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
Tuesday, December 29, 2009
Tuesday, December 22, 2009
Twas The Night Before Christmas...
We're not quite there yet, but we are just a few short days away. As such, we are going to take a pause from tax planning this week to wish everyone out there a Happy Holiday. As many of us are preparing to travel this week and weekend, please take heed to travel safely and with patience and kindness to your fellow road (and/or air) warriors. As many wise folks out there take time to sing in their best holiday voices every single year, "Tis the season to be jolly".
Happy Holidays!!!
P.S. We just couldn't help ourselves... Next week is the last week for many important 2009 tax planning initiatives. Take the time to call your CPA and see what you need to have done before the clock strikes midnight on New Year's Eve.
info@mcarthurco.com
704.544.8429
Happy Holidays!!!
P.S. We just couldn't help ourselves... Next week is the last week for many important 2009 tax planning initiatives. Take the time to call your CPA and see what you need to have done before the clock strikes midnight on New Year's Eve.
info@mcarthurco.com
704.544.8429
Tuesday, December 15, 2009
A Few More Tips for the End of the Year
The end of the year is quickly approaching and as many of us become distracted by the multitude of activities associated with the holiday season, some important financial decisions can fall between the cracks. Over the last several weeks, we've tried to emphasize the importance of looking at the various credits and deductions available to you and implementing them into your planning with the help and advice of your CPA. Today, we're going to focus on a few last matters for your 2009 planning.
Let us first highlight some unique opportunities available to businesses in the current tax climate. If you are a business considering the purchase of a business vehicle that would be subject to the 280F depreciation limitations, you can receive up to an additional $8,000 in depreciation deductions if the vehicle is acquired AND placed in service by the end of the 2009 calendar year. Contact your accountant to further discuss what vehicles may qualify and if this plan of action makes sense for you.
Next, if you are an S Corp who found yourself in the position of repurchasing your own debt for less than the adjusted issue price or you had all or a portion of your indebtedness forgiven, you can elect to defer the income for 4 years and then report the income over the subsequent 5 years. Additionally, if the taxpayer is bankrupt or insolvent, then all or a portion of the income realized from the repurchase or forgiveness of business debt may be excluded.
Now, moving to the individual, if you found yourself in the tough position of claiming unemployment pay this year, please keep in mind that you can exclude up to $2,400 from your federal income taxation for 2009 only. Additionally, if you did not elect to have withholding taken from your unemployment payments, it could create an unexpected surprise come tax time. Please consult your CPA if you feel this may be an issue for you.
A classic end of year tax planning tip has always been to bunch your itemized deductions, such as property tax payments, into the current year. This tip still holds true in 2009 for those taking itemized deductions. However, non-itemizers can also get a boost to their 2009 Standard Deduction by claiming an additional "Standard Deduction" amount for state and local property taxes you pay. This deduction is limited to the lesser of $1,000 filing jointly ($500 if filing single) or the actual real estate taxes you paid. This deduction does not help those of you out there who take itemized deductions. However, if you are planning to take a Standard Deduction in 2009 and you are holding a current property tax bill that will help you meet the $1,000 cap, then be sure to pay that bill before the end of 2009 to maximize this additional "Standard Deduction" opportunity.
As we move into next week, we are going to shift our focus from the End of the Year planning into a mode where we start planning for 2010 and beyond. First up on our list is to tackle issues and opportunities related to the new version of the First Time Homebuyers Credit.
info@mcarthurco.com
704.544.8429
Let us first highlight some unique opportunities available to businesses in the current tax climate. If you are a business considering the purchase of a business vehicle that would be subject to the 280F depreciation limitations, you can receive up to an additional $8,000 in depreciation deductions if the vehicle is acquired AND placed in service by the end of the 2009 calendar year. Contact your accountant to further discuss what vehicles may qualify and if this plan of action makes sense for you.
Next, if you are an S Corp who found yourself in the position of repurchasing your own debt for less than the adjusted issue price or you had all or a portion of your indebtedness forgiven, you can elect to defer the income for 4 years and then report the income over the subsequent 5 years. Additionally, if the taxpayer is bankrupt or insolvent, then all or a portion of the income realized from the repurchase or forgiveness of business debt may be excluded.
Now, moving to the individual, if you found yourself in the tough position of claiming unemployment pay this year, please keep in mind that you can exclude up to $2,400 from your federal income taxation for 2009 only. Additionally, if you did not elect to have withholding taken from your unemployment payments, it could create an unexpected surprise come tax time. Please consult your CPA if you feel this may be an issue for you.
A classic end of year tax planning tip has always been to bunch your itemized deductions, such as property tax payments, into the current year. This tip still holds true in 2009 for those taking itemized deductions. However, non-itemizers can also get a boost to their 2009 Standard Deduction by claiming an additional "Standard Deduction" amount for state and local property taxes you pay. This deduction is limited to the lesser of $1,000 filing jointly ($500 if filing single) or the actual real estate taxes you paid. This deduction does not help those of you out there who take itemized deductions. However, if you are planning to take a Standard Deduction in 2009 and you are holding a current property tax bill that will help you meet the $1,000 cap, then be sure to pay that bill before the end of 2009 to maximize this additional "Standard Deduction" opportunity.
As we move into next week, we are going to shift our focus from the End of the Year planning into a mode where we start planning for 2010 and beyond. First up on our list is to tackle issues and opportunities related to the new version of the First Time Homebuyers Credit.
info@mcarthurco.com
704.544.8429
Monday, December 7, 2009
Every Dollar Counts - Take Advantage of Available Tax Credits
There are a number of tax credits out there, some of which can and should apply to your situation and others that just won't work for you. We have highlighted a few below that are new onto the scene.
