Mexico's Value Added Tax for Hollywood Film Production

Mexico has launched a $20-million tax-incentive program in an ambitious move to lure film production from Hollywood and other locales.

Mexican President Felipe Calderon said he hopes the program will make Mexico "the capital of Latin American cinema."

He made the announcement at Baja Studios in the state of Baja California, where James Cameron's "Titanic" and Peter Weir's "Master and Commander: Far Side of the World" were shot in the studio's colossal tanks.

Managed by state-run film financing agency Imcine and Mexican trade and investment body ProMexico, the program offers tax rebates of 7.5% on film productions that exceed the amount of 70 million pesos ($5.5 million). By Mexican standards, where the average budget runs about $2 million, that is considered a high-budget production. The fund will double next year to $40 million.

To qualify, foreign producers must contract local production services. Producers also can write off an additional 10% owed for IVA, Mexico's value-added tax.

"The message is that there is a 17.5% rebate for foreign productions," said Manuel Sandoval, ProMexico's head of strategy and innovation.

H&R Block Traditional Tax-Preparation Business

H&R Block Inc.'s (HRB) fiscal third-quarter earnings rose 6.9% on prior-year losses from discontinued operations as the largest tax preparer in the U.S. suffered from handling 7.1% fewer returns.

"While we are disappointed with our early results this tax season, we remain committed to improving our performance as the remainder of the season unfolds," said President and Chief Executive Russ Smyth. "We expect to outperform our competitors regardless of the external factors like unemployment rates, but we have not done so to-date."

The company, citing industry wide sources, said returns to the Internal Revenue Service were down up to 5% through Feb. 28 from a year earlier. The decline is expected to be half that by the time April 15 arrives. As of Feb. 28, H&R Block said same-office returns fell 6.8% in retail operations and were down 9.4% overall. The company last month warned tax-return preparation was coming up short of what it was a year earlier.

H&R Block and other traditional tax-prep companies such as Jackson Hewitt Tax Service Inc. (JTX) have struggled since consumers began moving to filing taxes online. The company has recently been looking to focus more on its traditional tax-prep business, exiting its brokerage and loan-origination businesses. For the quarter ended Jan. 31, H&R Block posted a profit of $50.6 million, or 15 cents a share, compared with $47.4 million, or 14 cents a share, a year earlier. Earnings from continuing operations fell to 16 cents from 20 cents as revenue decreased 5.9% to $934.9 million.

Analysts surveyed by Thomson Reuters predicted 14 cents in earnings on $950 million in revenue.

Shares in H&R Block were up 3 cents after-hours at $16.77. The stock is down 10% from a year earlier.

Claim a Refund Tax From 2006

While taxpayers are busy preparing their 2009 returns, the clock is ticking down for anyone who still could be claim a refund from 2006.

The Internal Revenue Service, or IRS, has an estimated $1.3 billion in unclaimed refunds due to nearly 1.4 million Americans. In Iowa, about $10 million went unclaimed by about 12,200 Iowans who did not file a federal return in 2006. About 51,400 Illinois taxpayers could get a piece of the $54.74 million in refunds that went unclaimed there.

The IRS stressed that taxpayers must file a 2006 return by April 15 in order to collect the refund. The agency estimates that the median unclaimed return is worth $596 in Iowa and $655 in Illinois.

“Especially in these tough times, we want to encourage people to review their records to see if they had tax withheld from their paychecks for 2006 but didn’t file a tax return,” said Christopher Miller, the IRS spokesman for Iowa. “Maybe they didn’t file because they didn’t make enough money to require filing, but they could be leaving money on the table.”

By law, most taxpayers have a three year window of opportunity to claim a refund even if they did not file a return. For 2006 returns, the window closes April 15, Miller said.

If the time expires and no return is filed, the money becomes property of the U.S. Treasury. The IRS said there is no penalty for filing a late return qualifying for a refund. While back-year tax returns cannot be filed electronically, taxpayers can speed up their refunds by having them deposited directly to their accounts.

According to the IRS, taxpayers will have their 2006 refund checks held if they have not filed tax returns for 2007 or 2008. In addition, refunds will be applied to any amounts still owed to the IRS or to satisfy unpaid child support or past due federal debts, such as student loans.

Miller said taxpayers also could be eligible for additional tax credits, such as the one-time telephone excise tax refund for telephone users including cell-phone users. Available only on the 2006 return, the special payment applied to long-distance excise taxes paid on phone service from March 2003 through July 2006.

