Beginning in 2010, the rules for conversions of traditional IRA money to a Roth IRA are changing by eliminating the MAGI limitations and hence, making more investors eligible to convert their traditional IRAs to Roth IRAs.
However, look before you leap....just because you can convert to a Roth IRA doesn't necessarily mean that you should.
First of all, you need to evaluate if you should convert the traditional IRA to Roth. There are various factors to consider including the age to retirement, your income source at retirement, your need for funds, tax rates in future and appreciation expected in these accounts.
If you are already retired and over 59 1/2 years than you can take distribution over a period of time and spread the taxes over a number of years.
Higher your tax bracket, the more tax you will have to pay on conversion. But if you expect taxes to go up in the long term, conversion will make sense as you may have to pay a higher tax rate on these distributions later.
Also to note is the special tax treatment for Roth IRA conversions available for 2010 which allows taxpayers to spread the taxes due on the conversion over two years and thus making the tax burden much easier to handle by requiring only one-half of the taxes to be paid during 2011 and the other half of the Roth conversion taxes to be paid in 2012.
Feel free to contact for a detailed evaluation considering your financials facts and long term goals.
Friday, July 30, 2010
Tuesday, July 27, 2010
One-Time Special Filing Relief Program for Small Charities
Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.
The relief announced is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
The relief announced is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
Friday, July 23, 2010
Fees for Preparer Tax Identification Numbers
IRS released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN).
The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated.
Click the link to find more details on Oversight of Federal tax return preparation
The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated.
Click the link to find more details on Oversight of Federal tax return preparation
Wednesday, July 21, 2010
Estate tax to return in 2011
Estate tax is repealed for the tax year 2010. So everyone inheriting in 2010 can look forward to a hefty inheritance due to a big estate tax saving.
Good things don't last long and speculations are on that federal estate tax will come back. Only fact unknown is what will be the exemption amount.
Many believe that the the Federal estate tax is scheduled to return on Jan. 1, 2011, imposing a levy of up to 55% on estates valued at more than $1 million. However, a $1 million exemption would affect a lot of families considering the fact that cost of living and property values have gone up from what it was 8 to 10 years ago.
Considering the current economic conditions it seems reasonable to enact the estate tax to its 2009 level, with a $3.5 million exemption and a 45% rate on assets that exceed that amount, But, whether it will be approved at this level is what the future will tell....
Good things don't last long and speculations are on that federal estate tax will come back. Only fact unknown is what will be the exemption amount.
Many believe that the the Federal estate tax is scheduled to return on Jan. 1, 2011, imposing a levy of up to 55% on estates valued at more than $1 million. However, a $1 million exemption would affect a lot of families considering the fact that cost of living and property values have gone up from what it was 8 to 10 years ago.
Considering the current economic conditions it seems reasonable to enact the estate tax to its 2009 level, with a $3.5 million exemption and a 45% rate on assets that exceed that amount, But, whether it will be approved at this level is what the future will tell....
Small Business Health Care Tax Credit
Small businesses can avail of the health care tax credit beginning 2010.
Eligibility.
To be eligible for the tax credit-
• A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify.
Maximum Amount.
The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
Phase-out.
The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Eligibility.
To be eligible for the tax credit-
• A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify.
Maximum Amount.
The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
Phase-out.
The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Wednesday, July 14, 2010
2010 Florida Tax Amnesty Program
Florida's tax amnesty program is an opportunity for taxpayers to voluntarily pay overdue taxes with no penalty and reduced interest. Florida's Tax Amnesty Days start July 1 and end on September 30, 2010.
All taxes administered by the Department of Revenue are eligible, except unemployment tax and Miami-Dade County Lake Belt Fees.
Taxpayers eligible for amnesty are ones with liability for tax, penalty, or interest due before July 1, 2010 and:
•have completed a Tax Amnesty Agreement.
•have liability not already covered by a settlement or payment agreement.
•are not under criminal investigation, indictment, information, or prosecution regarding a Florida revenue law.
•are not under a pretrial intervention or diversion program, probation, community control, or in a work camp, jail, state prison, or another correctional system regarding a Florida revenue law.
All taxes administered by the Department of Revenue are eligible, except unemployment tax and Miami-Dade County Lake Belt Fees.
Taxpayers eligible for amnesty are ones with liability for tax, penalty, or interest due before July 1, 2010 and:
•have completed a Tax Amnesty Agreement.
•have liability not already covered by a settlement or payment agreement.
•are not under criminal investigation, indictment, information, or prosecution regarding a Florida revenue law.
•are not under a pretrial intervention or diversion program, probation, community control, or in a work camp, jail, state prison, or another correctional system regarding a Florida revenue law.
2010 Sales Tax Holiday
Just in time for Back to School Shopping.....
Florida law directs that no sales tax or discretionary sales surtax will be collected on sales of books, clothing, footwear, and certain accessories selling for $50 or less, or on certain school supplies selling for $10 or less. This three-day tax exemption is in effect from 12:01 a.m., Friday, August 13, 2010, through midnight, Sunday, August 15, 2010.
The sales tax exemption applies to each eligible book or item of clothing selling for $50 or less and to each eligible school supply item selling for $10 or less. The exemption will still apply no matter how many items are sold on the same invoice to a customer as the limit is applicable on a per item basis.
Florida law directs that no sales tax or discretionary sales surtax will be collected on sales of books, clothing, footwear, and certain accessories selling for $50 or less, or on certain school supplies selling for $10 or less. This three-day tax exemption is in effect from 12:01 a.m., Friday, August 13, 2010, through midnight, Sunday, August 15, 2010.
The sales tax exemption applies to each eligible book or item of clothing selling for $50 or less and to each eligible school supply item selling for $10 or less. The exemption will still apply no matter how many items are sold on the same invoice to a customer as the limit is applicable on a per item basis.
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