In a release on the IRS website regarding the Stimulus Act, if a taxpayer’s tax refund was deposited (as directed by their tax return) into a direct deposit account, the stimulus payment would follow the same process. 

Such deposits could have been made into a checking or savings account, or an account that is given favorable tax treatment under the code, such as an IRA, health savings account, an Archer MSA, a Coverdell education savings account, or a qualified tuition program account. Distributions to these accounts are subject to rules and restrictions of the IRS Code.

Taxpayers who had their 2007 refunds deposited into more than one account will receive a paper check for their stimulus payment.

Individuals may withdraw an amount equal to the stimulus payment from a tax-favored account, but are subject to restrictions of IRS code.  The amount withdrawn is treated as neither contributed to, nor distributed from the account, and will not be subject to regular federal income tax.  Please see the irs.gov website for additional guidelines regarding stimulus payments.

Mortgage interest owners pay on loans up to a million dollars ($500,000 if you use the married filing separately status) is deductible, provided they used the money to buy, build, or improve their home.
Mortgage interest they pay on loans secured by home and used for a purpose other than to buy, build, or improve your home is deductible for loans up to $100,000 ($50,000 if they use the married filing separately status) or to the extent of their home equity, whichever is less. As they gain equity in their home, use these lines of credit wisely: If they fail to make the payments, they put your home at risk.
Lastly, let’s not forget points, also called loan origination fees. One point equals one percent of their loan. Points they pay (and even points the seller pays) when they purchase their home are generally deductible in full the year they pay them. Alternatively, they may amortize the points over the term of your mortgage. The wise choice is usually the immediate deduction, but not always.

They filed on time but didn’t pay all of their balance due.

It is best to file on time and pay as much of the balance as possible. Why? Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is 7 percent for the first quarter of 2008; the rate is adjusted every three months. If your client filed on time but didn’t pay on time, they will generally have to pay a late-payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, up to 25 percent. The one-half of one percent rate increases to one percent if the tax remains unpaid after several notices have been sent to you and the IRS issues a notice of intent to levy.

They haven’t filed or paid their balance due.

If they did not file on time, and they owe tax, they may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5 percent late filing, 0.5 percent late payment) for each month, or part of a month, that the return is late. The late-filing penalty applies to both the tax shown on your return and any additional tax found to be due (reduced by withheld and paid tax amounts). The failure-to-file penalty is generally imposed for a maximum of five months. However, after five months, if they still have not paid, the 0.5 percent failure-to-pay penalty continues to run, up to 25 percent, until the tax is paid. So, the combined maximum penalty may be as high as 47.5% ((4.5% x 5 months) + 25%).

Please Note: 25 percent is not a total combined maximum. The maximums apply separately. Also, if the return is over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100 percent of the tax required to be shown on the return.

You Requested an IRS Installment Agreement

If you filed Form 9465 requesting an installment payment plan, and the IRS accepted the installment payment plan, they will charge you a $43 administrative fee, plus interest on the unpaid tax and your client will be expected to have the taxes paid by January 15th of next year. If they filed a timely return and are paying your tax due according to an installment agreement, the penalty is one quarter of one percent for each month, or part of a month, that the tax remains unpaid.

With all the planning that goes into a move, don’t forget to let the IRS know where to find your clients. Come tax time, you want to be sure they have their correct mailing address – especially if they are due a refund. If you received pre-printed address labels with a packet from the IRS, they may write the correct new address information on the label. Or, instead of using the labels, they may write their new address in the proper spaces on the IRS forms. The IRS will update their files with the new address. An alternative method to update addresses is to send the following information to an IRS service center:

1. full name
2. old and new addresses
3. social security number or employer identification number
4. signature

You may use IRS Form 8822, Change of Address, for this purpose. All service center addresses are listed in the package of IRS tax forms clients receive. On a joint return, all the above information must be provided for both spouses. Make sure the post office that serviced the clients’ former address has the new address as well. They can ask if they will forward the refund – not all post offices will forward government checks. In certain cases your clients  may be able to deduct some of their moving expenses.