The government’s standard refund ranges from $30 to $60, but taxpayers also can base their refund request on the actual tax paid. For more information, see the Telephone Excise Tax Refund page on IRS.gov.

In addition, many low and moderate income workers may not have claimed the Earned Income Tax Credit (EITC).

When Tax Help Needed?

The decision of whether to do your own taxes or hire someone keeps getting more difficult.

Companies continue to offer updates to their do-it-yourself tax tools. With names like CompleteTax, Jackson Hewitt Online, H&R Block at Home and, of course, TurboTax, the tax solutions purport to make doing your own taxes easier.

But even as the Internal Revenue Service plans to regulate paid tax preparers to help prevent taxpayers from paying for bad advice, the tax code continues to get more complicated (it’s now at nearly 14,000 pages). The I.R.S. has also been increasingly filing claims on property or income against taxpayers with little or no property and auditing the middle class, which means you may end up with a lot of extra headaches if you don’t have extra help.

In fact, even the commissioner of the I.R.S. doesn’t do his own taxes. He is among the 60 or so percent of Americans who hire tax preparers to do their income taxes.

Still, you may be unsure of whether your particular situation warrants extra help. So here’s some guidance.

One factor to consider is the convenience. Pay someone to do your taxes if you simply don’t want to spend the time doing them yourself. And you should also look for professional tax help if you find yourself scratching your head as you try to answer the questions in the do-it-yourself tax preparation software.

If your taxes are relatively simple for instance, you just have a W-2 form from your employer and one interest-bearing account then you should be able to handle doing your own taxes.

“When people’s financial situation gets more complicated, they should not be doing their own returns”. The situations are:

• You are self-employed.
• You are an active trader in securities.
• You are part of a limited partnership (think hedge funds or private equity funds).
• You have a trust fund.
• You are going through a major life change like a divorce or retirement.
• You need to file in multiple states or cities.
• You have a significant amount of money in I.R.A.’s and are grappling with how the new Roth I.R.A. rules will affect you.

Other articles like this one offer more situations where you might want to get help, including if you sold a home through a short sale or receive rental income.

What do you think is missing from this list? If you fall into one of these categories, do you seek tax help? Why or why not?

But if you fall into one of the situations propose to talk with tax professionals.

Tax Breaks for Vehicles

You bought a car last year and that monthly payment is causing pangs of buyer's remorse. Take heart that new car could lead you to a refund this tax season.

That's because taxpayers who bought new vehicles in 2009 are eligible for deductions or credits that could help cut their tax bills or boost their return.

SALES TAX DEDUCTION
Tucked within last year's economic recovery act is a provision that allows buyers of new vehicles to deduct state and local sales and excise taxes. Those who bought a vehicle between Feb. 17 and Dec. 31, 2009 are eligible.

Most types of vehicles qualify cars, trucks, motorcycles and motor homes all count. But if you’re new ride last year was a pricey luxury car, your deduction could be capped. Filers can only claim a deduction for taxes paid on up to $49,500 of the sales price.

So on a $25,000 car bought in a state where the applicable taxes come to eight percent, which entitles you $2,000 deduction.

But your deduction will be smaller if you earn between $125,000 and $135,000 a year, or between $250,000 and $260,000 for married couples filing together. The deduction is eliminated for individuals earning more than $135,000 and for joint filers earning more than $260,000.

The tax break is also available for people living in states with no sales tax, which includes Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon. Filers in these states can simply deduct other fees or taxes imposed by state or local governments, such as a city-wide sales tax.
The deduction is available regardless of whether you itemize your returns. Taxpayers who do not itemize can simply add the tax break to their standard deduction on their 2009 return.

The decision to itemize or not will depend on your income. Most tax preparation software and any tax adviser should be able to help you make the decision.

HYBRID TAX CREDIT
Recent buyers of some gas-electric hybrids, like the Nissan Altima hybrid, may be eligible for a tax credit. Tax credits can be more valuable than deductions because their value counts as taxes already paid; deductions simply lower your taxable income.

The rules of the hybrid tax credit are a bit more complicated. When the tax credit took effect in 2006, the number of tax credit-eligible hybrids each automaker could sell was capped at 60,000. That means the credit has long expired for hybrids from carmakers like Toyota and Honda, which have been selling popular hybrids for a while.

Eligible 2009 model-year vehicles include certain hybrids made by General Motors, Nissan, Chrysler, Ford, and Mazda. Tax credits for these hybrids range between $1,550 and $3,000.

