|News You Can Use|
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And just a reminder that tax returns can't be filed until January 15th!
Here's the latest edition of Maco & Associates' newsletter, News You Can Use, which brings tax issues to your attention. Today, we're highlighting tax credits, changes, and updates that you should be aware of as April 15th approaches.
|First-Time Homebuyer Update...|
The first-time homebuyer credit is still available
with a maximum credit of $8,000 for
home purchases closed before June 30, 2010. Previous home owners who purchase a
replacement primary residence are eligible for a credit up to $6,500. As of November 6, 2009, the credit must be requested via the new version of Form 5405. If you
elect to file this credit on your 2009 return, you must file a paper return and cannot file electronically!
more information on the benefits of this credit, please visit our blog. There's also more information on irs.gov.
|Roth Conversions in 2010...|
Year 2010 may bring many great things, financially speaking, for your
IRA account. In 2010, everyone will be
allowed to convert his/her IRA account to a Roth IRA. In a traditional IRA, your investment can
grow and taxes are deferred until the money is withdrawn in retirement. If you decide to convert to a Roth IRA, you must pay taxes at the time of conversion on any
investment you made pre-tax. Subsequent contributions are taxed at the time of investment, so you don't have to pay any additional taxes at the time of your retirement.
The difference in 2010 is that there is no longer
an income limit cap for a Roth conversion. Previously, income was capped at
$100,000, eliminating the option to convert from a traditional IRA to a Roth
for many taxpayers. Currently, this cap has been "permanently removed" (as permanent
as any tax code change is)! Taxes must be paid on the conversion, but you may spread it out over two years to defer the tax hit (2011 and 2012); or 100% of the
conversion may be recognized for taxes in 2010. The benefit comes in retirement when you can withdraw your investment
and growth tax-free.
This is a potentially big decision for many of our clients. To help determine if you'll benefit from the conversion, try this Roth vs. Traditional IRA Calculator.
For more information, check out this article.
|Appliance Credit Update...|
New windows? New water heater? New Roof?
Insulation? If you purchased any of these items in 2009 or plan to in 2010,
let's hope they're energy efficient! If they were, you may be eligible for a
tax credit of 30%
(up to $1,500). Check out which household appliances qualify.
If you qualify, submit Form 5695
with your taxes before April 15, 2010.
Save the receipt and Manufacturer's Certificate Statement for your
To read more about what is eligible and to estimate your savings,
see our blog article about the credit.
|Sales Tax Exemption on New Car Purchases...|
Did you purchase a car this year? Between
February 16, 2009
and January 1, 2010? You
eligible for a tax break in April. The
deduction is good for state, local, and excise
taxes for up to $49,500 of
the purchase price
on the vehicle. There
is an income phase-out for this deduction, and it is available whether you
itemize or not. Click here for more information.
Making a charitable contribution keeps getting more and more
difficult, from a tax perspective that is! To receive a tax deduction on such
contributions, several requirements must be met:
So, what you have to remember to receive a deduction is: 1) give
to a qualified organization, 2) itemize on your tax return, and 3) get a receipt or proof of your donation and
deductions on your tax return (1040) on Schedule A.
- The donation
must be made to a qualified organization. Click here to find one.
- Maintain a
record of the donation -- either a bank record or statement from the donee.
- The fair
market value of the donation may be deducted minus any benefits received
(products, meals, etc). Click here to find the fair market value of a donation.
- If your
donation exceeds $500, you must also fill out Form 8283 with your tax return.
- Maco & Associates
As always, we're here year-round to help you make sense of the
numbers. Give us a call at
610-489-7215 or send us an email
any time! We look forward to hearing from you.