Number crunching
Dear Clients:
There is a lot of number crunching going on here. There are very few “simple” tax returns anymore. Having a tax strategy is a necessity in our time even for someone with a modest income. Keeping up with tax changes is a year round endeavor. Here are some reminders and changes to keep in mind for 2009.
Standard Deduction This year, even though you do not itemize; you can claim property tax paid $1000 Joint $500 Single, net disaster losses, and sales taxes paid for purchase of new vehicle after Feb. 16, 2009. Also you may be able to deduct certain fees from your vehicle purchase invoice in Oregon.
Itemizers Don’t forget to claim any deductible charges to your credit card dated in 2009 even though you won’t be billed until January 2010, such as medical expenses and business expenses.
Homebuyer’s Credit 2009 Purchase by May 1, 2010 to get this up to $8000 credit if qualified. Also available up to $6500 to repeat homeowners who have binding sales agreement signed by April 30, 2010 and have lived in old home at least 5 consecutive years out of the 8 years prior to sale. May be limited by AGI.
Education Credit 529 Plan expenses can include computer and internet expenses for 2009 and 2010. Hope credit has been renamed American Opportunity Tax Credit and is now good for 4 years per student. This credit is 40% refundable and will reduce your tax liability. Losses on 529 plans are deductible in the year of final disbursement. Keep all your statements for records of contributions and withdrawls.
Making Work Pay Credit could make you pay more tax for 2009. If you had more that one job you may not have had enough tax taken out of your check because you would have gotten the credit from each employer. Retirees who received $250 will only get $150 more.
Capital Gains exclusion for sale of main home was qualified by living in the home for 2 out of 5 years for the full exclusion up to $500,000 for married or $250,000 for single in 2008. The rules have changed for 2009. If you rented your home you can only exclude gain allocated to the time you actually lived in the home. Years of rental will add to the ratio of unqualified use subject to capital gains tax rates. All years of ownership prior to 2009 will be counted as qualified and excludable. Lower tax brackets of 15% and below pay no capital gain tax in some cases.
Energy Saving Home Improvements 2009 and 2010 you could get credit of 30% up to $1500 max. Check out the list of all eligible improvements you could take advantage of online.
Standard Mileage for 2009 is 55 cents business, 14 charitable, 24 medical/moving. 2010 will be 50, 14, and 16.5, respectively. No deduction without mileage logs. A tip for finding your odometer reading - check your oil change receipt for last January.
Charitable Contributions for cash without receipt are not deductible. Donated items values are available of several websites such as www.salvationarmyusa.com. Take pictures for your tax files. Raffles are considered gambling not charity. Auction items are deductible for the amount you paid that was above the fair market value of the item. Oregon matches many donations through Oregon Cultural Trust. Get their very long list online.
Gifts in 2009 tax free up to $13,000. Up to $26,000 with "gift splitting" between spouses.
401K Contribute up to $16,500 for 2009 and 2010. Individuals over 50 may catch up with $5500. IRA Same $5000 max plus $1000 catch for over 50 years of age. Consider converting to Roth.
Debt Forgiveness is taxable income. Watch for 1099C if you have home equity or credit card reductions that are taxable except in case of Title 11 bankruptcy, insolvency, Qualified farm, or Qualified real property business indebtedness. Not for C corporations
Mortgage Forgiveness Debt Relief Act excludes from taxation up to $2 million of indebtedness was secured by home acquisition.. Available 2007 - 2012.
Federal Audits are stepping up on S-Corporations particularly expenses for travel, meals, auto and distributions in lieu of payroll.
OREGON will adjust your federal taxable income thus increasing your Oregon tax for these:
Homeowner Credit for 2009 reduces federal tax subtraction,
Making Work Pay Credit $400 reduces federal tax subtraction.
$250 Credit for government employees reduces federal tax subtraction.
Sec 179 deduction for Oregon is limited to $125,000.
No Sec 168 Bonus Depreciation.
Deafness is now a severe disability eligible for Oregon tax credit.
Oregon Working Family Child Care Credit may be claimed by custodial parent who pays the childcare expenses without dependency exemption.
Oregon SB690 passed and now allows disclosure of information about delinquent taxpayers to consumer reporting agencies in some cases.
Oregon Tax Credits Sunset Dates can be found online at:
Oregon Measures 66 and 67 will both be retroactive back to January 1, 2009 in an effort to raise revenues in light of deficits unless they are voted down.
Finally, watch for any and all year end statements in the mail; W-2s, 1099s, mortgage and property taxes, charities, as well as all pages of your brokers’ statements. We will need original purchase price of stocks sold. Please take the time to pencil through your organizer. You will be reminded and prompted through this process to get everything needed for Puttman & Teague LLP to complete your tax return as efficiently as possible. New IRS rule require most tax returns to be filed electronically this year. We will again give our clients the option of payment by VISA card.
If you have any questions about the information listed above or any other tax issues, please so not hesitate to call us. We look forward to working with you again this year.
Puttman & Teague LLP
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