For 2010 model-year vehicles, which went on sale last fall, tax credits are available for certain hybrids made by GM, Ford, BMW, Mercedes-Benz and Nissan. The amounts range between $650 and $3,400. A detailed list of available hybrid tax credits can be found on the IRS Web site.

LOOKING AHEAD: PLUG-IN TAX CREDIT
There is one tax break that will become more available to car buyers this year: a credit meant to spur purchases of plug-in vehicles. The credit is worth between $2,500 and $7,500.

Vehicles qualifying now include the Tesla Roadster, a high-end electric sports car built by Tesla Motors Inc. that costs around $109,000. But automakers will begin rolling out more moderately priced electric cars later this year.

Nissan has said it will start selling an all-electric car called the Leaf. Although it hasn't announced a price, it will be a good deal less than vehicles like the Roadster. GM, meanwhile, will begin selling the Chevrolet Volt, which is expected to cost around $40,000 after the tax credit.

The cap on this tax credit will be much higher than the hybrid tax credit. Automakers can sell up to 200,000 plug-ins before it expires.

Missouri State Tax Refunds Faster Under a Bill

Missouri residents might get their state tax refunds faster under a bill endorsed by the House. State officials currently can hold onto tax refunds for up to 120 days without paying interest.

Legislation given first-round approval in the House would limit that to 45 days. The shorter period would take result immediately when it is signed into law.

The 45-day clock would start on April 15 unless someone is late filing their taxes, and then it would start when the tax return is postmarked. The state's time limit would apply to refunds for sales taxes and personal and corporate income taxes.

Last year, Missouri delayed tax refunds to boost cash reserves. Kansas, California and North Carolina also belated tax refund checks last year because of cash-flow problems. Missouri officials eventually used $250 million of federal economic stimulus money to speed refunds.

Bill followers said the state should not keep tax refunds any longer than is necessary for processing.

According to the state Department of Revenue, tax refunds so far are ahead of last year's pace. Through March 1 the state had issued 726,080 refunds for a total of $281 million. Last year, 714,926 refunds totaling $264 million had been issued.

But Missouri is facing financial problems again this year that have provoked spending cuts from the current budget. Gov. Jay Nixon and legislative budget leaders met Tuesday because state revenues have declined more than was expected in January.

Rep. Jason Smith, who handled the tax bill during House floor debate, said he believes the state should pay all its debts on time including those owed for collecting too much tax.

"This is not the state's money," said Smith, R-Salem. "This is the taxpayer's money, and we shouldn't be holding onto it."

Legislative staff predicated in a cost estimate that shortening the deadlines could force the state to spend more than $100,000 per year. The Department of Revenue estimated that the state could be required to pay several million dollars in interest and that processing tax refunds quicker could cost several million dollars more to hire the necessary extra employees.

Want to Choose your Tax Preparer?

If you decide to hire a professional to help prepare your taxes, it's important to remember that you are still ultimately responsible for what's on your return.

Here are some tips to remember before you hire someone to assist with your taxes:
1. Ask for recommendations.
Word of mouth is the best way to find a reliable preparer, so ask friends and family where they get their taxes done and if they've had any problems with their preparers.

2. Make sure the person is qualified.
Your preparer doesn't need to be a certified public accountant, but it's important to make sure he or she is properly trained and stays up to date on tax law changes. Ask questions about the individual's training, experience and continuing education.

3. Be certain the preparer will have your back in an audit.
Ask the preparer if you'll have support if the IRS questions your return or you get audited. Audits are rare, but can be unpleasant, and you shouldn't have to face them alone. Ask if the preparer has experience handling such problems -- but not too much, which may signal problems.

4. Make sure you're comfortable with their approach.
Some tax preparers can be aggressive in their approach to minimizing your taxes, others can be conservative. Be wary of those who guarantees they can get larger refunds than other preparers, but make sure they're going to claim all of deductions you're entitled to.

5. Check their background.
If you are considering hiring a CPA, check the individual's license with the state CPA association. Ask enrolled agents and others if they are members of a professional organization that holds them to certain standards. Also check to see if there are any complaints against the person with the Better Business Bureau, the state's board of accountancy for CPAs, the state's bar association for attorneys or the IRS office of professional responsibility for enrolled agents. Your state may also track complaints against preparers.

6. Make sure they'll sign your return.
The law requires paid preparers to sign each return they handle, and include an identifying number on the return. If they won't, take your business elsewhere.