Dan McDevitt Wins Annual Referral Contest

 

$500 Grand Prize Awarded 

Each year, Rounsfull & Associates, Ltd. holds its Annual Referral Contest.  The client who refers the most new clients to our firm, for preparation of their individual tax returns, wins a $500 gift certificate to the store of their choice.

2008 Tax Outlook 

April 15 has come and gone, and taxes are probably "off your radar." But now is a great time for tax planning. We're writing with ideas for you to consider as you plan your finances for the rest of the year. Let's work together to make sure you don't pay any more in tax than you have to! As always, call us for more information at 847-832-9470.

• Standard deductions this year are $5,450 for singles and married couples filing separately, $8,000 for heads of households, and $10,900 for joint filers. Taxpayers who are blind or age 65 or older may claim an additional $1,050.
   
• Personal exemptions are now $3,500. 
   
• If you expect your 2009 income to be significantly more or less than in 2008 (as may be the case if you retire, buy or sell a business, or sell significant investments), consider timing income and deductions for maximum tax advantage. 
   
• If you expect your income to go DOWN, consider delaying income (to subject it to tax at next year's lower rate) and paying deductible expenses this year, to the extent possible.   
   
• If you expect your income to go UP in 2009, consider accelerating income from commissions, bonuses, and qualified plan withdrawals (to subject it to tax at this year's lower rate), and delaying deductible expenses until next year.
   
• Ask any member of Congress whether they want to "reform" the Alternative Minimum Tax (AMT), and they'll say "yes." But AMT reform is one of those wish-list items that never seems to get off the ground - and right now, the tax is scheduled to hit more Americans than ever. AMT triggers include high deductions for state and local taxes (including property tax), incentive stock options, high deductions for unreimbursed employee business expenses and miscellaneous itemized deductions, interest income from "private activity" municipal bonds, and even high capital gains.
   
• IRS audit odds are increasing, from 1 in 200 returns for 2000 to 1 in 107 for 2006. But your chance of getting audited is still minimal. Don't take low audit rates as an invitation to cheat! But don't let fear of an audit stop you from taking every legitimate deduction you're entitled to.
   
• Make sure to review your withholding any time your tax picture changes. Do this as soon as possible if you get married or divorced, have a baby, take a new job, get a significant raise, buy or sell your home, or you sell appreciated property.
   
• Remember that the IRS has tightened rules for substantiating charitable gifts. Now you'll need a canceled check, bank record, or other receipt listing the charity's name, the date of the donation, and amount of the contribution.
   
• The IRS has imposed new rules for charitable gifts of property. You can't claim deductions for used clothing and household items unless they're in "good" condition. You'll need a qualified appraisal for any item valued at $500 or more, and there are new restrictions on automobile donations. Don't let the new rules stop you from giving! But be aware that you'll need the right substantiation to sustain your deduction.
   
• Contribution limits for 401(k), 403(b), and 457 plans remain at $15,500, for 2008. The "Catch-up" limit for those age 50 or above remains at $5,000.
   
• Mileage allowances for using your car are 50.5 cents per mile for business use, 19 cents/mile for medical or moving use, and 14 cents/mile for charitable use.
   
• As healthcare costs continue to climb, it becomes more important to find tax-advantaged ways to pay the bill. The Tax Court has issued several decisions clarifying how you might use a Section 105 medical expense reimbursement plan to write off medical bills as business expenses.
   
• SIMPLE IRA contribution limits remain at $10,500, for 2008. "Catch-up" contributions for those age 50 or above are now $2,500.
   
• The annual benefit limit for defined benefit plans is now $185,000, for 2008.
   
• The 2006 "TIPRA" act lets you convert your traditional IRA to a Roth IRA, regardless of your current income, beginning in 2010. In the meantime, you can convert part or all of your account if your adjusted gross income is under $100,000. Please call us if you're interested in a Roth IRA conversion, as this is a complex analysis.
   
• For 2008, taxpayers in the 15% tax bracket or below will enjoy a special 0% tax rate on long-term capital gains. If your taxable income (including those gains) is under $32,550 (single filers) or $65,100 (joint filers), you should qualify. So consider realizing those long-term capital gains in 2008, if it makes good investment sense.
   
• This year's roller-coaster stock market may mean you have paper losses. Consider selling those positions to realize those losses this year. You can use 2008 losses to offset an unlimited amount of 2008 gain, plus up to $3,000 of ordinary income. You can reinvest the proceeds in a similar stock or fund, or even the same security if you wait more than 30 days.
   
• Are you selling appreciated assets such as securities, real estate, or a business? Check with us first, to discuss if you can use tax-free exchanges, installment sales, charitable trusts, or similar strategies to minimize or even eliminate tax on those sales.
   
• House Ways and Means Committee Chair Charles Rangel has said he supports estate-tax reform. While complete repeal looks unlikely in the Democrat-controlled Congress, we may see a compromise bill with a higher permanent unified credit.