Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) December 16, 2009

The newly signed Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) extends three programs that may benefit you:

1. Unemployment Benefits
   
   Unemployment tax benefits to will be extended an additional 14 weeks across the country. In Georgia and in other states where the jobless rate exceeds 8.5 percent, unemployed workers will receive a 20-week extension.
2. Homebuyer Credit
   
   The $8,000 first-time home buyer tax credit will be extended to qualifying principal residences purchased before May 1, 2010, or those closing before July 1, 2010, where a written binding contract was entered into before May 1, 2010.
   
   In addition, qualifying existing homeowners (those who have owned and used the same home as their principal residence for five out of eight last consecutive years) may take a new $6,500 tax credit if they purchase a different home as their primary residence.
   
   Furthermore, the law increases the beginning of the AGI phase out ranges for credit eligibility to $125,000 for individuals and $225,000 for couples filing joint returns. However, for residences purchased after November 6, 2009, no credit is allowed if the purchase price of the residence exceeds $800,000.
3. Five-Year NOL Carryback
   
   For tax years ending after 2007 and beginning before 2010, a taxpayer of any size may elect for one of these years an extended NOL carryback period of 3, 4, or 5 years. Eligible small businesses (with less than $15 million average gross receipts) that elected the extended carryback period for a 2008 tax year may still make this election for a 2009 tax year. An election for a 2008 or 2009 tax year must be made by the due date of the return for the last tax year beginning in 2009.

Please note that the act also increases the penalty for failing to file S Corp or Partnership Returns. Effective for returns for tax years beginning after 2009, the Act increases the penalty for failing to timely file an S corporation or partnership return from $89 per month (maximum 12 months) per owner to $195 per month (maximum 12 months) per owner.

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IRS Suspends Required Minimum Distributions, Permits Rollovers until November 30, 2009 October 20, 2009

The Worker, Retiree and Employer Recovery Act of 2008 waived the minimum distribution requirement for 2009 for IRAs and defined contribution plans (such as 401(k) plans) and allowed certain amounts distributed as 2009 required minimum distributions to be rolled over into an IRA or another retirement plan.

Because the Act was not enacted until December 2008, many plan administrators did not have time to modify their procedures relating to 2009 required minimum distributions to accommodate the new rules and made distributions.

To help participants who may have received required minimum distributions (RMDs) already in 2009, but have been unclear on what they could roll over, IRS Notice 2009-82 extends the usual 60-day rollover period.

Taxpayers who received required minimum distributions (RMD) in 2009 from an IRA, 401(k), profit sharing, pension or similar account have until Nov. 30, 2009, (or within 60 days of the distribution, whichever is later) to roll over the distribution into another plan.

Notice 2009-82 also assures plan administrators that a plan will not be treated as failing to satisfy the requirement that it be operated in accordance with its terms merely because, during the period Jan. 1, 2009, to Nov. 30, 2009, it:

1. Did (or did not) make required minimum distributions to participants;
2. Did (or did not) give beneficiaries the option to receive 2009 required minimum distributions; or
3. Did (or did not) offer a direct rollover option for 2009 required minimum distributions.

Caution: The IRS has not suspended the one-rollover-per-year rule. No more than one IRA distribution will be eligible for rollover relief under Notice 2009-82

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IRS EXTENDS DATE FOR REPORTING FOREIGN ACCOUNTS UNTIL OCTOBER 15, 2009 October 7, 2009

After offering multiple extensions to the deadline for filing 2008 foreign bank account reports (FBARS), the IRS has extended the filing date once more to October 15, 2009, adding that there will be no further extensions.

Each time I share information about these extensions, additional clients come forward. As I value our relationship and do not want you to get caught up in these measures, let me once again share the requirements:

Each U.S. person must file Form TD F 90-22.1, the Report of Foreign Bank and Financial Accounts (FBAR), with the Department of the Treasury if:

1) The person has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country

AND

2) The aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.

The FBAR is not an income tax return and should not be mailed with any income tax returns.

The civil and criminal penalties for non-compliance with the FBAR filing requirements include:

• Civil penalties for a non-willful violation can range up to $10,000 per violation.
• Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation.
• Criminal Penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both.

