Form 1040X may also be filed without attaching a corrected form.

An individual whose employer withheld and paid taxes under the Federal Insurance Contributions Act  on payments covered under the new exclusion may request that the employer seek a refund of withheld FICA on the employee’s behalf. And because employers also pay a portion of the FICA tax, the employer also may also be entitled to a refund.

To obtain a refund, an employer should file a separate Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, for each Form 941, Employer’s Quarterly Federal Tax Return, that needs to be corrected. An employer filing a Form 941-X is also required to file a Form W-2c for each employee who benefits from the exclusion.

Tax Days of the Tax Year – Filing Deadlines

for 2010 Tax Returns

*The customary tax return filing deadline for each year  is April 15.  The IRS has approved April 18, 2011 as the tax filing deadline for 2010  for both tax returns and requests for filing extension. The change is to Observe Emancipation Day in the District of Columbia.

**The extension period for individual tax returns is normally October 15 of each year, but the IRS has approved October 17, 2011 as the tax filing deadline for 2010 Tax Returns with approved extensions because October 15, 2011 is a Saturday.

begins Friday, January 14, 2011.

via Tax Tips – Several Ways to Save Money on 2009 Taxes – NYTimes.com.

Tips for Self-Employed Nurses

From an article by Patricia Ann Bemis, RN, CEN

Are you planning a new career path as a self-employed nurse (full or part-time) in 2009? If so, your federal income tax on that income needs to be estimated and paid quarterly. Don’t wait to report your self-employment income on your 2009 annual tax return. If you don’t file quarterly, you may be responsible for back taxes and penalties by the end of the year.

We have a pay-as-you-go tax system in the United States. There are two methods to pay as you go:

    1.  Withholding method: If you are an employee, your employer withholds income tax from your wages. You file your income tax return annually.

    2.  Estimated tax method: If you are a self-employed nurse, you estimate your income tax withholding and pay quarterly. This estimated tax payment includes income tax, self-employment tax, and an alternative minimum tax if applicable to you. You also file an annual income tax return.

Good records of the money you make and spend in the business will ensure that you have everything you need to file accurately. The general rule is that you will need to make quarterly estimated tax payments if you expect to owe $1,000 or more when you file your annual return. To figure and pay your estimated tax, use Form 1040-ES (Estimated Tax for Individuals).

Schedule C (Profit or Loss from Business) is the annual federal tax form filed by most self-employed nurses. You can use it whether you do well, make little or no profit, or even lose money. You can file Schedule C-EZ if your situation is not complex and you have expenses less than $5,000, no net losses, and no employees. Schedule C or C-EZ is filed annually as an attachment to your 1040 individual tax return.

Some self-employed nurses need an employer identification number (EIN). It is a federal tax identification number for your business. Your Social Security number is your federal tax identification number for you as an individual. Generally, if you operate your business as a corporation (Inc.) or partnership (LLC), or if you have employees, you will need an EIN. The fastest way to apply for an EIN is online. You will receive your number immediately.

The Web site of the Internal Revenue Service (www.IRS.gov) has a wealth of information. The IRS also has a toll-free business hotline at (800) 829-4933. The 2009 IRS Tax Calendar for Small Businesses and Self Employed contains filing dates and tax-related information. Search for Publication 1518 on the IRS Web site. Print it out and refer to it frequently.

Your state also may have income tax requirements.  Be sure to check with your state on what it requires.

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Understand your taxes -- then lower them

For most people, filing a tax return is still about as fun as getting a root canal. It’s something you absolutely have to do, but it doesn’t have to be painful. Just like having your dentist numb your mouth, there are ways of making taxes less of a nuisance – most importantly by developing a basic understanding of taxes and ways of reducing them. Here are 4 easy tips for starters:

1) Understand what kinds of taxes you pay.  We all complain about them, yet most people don’t spend the time to really understand their taxes. However, understanding the different types of taxes being paid is the first step in figuring out ways to reduce your tax burden. For the most part, we all pay Federal, State and Local income taxes, Social Security taxes and Medicare taxes. If you’re self-employed you have to pay twice as much in Social Security and Medicare since you’re paying for both the employer and employee contributions (this would especially be of interest if you’re an independent traveling nurse).

