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Gelman, Rosenberg & Freedman, CPAs Year-End Tax Planning Seminar. Presented By: Walter Deyhle, CPA, CFP, ABV, CM&AA. Where Personal Attention Will Never Become Obsolete!. Rules. No throwing things! No question is unimportant! Do not hold questions! Try not to be political!
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Gelman, Rosenberg & Freedman, CPAsYear-End Tax Planning Seminar Presented By: Walter Deyhle, CPA, CFP, ABV, CM&AA Where Personal Attention Will Never Become Obsolete!
Rules • No throwing things! • No question is unimportant! • Do not hold questions! • Try not to be political! • Turn off phones, etc.
Our Process • Tax organizers • E-filing • Copies of returns • Portal (coming soon)
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
Federal Expiring Provisions (cont’d) • Lowest tax rate to increase from 10% to 15% • Top tax rate to increase from 35% to 39.6%
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%
Convert to a ROTH IRA? Tax Deductible No Tax Deduction Qualified Distributions Taxable Qualified Distributions Tax Free Tax Deferred Growth Tax Free Growth Required Minimum Distribution No Required Minimum Distribution Most Effective When Tax Rate Higher at Retirement Most Effective When Tax Rate Lower at Retirement
When To Convert • 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 (cont’d) • No required minimum • distributions • Pass to heirs • Heirs have required RMD
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
Housing Credit (cont’d) • Long-time resident • 5 consecutive years / last 8 • lesser of 10% or $6,500 • Homes up to $800,000
Residential Energy Credit
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
House Health Act • Employers with over $750,000 of • payroll must provide 72.5% single or • 65% family • Individual required to get insurance, if • not 2.5% tax
House Health Act (cont’d) • 5.4% surtax $500,000/$1,000,000 • effective 2011
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%
Other Items Aimed At “Rich” • Reinstate 3% phase-out of itemized • deductions • Reinstate 3% phase-out of exemptions
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
Kiddie Tax (cont’d) • Applies to children age 18 and younger • and “children” age 23 and younger • who are full-time students
Other Items of Interest • Sale of residence rules • Capital gain/loss rules • Mortgage interest rules • Life settlements
Questions? 4550 Montgomery Avenue, Suite 650 N Bethesda, MD 20814 301-951-9090 • www.grfcpa.com Walter Deyhle, CPA, CFP, ABV, CM&AA Gelman, Rosenberg & Freedman, CPAs wdeyhle@grfcpa.com Where Personal Attention Will Never Become Obsolete!