The IRS Launches Major Drive to Inform Taxpayers
The IRS is going all out to promote taxpayer awareness of the tax benefits in the "Recovery Act" passed earlier this year. The Service is using YouTube videos, iTunes podcasts, radio public service announcements, and informational flyers to remind both individual and business taxpayers about these tax breaks, many of which will expire soon.
INDIVIDUALS
Among these limited-time tax benefits for individuals:
* First-time homebuyer credit of up to $8,000 for homes purchased before December 1, 2009.
* Expanded credit of up to $1,500 for energy-efficient home improvements done in 2009 and 2010.
* Above-the-line 2009 deduction for state and local sales and excise taxes paid on up to $49,500 of the purchase price of a new car, light truck, motor home, or motorcycle.
* American opportunity tax credit of up to $2,500 annually for qualifying higher education expenses for 2009 and 2010.
BUSINESSES
Among the tax breaks the IRS wants to remind businesses about:
* The $250,000 limit for immediately expensing qualified new or used equipment purchases in 2009.
* 50% bonus depreciation on purchases of new equipment, software, and qualified leasehold improvements made in 2009.
* Credit on employment tax returns for providing the 65% COBRA health insurance subsidy to former employees.
* Lower requirement for estimated tax payments for those whose 2008 income is less than $500,000 and more than 50% of income is from a small business.
For more information and planning assistance in using these and other available tax breaks, give us a call soon.
Article #2
Look Ahead to Change in Roth IRA Rules
Taxpayers with adjusted gross incomes over $100,000 have had to sit on the sidelines when it comes to converting their traditional IRA to a Roth IRA. But a provision from a 2006 tax law goes into effect January 1, 2010, repealing the income limit for converting to a Roth.
Why would you want to convert?
A major attraction of Roth IRAs is that distributions are tax-free, provided you meet the age and holding period rules. And there are no required annual distributions once you reach age 70½. In contrast, you'll generally pay tax at ordinary income rates on distributions from a traditional IRA.
With a Roth IRA, you can enjoy tax-free growth and distributions whenever you want throughout your retirement years, or you can leave the Roth for heirs to receive tax-free distributions.
When a taxpayer converts a traditional deductible IRA to a Roth IRA, the amount converted is added to taxable income and is taxed at ordinary income rates.
There is a special incentive to do a Roth conversion next year.
If you convert in 2010, you can report half of the income on your 2011 tax return and the remaining half on your 2012 tax return. If you choose, you can report all of the conversion income on your 2010 return.
It's important to weigh the pros and cons of a Roth conversion in your individual situation and to look at steps you can still take in 2009 to capitalize on the new rule.
For a review of how you might benefit by converting your IRA to a Roth IRA, give us a call now.