2) Look for ways to reduce your tax bill.   Reduce your taxable income. Employer plans vary in what they offer, and each individual has to determine what’s right for their situation. However, if your employer offers a 401(k) retirement account, Health Savings Accounts, or other ways of reducing your gross income, you can significantly reduce your tax liability. Essentially, these items are subtracted from your gross income, thereby reducing the amount of income to which taxes are levied. Maximize your deductions. The most common deductions are mortgage interest, property taxes, charitable contributions, student loan interest and certain job-related expenses. Deductions can be taken as either a “standard deduction” or an “itemized deduction.” For example, to get your mortgage interest and property tax deductions, you could list or “itemize” them on the proper form on your tax return. The other approach, which most people use, is to take the standard deduction. In the end, you want to use the approach that minimizes your taxable income the most. Be sure to get professional input here to get the best outcome.

3) Be sure to understand whether you qualify for tax credits.  Tax credits are a dollar-for-dollar reduction of your tax bill, if you qualify. If you purchased a home in 2009, be sure to see whether you qualify for the first-time home buyer tax credit enacted in 2009. The most common tax credits are for child/dependent care, education, energy and the earned income tax credits (EITC).

4) Get professional input.  Unfortunately, even these simple tips can be complicated to fully understand without reading the tax code. So, either find a local accountant or use tax preparation software. Most software programs do a good job of guiding you through the process of preparing and filing your tax return – all in the comfort of your home. You can also save a lot of money by doing it yourself, especially if you have a pretty straightforward tax return.

Contributed by TaxReturnsForNurses.com, the first and only online service dedicated to the preparation of tax returns for nurses. For more information, visit their website at www.taxreturnsfornurses.com 
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Spending More Than You'd Like? Control These 4 Factors

by Hannah Waters | Geezeo.com

Overspending is easy to do. Everyone falls for it every now and again because sometimes you just feel the need to spend. However, there may be things that trigger our overspending even when we know that we are on a budget and cannot really afford to spend money.

1) Stress – Work, family, friends, sickness, money…all these things (and many more) can lead to stress in someone’s life. Stress can definitely trigger your spending because it allows you to take your mind off of whatever may be bothering you for that little amount of time. Even if it is just going out for dinner or a drink after work…although you may not be able to afford it, if you think it will take away your stress and allow you to relax a little bit you are willing to spend the money.

2) Peer Pressure – As you get older you think that you outgrow peer pressure and that it really not longer effects you. However, this is really not the case. In the work environment or even just with friends, peer pressure is very prominent as you get older. When shopping with friends, if they are buying things or if they tell you that something looks good on you and that you should buy it sometimes you fall into the trap and end up purchasing something just because someone said you should.

3) Emotions – If something is happening in your life that has got you down or on the flip side makes you want to celebrate, this often triggers a side of you that makes you want to spend money. Similar to stress, spending allows you to forget bad things that are happening. However, if you get a promotion or something, you spend money to celebrate. The same goes for if you have a date or vacation…you are excited so spend more money.

4) Credit Cards – Credit cards definitely give us an easy out. Even when people know that they do not have the money to spend, they know that a credit card can still allow us to spend. This is one of the worst influences because it will get you in serious amounts of debt that you have to account for later on. People get sucked into the credit card trap without really thinking about what they are doing and before they know it they have spent way more than they thought.

All of these things can trigger over spending that you know you should not be doing if it does not fit within your budget. Try to find things that will substitute spending money to help celebrate or make yourself feel better. In the long run, giving into these things that trigger your spending will only make you struggle with your budget or lead you into a great deal of debt down the road.