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Your Flood Damage May be Tax Deductible October 2, 2009

I pray that you, your family and your business were not catastrophically impacted by last month's flooding but if you did incur damage it is not too soon to begin thinking about the implications for your 2009 tax returns.

Recent legislation changed some of the tax rules pertaining to losses resulting from federally declared disasters. The new law removes the 10 percent of adjusted gross income limitation for net disaster losses and allows individuals to claim the net disaster losses even if they do not itemize their deductions. The new law also increases to $500 the amount by which all individuals must reduce their casualty and theft losses for personal-use property. For more info on the new legislation, read: Tax Relief in Disaster Situations.

If your property is not completely destroyed, or if it is personal-use property, the amount of your casualty is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty. The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation. For more information about the basis of property, refer to Topic 703, or Publication 547.

If your business or income-producing property is completely destroyed, the decrease in fair market value is not considered. Your loss is the adjusted basis of the property, minus any salvage value and any insurance or other reimbursement you receive or expect to receive. For more information on determining adjusted basis, see Publication 551.

If your loss deduction is more than your income, you may have a net operating loss. You do not have to be in business to have a net operating loss from a casualty. For more information, refer to Publication 536, Net Operating Losses.

My advice to you? Keep track of all expenses involved in your restoration including any for accommodations you had to make when your property was unreachable or unusable.

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Does Your Clunker Qualify Cash? July 29,2009

On June 24, President Obama, signed legislation aimed at boosting the sale of vehicles at financially struggling U.S. automobile dealerships. The so-called "cash for clunkers" program provides $1 billion in tax-free vouchers to automobile dealers who participate in the new program. The program vouchers will be for either $3,500 or $4,500 depending upon the type of vehicle and the fuel efficiency of the new vehicle. The vouchers will be given to dealers when consumers trade in qualifying old vehicles for the purchase or lease of new vehicles with higher fuel efficiency. To qualify:

• The new vehicle must have a combined fuel economy (CFE) of at least 22 mpg for a passenger auto, 18 mpg for a category 1 truck, and 15 mpg for a category 2 truck.
• For passenger autos, the new vehicle’s CFE must exceed the trade-in vehicle’s CFE by at least 1) 4 mpg for the $3,500 voucher, or 2) 10 mpg for the $4,500 voucher.
• For trucks, the new truck must be more fuel efficient than the trade-in. However, these rules are very complicated. Stayed tuned to Car Allowance Rebate System to view a list qualifying vehicles when one becomes available.
• The vehicle traded in must:
  1. be in drivable condition;
  2. have been continuously insured and registered to the same owner for at least one year prior to the trade;
  3. have been manufactured less than 25 years before the date of the trade;
  4. and 4) have a CFE of 18 mpg or less.

The new vehicle must have a suggested retail price of $45,000 or less and be purchased or leased between July 1 and November 1 of 2009. The dealer must scrap the vehicle traded in except for certain salvaged parts.

Buy a House Now and Get a Tax Refund on Your 2008 Return July 29, 2009

The details of the $8000 first-time homebuyer credit are getting more stringent but are also providing some unique benefits so make sure you follow along.

For qualifying residences purchased in 2009 (prior to December 1, 2009), homebuyers can apply for a tax refund even if they have already filed their 2008 return. This means that you could receive a refund check in 2009.

If you are purchasing a home that is under construction, you must purchase and occupy the home prior to December 1, 2009. It is not sufficient to close on a new home so make sure your builder is on schedule. To qualify for this program, the owner must move into the home no later than November 30, 2009.

For more info, see the IRS Q&A on the First-Time Home Buyers Credit

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Energy & Efficiency Standards of the American Recovery and Reinvestment Tax Act of 2009 July 29, 2009

Prior to the American Recovery and Reinvestment Tax Act of 2009, the credit for qualified energy-efficient home improvements was a maximum lifetime credit of $500. For 2009 and 2010, the Act provides a credit equal to 30% of the cost of qualifying property with a maximum aggregate credit for the 2009 and 2010 of $1,500. The improvement must be installed in or on a dwelling in the U.S. and be owned and used as a principal residence at the time of installation.

