I have heard of several people receiving letters regarding their 2006 North Carolina tax returns.  In the cases that I have heard of they were either because the individual moved into NC around mid-year (possibly even after) 2006.  We are looking into the circumstances regarding the other individual.  I can guarantee that letters did not go out just to these two.  What are the lessons to be learned?  First, always file your tax return on time.  Second, have quick and access with a professional tax accountant who will respond your emails you send on Saturday AM or 2 AM on Sunday morning.  If nothing else, it will provide a piece of mind and calm the panic.  3) Always keep records of the tax returns you filed.  If you used a professional, they should typically be able to provide you with those prior year records.

It is generally scary to receive a letter from a tax agency.  Just remember, it doesn't always mean that you did something wrong so do not panic.

Progress energy has recently announced new incentives for NC customers for 2011.  With these additional incentives, a new 2 kilowatt system can be had for approximately $4,500 (after all incentives and tax credits).  After analyzing my bill, I realize that 2 kilowatts cost roughly a little over $200 per month.  If you use that much energy, the payoff for such an investment is now very long at all – approximately 3 years.  With a system warrantied for 25 years, you will get 22 years of free electricity.  In my book, that is a pretty good deal.   http://bit.ly/hxY0Ve

Once again, North Carolina is trying to encourage certain types of purchases.  This weekend, all energy star appliances are sales tax free.  Hopefully, many people in Wilmington NC will us this opportunity to save on the sales tax.  More details can be found here: http://www.starnewsonline.com/article/20101104/ARTICLES/101109809/1004?Title=Get-energy-efficient-appliances-tax-free-this-weekend 

Similar credits were available in 2006 and 2007 but none were available for 2008.  We will face a similar set of circumstances for 2011 unless Congress makes changes to extend or reinstate the credits.  Directly from the IRS web site, the credit is based off "of 30% of the cost of certain energy-efficient property or improvements you placed in service in 2009. This property can include high-efficiency heat pumps, air conditioners, and water heaters. It also may include energy-efficient windows, doors, insulation materials, and certain roofs." 

There are a few details of the credit that tend to cause issues for people.  First, make sure the item is one that is qualified for the credit and/or meets the criteria for that specific item.  The manufacturer and/or installer should be able to provide you with that information.  In addition, note that the total credit for combined 2009 and 2010 is $1,500.  So if you have already claimed all or a portion of the residential energy credit in these years your credit may be reduced or not available.  This oversight is a common issues when you deal with vendors or sales people and they explain the credit to you.  They don't know or care to ask the proper question to see if it is something that has been claimed in the past, which may mean you buy something with the understanding that you would get the credit and learn at tax time that you would not.  This is just another example of when it is useful to make a quick 5 minute phone call to your tax partner to run it by them.

I will be teaching a short seminar on this subject at the Green Living Expo to be held in October by the Cape Fear Green Building Alliance / Wilmington Business Journal.   More details will be made available as we approach October.

Alternative Energy Credits


There are alternative energy credits for things like solar, wind, etc.  These credits do not necessarily expire at the end of 2010.  I may cover them in more detail in the future.

Residential energy credits are available for a variety of home improvement projects through the end of 2010.  These credits expire at the end of the year so start planning now as theses types of projects can take time to schedule and complete.  These credits can save you big bucks on some of these projects- both in the form of the refundable tax credit as well as saving electricity in daily use.  I had a non-qualifying HVAC placed in my downstairs in 2008 and a qualifying highly-efficient unit placed in my upstairs in 2009.  The efficient unit operated better and at a lower electricity unit.  In addition, when you factor in the tax credit the upstairs unit actually cost lest than the downstairs unit.  Here is a first-hand look at some of the things that can be replaced and possibly qualify for the credit:

Name Your Beneficiaries

I am not a lawyer and can not provide you with legal advice.  However, there are many areas where legal implications and taxes overlap.  This quick tip could save your heirs a lot of headaches.  Be sure that all of your retirement accounts have designated beneficiaries.  This will give your beneficiary additional flexibility on when the money has to be withdrawn from the retirement account. 

Specifics distribution options for named beneficiaries depend upon the decedent and beneficiaries' ages, etc.  Typically, if you don't have a beneficiary designated and your retirement account goes through your will/estate your beneficiary/heir is going to lose more of your retirement account to taxes.  Proper estate planning can save you and your family lots of money and headaches down the road.  If need be, I can put you in touch with qualified legal counsel to evaluate your situation.