Gelman, Rosenberg & Freedman, CPAsYear-End Tax Planning Seminar
Presented By:Walter Deyhle, CPA, CFP, ABV, CM&AA
Where Personal Attention Will Never Become Obsolete!
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Rules• No throwing things!• No question is unimportant!• Do not hold questions!• Try not to be political!• Turn off phones, etc.
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Our Process• Tax organizers• E-filing• Copies of returns• Portal (coming soon)
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News Affecting Taxes
• Deficit > $1.4 trillion• Bush tax cuts expire 12/31/2010• Funding for War in Iraq & Afghanistan• Funding for Health Care reform
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Federal Expiring Provisions
Federal Expiring Provisions (cont’d)
12/31/2009 IRC Section
Waiver of minimum required distribution rules for certain retirement plans
401(a)
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Federal Expiring Provisions (cont’d)12/31/2010 IRC Section
Reduced capital gain and qualifying dividend rates
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• Lowest tax rate to increase from 10% to 15%• Top tax rate to increase from 35% to
39.6%
Federal Expiring Provisions (cont’d)
12/31/2010 IRC Section
Personal energy property credit
25C(g)
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Estate & Gift Tax
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Estate Tax Basics• Unified gift & tax system• Current exclusion $3.5M per person• Annual gifting of $13,000• Exclusion for education and medical
payments• Step–Up Basis• Top tax rate 35%
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Roth IRA
Convert to a ROTH IRA?TRADITIONAL ROTH
Tax Deductible No Tax Deduction
Qualified Distributions Taxable
Qualified Distributions Tax FreeTax Deferred Growth Tax Free Growth
Required Minimum Distribution
No Required Minimum Distribution
Most Effective When Tax Rate Lower at Retirement
Most Effective When Tax Rate Higher at Retirement
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• Do not need IRA to pay tax• Expect to be in a higher tax bracket
in retirement• Do not need IRA in retirement• Expect to pay estate taxes
When To Convert
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• No required minimum distributions• Pass to heirs• Heirs have required RMD
When To Convert (cont’d)
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Housing Credit
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Housing Credit• Worker, Homeownership, and Business
Assistance Act of 2009• Income limit increased $125,000 / $225,000• P&S by 4/30/10 – close before 7/1/10
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Housing Credit (cont’d)
• Long-time resident• 5 consecutive years / last 8• lesser of 10% or $6,500• Homes up to $800,000
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Residential Energy Credit
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Residential Energy Credit• Removes individual item caps• Increases limit to $1,500 • Increases from 10% to 30%• Prior $500 not counted• For 2009 & 2010 installations• Required energy efficiency increased
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House Health Act
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House Health Act• Employers with over $750,000 of
payroll must provide 72.5% single or 65% family • Individual required to get insurance, if
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House Health Act (cont’d)
• 5.4% surtax $500,000/$1,000,000
effective 2011
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2011
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Rates for the “Rich”• Rich is:•$250,000 MFJ•$200,000 Single• 35% to 39.5%• 33% to 36% • Capital gains & qualified dividends to 20%• Possible top marginal rate 45%
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Other Items Aimed At “Rich”
• Reinstate 3% phase-out of itemized
deductions• Reinstate 3% phase-out of exemptions
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Kiddie Tax• $950 allowance• Earned income taxed at child’s rate• $1,900 of investment income taxed
at child’s rate• Excess investment income taxed at
parent’s rate
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Kiddie Tax (cont’d)
• Applies to children age 18 and younger
and “children” age 23 and younger who are full-time students
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Other Items of Interest• Sale of residence rules• Capital gain/loss rules• Mortgage interest rules• Life settlements
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Alternative Minimum Tax
4550 Montgomery Avenue, Suite 650 NBethesda, MD 20814
301-951-9090 • www.grfcpa.com
Walter Deyhle, CPA, CFP, ABV, CM&AAGelman, Rosenberg & Freedman, [email protected]
Where Personal Attention Will Never Become Obsolete!30
Questions?
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