"Making Work Pay" Tax Credit: For 2009 and 2010, those with earned income may qualify for this credit at an amount of $800 for joint filers and $400 for single filers. This credit is phased out as your Modified AGI increases from $150,000 to $190,000 if married filing jointly ($75,000 to $95,000 on a single return). This tax credit is different from last year's economic stimulus plan in that instead of receiving a rebate check, the IRS has reduced the federal income tax withholding by the amount of the credit. Therefore, your 2009 take-home pay has been increased by the amount of the credit. Since the credit is built into the withholding calculations, it could result in your withholding being less than your taxes due. This situation becomes more likely if both you and your spouse are employed and your combined income is above the phase-out levels or you have two jobs and both employers are reducing your withholding. If you fit this criteria, please contact your CPA to determine whether you need to increase your 2009 withholding to avoid a penalty.
Hybrid Vehicle Credit: If you have decided to "go green" this year and purchased a hybrid vehicle, then you may be eligible for a tax credit, and for the first time, this tax credit is allowed against AMT. There are phase-out rules per manufacturer, so please check out the updated list of the credit status of all hybrid vehicles: http://http//www.irs.gov/businesses/corporations/article/0,,id=203122,00.html
If you purchased a hybrid vehicle and need help determining your eligibility, please contact your CPA.
Please see the below links for further tax credits that may be available to you, and as always, if you are looking for help in your tax planning, please contact us.
Foreign Tax Credit http://http//www.irs.gov/publications/p514/index.html
Credit for Child Care & Dependent Care Expenses http://http//www.irs.gov/publications/p503/index.html
Education Tax Credits http://http//www.irs.gov/publications/p970/index.html
Credit for the Elderly or Disabled http://http//www.irs.gov/publications/p524/index.html
Retirement Savings Contribution Credit http://http//www.irs.gov/pub/irs-pdf/p4703.pdf
Earned Income Credit http://http//www.irs.gov/publications/p596/index.html
Empowerment Zone & Renewal Community Employment Credit http://http//www.irs.gov/publications/p954/index.html
In addition to the above credits, we want to talk about one more planning opportunity with you today, and that is how to plan with the current zero percent capital gains tax rate. This opportunity started in 2008 and will be available through 2010. Long-term capital gains and qualified dividends that would be otherwise be included in the 15% or below ordinary income tax bracket are taxed at zero percent if realized in 2009 or 2010. For 2009 taxpayers filing jointly who have W-2 income up to $67,900 can take advantage of the zero percent rate. If you have been historically at a higher rate, but find yourself between jobs, recently retired, or have higher than normal business deductions, please be aware of this opportunity and speak with your CPA to formulate an end of year plan.
Come back next week for more insight on how to maximize your tax planning for the end of this year and looking forward to 2010. We even have a tip out there for those of you that file with a standard deduction!
704.544.8429 info@mcarthurco.com
"Making Work Pay" Tax Credit: For 2009 and 2010, those with earned income may qualify for this credit at an amount of $800 for joint filers and $400 for single filers. This credit is phased out as your Modified AGI increases from $150,000 to $190,000 if married filing jointly ($75,000 to $95,000 on a single return). This tax credit is different from last year's economic stimulus plan in that instead of receiving a rebate check, the IRS has reduced the federal income tax withholding by the amount of the credit. Therefore, your 2009 take-home pay has been increased by the amount of the credit. Since the credit is built into the withholding calculations, it could result in your withholding being less than your taxes due. This situation becomes more likely if both you and your spouse are employed and your combined income is above the phase-out levels or you have two jobs and both employers are reducing your withholding. If you fit this criteria, please contact your CPA to determine whether you need to increase your 2009 withholding to avoid a penalty.
Hybrid Vehicle Credit: If you have decided to "go green" this year and purchased a hybrid vehicle, then you may be eligible for a tax credit, and for the first time, this tax credit is allowed against AMT. There are phase-out rules per manufacturer, so please check out the updated list of the credit status of all hybrid vehicles: http://http//www.irs.gov/businesses/corporations/article/0,,id=203122,00.html
If you purchased a hybrid vehicle and need help determining your eligibility, please contact your CPA.
Please see the below links for further tax credits that may be available to you, and as always, if you are looking for help in your tax planning, please contact us.
Foreign Tax Credit http://http//www.irs.gov/publications/p514/index.html
Credit for Child Care & Dependent Care Expenses http://http//www.irs.gov/publications/p503/index.html
Education Tax Credits http://http//www.irs.gov/publications/p970/index.html
Credit for the Elderly or Disabled http://http//www.irs.gov/publications/p524/index.html
Retirement Savings Contribution Credit http://http//www.irs.gov/pub/irs-pdf/p4703.pdf
Earned Income Credit http://http//www.irs.gov/publications/p596/index.html
Empowerment Zone & Renewal Community Employment Credit http://http//www.irs.gov/publications/p954/index.html
In addition to the above credits, we want to talk about one more planning opportunity with you today, and that is how to plan with the current zero percent capital gains tax rate. This opportunity started in 2008 and will be available through 2010. Long-term capital gains and qualified dividends that would be otherwise be included in the 15% or below ordinary income tax bracket are taxed at zero percent if realized in 2009 or 2010. For 2009 taxpayers filing jointly who have W-2 income up to $67,900 can take advantage of the zero percent rate. If you have been historically at a higher rate, but find yourself between jobs, recently retired, or have higher than normal business deductions, please be aware of this opportunity and speak with your CPA to formulate an end of year plan.
Come back next week for more insight on how to maximize your tax planning for the end of this year and looking forward to 2010. We even have a tip out there for those of you that file with a standard deduction!
704.544.8429 info@mcarthurco.com
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