Tax Tips

Death and Taxes

Death and taxes are often considered as the "certainties" of life. Well, you can't do much about death. But you can delay it by NOT walking in front of speeding cars or jumping off tall cliffs, etc. But when it comes to taxes, it is entirely possible to avoid taxation blunders and problems. You can postpone, eliminate, or at least lower them through proper planning. Proper planning should include "bouncing" your ideas off a professional BEFORE you plan to implement them.

Here are a few new areas of interest, or TIPS, that you might want to know more about:

IRA Conversions

Good news for Roth IRA conversions for retirees who made too much money before to qualify. The IRS has opened the door for older, wealthier individuals to convert their traditional IRAs into Roth IRAs. As of January 1, 2005, you can now deduct any required distribution from your AGI figure. In many cases, this will allow one to qualify who could not before!
And, starting January 1st, 2010, "cap" limits on AGI income will be eliminated under current law so you can convert large IRA or 401-K rollout accounts much more easily if in a high tax bracket. And, the IRS will let you spread your reporting of the income over a few years, instead of hitting you up all in one year for the taxes due.

Estate Tax

You can look forward to individual estate tax exemption on the first $3,500,000 started on January 1, 2009! And that amount increases on a schedule to a fantastic unlimited exemption in 2010! (Federal Death Tax is repealed for just one year) But if you don't understand the "sunset" clause in the tax bill, you could make drastic mistakes in your estate plan! However, new tax law is possible that may be better yet - no estate death taxes at all! Or, the current estate laws may be repealed and taxes could go up. Either way, getting a professional review is necessary now.

Income Tax

AMT reform or repeal is still not a reality. For many who have "preference items" in deductions, usually associated with running a small business, AMT has increasingly become a problem on your tax return. The Bush administration has a goal to simplify the tax code for you. One thing is for sure, any major change will most likely increase our business substantially! We wish them the best in their attempt. Though a bill was passed late December 2007 to address the increase in the AMT tax, most subject to it will pay at about the same "higher" rate AMT costs, as they did on their 2006 tax returns.
Starting in 2007, your mortgage insurance is now a full itemized deduction on Schedule A. However, if you now have 80% or more equity in your home, you should consider calling us for a review. Procedures exist without refinancing to get this expensive premium removed from your mortgage payment. We can help you in that area. Just remember this only applies to NEW mortgages put into affect in 2007!!!
New tax credits give you up to $8,000 or 10% of purchase price for first time home buyers and now, tax credits also apply for a homeowner who has previously owned a home for 5 years. Contact us for more details or to claim your credit on a tax return or amended return. A tax tip after January 1st, 2010 is to file for the tax credit on your 2009 return, instead of amending later!
Some tax links for your use as well:

All States: www.taxadmin.org/fta/rate/ind_inc.html (Very Handy!)

IRS: www.irs.gov/newsroom/content/0,,id=104608,00.html (Links to IRS Tax Tips)

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