For property placed into service after May 31, 2009, it is no longer sufficient to rely upon the Energy Star Label to determine qualifications and the taxpayer needs to retain the manufacturers’ certification as part of their records. See this list of qualifying products.

If you’re considering home improvements that go beyond simply making it more energy efficient towards actually adding equipment to help take advantage of renewable sources of energy, you may be interested to learn of another benefit of the plan.

Qualifying solar water heater, solar electric generating property, geothermal heat pump, or small wind energy property installed in a taxpayer’s residence located in the U.S. may qualify for a credit equal to 30% of the equipment's cost (including onsite labor costs). Before 2009, this credit was capped at $2,000 for solar water heaters, solar electric generating property, and geothermal heat pumps and at $4,000 for small wind energy property but for qualifying property placed in service after 2008 the Act removes the $2,000 and $4,000 caps.

Note! These credits are not subject to AGI phase-outs and are available to offset AMT. Therefore, the credit is available to high income individuals and other taxpayers who are subject to the AMT.

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Still Waiting for an Income Tax Refund? June 25, 2009

Earlier this month, Georgia Tax Commissioner Bart Graham issued this statement explaining the status of overdue income tax refunds. If you missed the TV news in the last few days, you may be interested to hear this update from Graham reported by 11Alive news earlier this week which describes the process they are making and how some tax payers may start earning interest on their refunds.

Convert your IRA into a Roth in 2010 - as a hedge against future tax increases - then pay half the tax in 2011 and the other half in 2012. June 25, 2009

As part of the Tax Increase Prevention and Reconciliation Act enacted in 2006, the federal government is eliminating the $100,000 income limit for Roth conversions. This change is designed to make it easier for people with higher incomes to invest through Roth accounts. The change also enables more retirees-who rolled over their holdings from 401(k)s and other workplace savings plans into IRAs-to convert to Roths. Of course when you make the conversion you will incur a tax liability.

For a primer on how to do this successfully, and take advantage of the provision that allows you to spread your taxes out over two years, check out this explanation published in last Saturday's edition of the Wall Street Journal Personal Journal.

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Changes in NOL Laws May Benefit Taxpayers: May 6, 2009

A key provision in the new law is a temporary extension of the carryback period for certain net operating losses (NOLs), which allows small businesses to carry back NOLs up to five years, rather than the usual two years.

To qualify for the extended carryback period, two conditions must be met:

1. it only applies to 2008 NOLs, and
2. it only applies to small businesses, defined as those with gross receipts of $15 million or less.

HOW DO TAXPAYERS BENEFIT
In order to take advantage of the tax incentives, taxpayers should follow a two-phase planning strategy:

• First, they need to maximize 2008 expenses to carry back for the extended 5-year period. This can be accomplished by having a Cost Segregation study performed, in conjunction with the use of bonus depreciation and the Section 179 expensing provisions.
• Second, evaluate the tax paid in years two through five to determine the maximum benefit from the carryback - given the marginal tax rate and overall tax position of the taxpayer.

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IRS Extends Net Operating Loss Carryback for Small Biz: April 8, 2009

The Internal Revenue Service announced last month that small businesses with deductions exceeding their income in 2008 can use a new net operating loss (NOL) tax provision to get a refund of taxes paid in prior years.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a NOL in 2008 to elect to offset this loss against income earned in up to five prior years.

Typically, an NOL can be carried back for only two years. The IRS released legal guidance in Revenue Procedure 2009-19 outlining specific details. Depending on your individual situation, some taxpayers will be required to make the election to use this special carryback by April 17, 2009.

Addition info is available in this IRS Q&A or the original announcement.

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IRA Required Minimum Distributions Suspended for 2009: February 25, 2009

As you are all most likely aware, former President Bush signed the H.R. 7237 Workers, Retiree and Employer Recovery Act of 2008 late last year. Under the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), IRA participants who are required to take a minimum distribution will not be required to do so in 2009. This bill, signed into law on December 23rd, applies to investors age 70 1/2 or older, as well as beneficiaries of IRAs, and entitles them to a temporary waiver of their required minimum distribution (RMD) for 2009 only.

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