On January 1, 2010, and for the first time in almost 100 years, the United States Tax Code does NOT have a tax on the transfer of wealth at the death of an individual. However, there remains a gift tax on lifetime transfers in 2010 at a maximum rate of 35% (10% lower than in 2009).

How Did This Happen?

The Economic Growth and Tax Relief Reconciliation Act of 2001 (“the Act”) was signed into law by President Bush on June 7, 2001. The Act made many changes to the estate, gift and GST transfer tax system, gradually lowering tax rates and increasing exemption amounts.

Read complete post...

The IRS recently released new Roth IRA conversion rules that provide any person, regardless of income level, with the opportunity to convert their individual IRAs to Roth IRAs in 2010. This conversion may be done by recognizing the entire Roth account value in 2010 or by dividing the income between the 2011 and 2012 tax years. For years after 2010, the Roth conversions will be allowed but will not have the two-year recognition opportunity for 2011 and 2012.

The rules also govern eligible rollover distributions from qualified employer retirement plans to Roth IRAs. An IRS notice (IRB 2009-39) outlines the specific requirements for the conversions and eligible rollovers from employer plans, such as pensions, profit sharing, and 401(k)s to Roth IRAs. The terms are summarized as follows:

Read complete post...

As 2009 closes in just a few days, there are some important tax changes that will help you save money and prepare to file your 2009 tax return in the spring. We have summarized many of the major changes in our blog post, “Tax Planning Strategies & Year-End Considerations” in November, and since it has been one of our most popular posts, we’ve reposted it here and encourage you to review this information again before starting the process for your 2009 tax return.

Read complete post...

As the end of the year approaches, now is the time to evaluate your business and your personal tax strategies. By taking the time to prepare now, using this checklist, you will be able to develop a clearer picture of what your tax picture will look like while there’s still time to maximize current-year savings.

Retirement Planning

Look to maximize tax-deductible retirement plan contributions. The following table provides the maximum amounts that can be deferred under several popular retirement plan options during 2009.

Read complete post...

Every year, the IRS issues new limits for the following year that apply to retirement plan contributions. On October 15th, they announced the cost of living adjustments for 2010 that apply to all the various plans, and for the first time in memory there were virtually no changes from 2009. This also will apply to recipients of Social Security benefits. Below is a brief list of the 2010 limits, noting whether or not there will be an increase applied:

Read complete post...

The current economic climate, with a flagging stock market and depressed asset prices, can be a great time to transfer wealth. Taxpayers can take advantage of reduced asset values to transfer wealth with considerably more future value tax-free than was possible even a year ago. Simply utilizing annual gift tax exclusions ($12,000 in 2008; $13,000 in 2009) and federal lifetime gift exemptions ($1,000,000 in 2008) to transfer assets with decreased current values allows the giver to avoid taxes on the value that gifted assets will regain as economic conditions improve. There are several possible ways to maximize gift giving in current economic conditions.

Read complete post...