Let's take the guess work for decisions out of it...knowing the below deadlines can help ease the pain of your year-end tax planning. Please take a moment to log these dates away:
Employee Sponsored Plans (to include a 401(k) and a Keogh)
The deadline here does not budge..have your plan in place by December 31, 2009.
SEP IRA's
You have until the due date for filing your return plus any extension to make contributions. Therefore, with extensions, you can deduct payments for 2009 as late as Oct. 15, 2010. This offers a nice tax planning safety net for those self-employed individuals who missed the December 31 cutoff for Keogh Plans.
Traditional IRA, Roth IRA, and Coverdell Education IRA
The deadline is April 15, 2010 for a contribution to be deductible in 2009. The plan must be established and your contribution must be made by this date; in this case, filing an extension will not extend this due date. When making a contribution in 2010 before April 15, be sure to clearly notify your plan sponsor as to what year your contribution is being made for- 2009 or 2010. Here, be cognizant of your plan limits also, especially in regards to Adjusted Gross Income phase out ranges.
Flexible Spending Accounts
Depending on whether or not your company has adopted the 2 1/2 month grace period now permitted by the IRS, then December 31, 2009 may be the last day you have to clear out your balance in your flexible spending account. Whatever is left at this date will be forfeited. Please check with your plan sponsor for the date this deadline applies to your plan.
Deductible Charges (Credit Cards)
If you pay bills for your business or make purchases for your business using a credit card, be aware of a distinction between bank credit cards and retail credit cards and what your deduction deadline might be. If you make a charge on a retail credit card, then you may only take that charge as a deduction in the year in which the bill is paid. If you make a charge on a bank credit card, then you must take the deduction in the year in which you charged the purchase.
Gifting
As the Holiday season just passed, here are some final reminders about gifting and the deadline and rules that apply. The Annual Gift Tax Exclusion for 2009 is $13,000 - any gifts made up to this level are made gift tax free, and by electing gift splitting as a married individual, this limit is doubled to reach $26,000. There are two special breaks worth mentioning from this $13,000 annual exclusion cap and that is for gifts made for tuition and medical expenses. If a tuition gift is paid directly to the school, then the gift tax break is unlimited. The same can be said for any medical expenses paid to the donee. If you made your Holiday or year-end gift in the form of a check, make sure the donee deposits that check before December 31, 2009. If not, this gift will not count as a gift for 2009 gift tax purposes. If your donee is unreliable in these regards, consider delivering a certified check as this will take that worry away. A certified check cut by December 31, 2009 is treated a 2009 gift whether deposited or not.
That's all for 2009. We look forward to planning with you in 2010 and beyond. Please have a safe and Happy New Year's!!!
info@mcathurco.com
704.544.8429
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