Is California's IOUs' interest taxable?

The answer is a bit of good news for taxpayers - "No!".

California began issuing notes instead of money after the State ran short of cash on July 1. Companies doing business with the State will probably receive IOUs instead of cash. The IOU is carrying interest rate of 3.75% (subject to change). This interest is tax free and please make a note to your tax preparer to ensure they will not be included as income when the company is filing tax returns.

Foreign Pension Account

IRS has widely warned individuals who have foreign bank accounts totaled $10,000 or more need to disclose the information by filing Form 90.22-1 for each year. The deadline of this filing is by June 30.

Now, IRS wants to clarify the rule also applies to pensions that invest in offshore hedge funds. The violation could cost you to pay $500. The filing deadline is Sep 23, 2009.

Closing statement with amended tax returns

If you need to file amended tax returns because you have not claimed first time home buyers credit, be sure to enclose a copy of the settlement statement with your 1040X.

Since IRS find a lot of fraudulent claim, it is recommended you include HUD-1(the closing statement) in your amended tax returns to avoid unnecessary delay.

California Credit for New Home Purchases

If you intend to buy a new single family house in California, you may be eligible for a tax credit! The credit is equal to 5% of the residence's purchase price, up to a maximum of $10,000, and is claimed over a three-year period beginning with the taxable year the residence is purchased.

The criteria to be qualified for this tax credti, taxpayers must purchase a brand new single family house in California. Also, the taxpayers must intend to stay for a minimum of two years and eligible for the property tax homeowner's exemption.