California offers a New Home and First-Time buyer Credit

Beginning May 1, 2010, Californians who purchase a new home and California first-time home buyers can qualify for one of two state tax credits.

Only one of the credits may be claimed per taxpayer, and there are some general guidelines:

• The home must be a principal residence; rental and investment properties don't qualify.
  
• The home must be purchased on or after May 1, 2010 and before January 1, 2011.
  
  However, a binding contract entered into by December 31, 2010 may also qualify if the escrow closes by August 1, 2011.
  
  Also, if you enter into a contract before May 1, 2010, you may also qualify if escrow closes on or after May 1, 2010.
  
• The credit is 5% of the purchase price of the home up to a maximum of $10,000.
  
• Unlike the federal credit, the California credit is nonrefundable (can't reduce the taxpayers tax liability below zero) and must be claimed in equal amounts over 3 successive tax years. No more than one-third of the credit may be claimed in any one year.
  
  This tax can't be carried back or forward, so if your tax liability for one year is already at zero, you can't 'hold' your credit and apply to a different year.
  

There is a limit to how much money the California government is willing to spend. There is a cap of $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. So if they run out of funds before you purchase your house, you are out of luck.

Check the state website for updates regarding these limits. Once the funds are completely allocated, home buyers will no longer be issued a Certificate of Allocation. This certificate is required to claim the tax credit on a California income tax return.

Gambling Winnings now Taxed in New Hampshire

Tax Form DP-300 Finally Released!

Haven't heard of Form DP-300? If you are a resident of New Hampshire, or hit a lucky streak while visiting New Hampshire, you might want to read on.

In July of 2009 the state of New Hampshire legislature passed a law that imposes a 10% tax on gross gambling winnings. Although the form required to file this new tax – Form DP-300, wasn't available until late February, 2010, you may still be required to file for the 2009 tax year.

Who is required to pay? This new tax applies to all New Hampshire residents, regardless of where they received the winnings. So if you currently reside in the granite state but hit the jackpot in Las Vegas, Nevada, you will still have to pay the newly imposed taxes in the state of New Hampshire. When it comes to taxes, what happens in Vegas doesn't stay in Vegas.

Not a resident of New Hampshire? Don't breathe easy just yet, if you had any gambling winnings in the state of New Hampshire, you too will be subject to the 10% tax. The determining factor is if you received a federally required W-2G form from a New Hampshire payer.

The form itself is fairly simple, with most of the information required available on the W-2G form.

However, if you aren't sure if this new tax applies to you, it's in your best interest to follow up and file as soon as possible. Lack of knowledge will not excuse you from paying interest and penalties if you don't file on time. Form DP-300 gives you the opportunity to determine how much you might own in interest. The interest rate is 6% or decimal equivalent .000164. The equation to figure out the exact amount (Number of days x daily rate decimal equivalent x Tax due = interest) is also detailed on the back side of the form.

The penalties for failure to pay and failure to file are much stiffer. The penalty for failure to pay is 10% unless you fraudulently attempt to hide your winnings, then the penalty jumps to 50% of the amount of non-payment.

Example: You won $10,000 at the Happy New Hampshire Casino, because you were late to discover the new tax law, you filed form DP-300 two weeks late. Your fees would be:

Tax - $1000 (10%)

Interest - $2.296 (14 days x .000164 x $1000)

Penalty - $100 (10% of nonpayment)

Total - $1,102.296

Form DP-300 can be found at www.revenue.nh.gov/forms/By_Number/documents/dp_300.pdf