Happy Holidays 2009

Happy Holidays!

Hi, I am Tynisa Gaines, the owner of Tynisa Gaines, EA LLC. Tynisa Gaines EA, LLC is going green. This year, all tax returns will be emailed to the client free of charge in an adobe document. This will save paper and ink. Copies of federal and state returns will cost $10/$5 respectively. The information below applies to 2009 tax year unless otherwise stated.

Individual Tax Returns

If you normally file a 1040, 1040A, or 1040X the following tax changes may apply to you:

It’s not too late… You can still save on your taxes if you buy a house, car, or energy efficient appliance.

The Homebuyer credit has been extended with the following rules:

* You must enter into contract on a principal residence priced less than $800,000, by 4/30/10 and close by 6/30/10.

* You can claim it on 2009 or 2010 tax return.

*If you have lived in a home 5/8 years ending on Nov 6, 2009, you may qualify for $6500 toward the purchase of a new principal residence.

*Income limits have increased to $225,000, up from $125,000.

Install energy Star qualified insulation, windows, doors, roofing, heating and cooling systems, water heaters or fuel-efficient stoves in your primary residence and you may be able to receive a federal tax credit for up to 30% of the cost; up to $1,500 for products put in service in 2009 & 2010. Not all products qualify. Read the rules at energystar.gov/taxcredits.

Taxpayers who buy a qualifying new motor vehicle this

year after Feb. 16 can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price. Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.

The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

Not in the market to spend money? You can still donate to charity. The rules for charitable donations changed in 2007 and are still enforced.

*Clothing and household items must be in good or better condition.

Any item over $500 must have an appraisal, and the condition is irrelevant.

*Monetary items require a bank record or written record from the charity including the name of the charity, the date, and the amount of the contribution.

*Deductions count during the year they are made. Any donations made by 12/31 will count for 2009.

*Make sure you donate to a qualified charity, if in doubt, ask for proof, or search on irs.gov.

*Charitable donations are not tax deductions for everyone. If your standard deduction is more than the amount of charitable contributions, plus taxes, or mortgage interest, then more than likely you don’t itemize, and therefore are unable to take a deduction on your tax return.

Traditional IRA’s

The maximum contribution for 2009 is $5000 and $6000 if you are over 50. You must take money out, (minimum required distribution) once you turn 70 ½ and you will pay income taxes on that money at your current rate. If you take money out prior to age 59 ½, you will have to pay tax plus an additional 10 percent penalty if you don’t qualify for an exception.

IRA changes: For 2009 only, you don’t have to take minimum required distributions if you are 70.

ROTH IRA’s-

You don’t have to withdraw the money at 70 ½, and you can pass the account to heirs. You can withdraw contributions with no tax and no penalty if you are over 59 ½ or meet a requirement for a qualified distribution, such as purchasing a home.

Do you have a 401k or Traditional IRA that you wish was a ROTH IRA, but could not convert because your income was over $100,000? The income ceiling has been removed for 2010.

As of January 1, 2010, you can convert to a ROTH IRA however you will pay income taxes on the amount of money that you can convert. The good news is that you can split the income on your 2011 and 2012 returns if it’s a large amount.

Who would benefit from this?

Some who expects their assets to increase or tax rate to increase significantly into retirement.

Someone who can take an increase in income hit now, rather than later. Maybe you or your spouse was unemployed this year, or you expect income to decrease in the next two years and you can absorb the tax hit now.

I suggest that you keep one of each and if you don’t have one, you should open one of each. Who knows what the upcoming tax laws may benefit you in the future.

Beginning Jan,2010, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven;
• 16.5 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.

Do you have a business related question or need help with your books?

Email me mstyea@yahoo.com.

That’s all for now. Thanks for reading! If there is a particular tax subject you’d like to see in the next issue, let me know!

Do you have a tax question? Email me at mstyea@yahoo.com