Posted by Wally Ross on Fri, Feb 12, 2010
As of January 2010, everyone is eligible to convert a traditional account into a Roth IRA, regardless of income. The taxpayers who were originally shut out by the $100,000 income limit can now take advantage of redeeming their retirement money tax-free.
Roth IRA's are often more popular than Traditional IRA's due to the fact that you pay tax on money before you contribute it, thus avoiding being taxed at distribution (when the tax rates will most certainly be higher). However, if you forsee yourself being in a lower tax bracket at retirement age or expect to withdraw the money in less than 5 years, converting to a Roth IRA may not be beneficial for you. Be sure to consider all factors before deciding if a conversion is best.
Calculate the benefits (if any) of converting to a Roth IRA with our "Roth vs Traditional IRA" calculator.
*Dont forget that it is still not too late to contribue to an IRA for the 2009 tax year. Click here, or call us, for help preparing your 2009 personal tax return.
Posted by Wally Ross on Fri, Jan 22, 2010
Deduction Reminders
With the tax laws changing from year to year, it's easy to lose track of what's deductible this year vs. last year. Be sure not to miss these deductions for your 2009 return:
* New Vehicle Deduction. You can deduct up to $49,500 of the sales tax on the purchase price of a new car.
* Educator's Deduction. If you're a teacher, you can deduct up to $250 for classroom supplies purchased.
* College Deduction. If you or your dependents are in college, don't miss out on deducting tuition and fees.
* Standard Deduction. Additional standard deduction of up to $500 ($1,000 for couples) for real estate taxes paid.
* Choice of deducting sales taxes paid in 2009 or state and local income taxes paid.
Please note - there are most always various restrictions and income limits.
IRA contributions
If you didn't make your IRA contribution in 2009, make it now. You can still contribute in 2010 (until April 15th to be exact) and use this contribution as a deduction on your 2009 tax return.
Tax Returns For Children
Did your children have income in 2009? If so, they may be required to file a 2009 income tax return, too. A child will need to file a 2009 tax return if any of the following apply:
had wages of more than $5,700,
had self-employment earnings over $400, or
had investment income (such as dividends, interest, or capital gains) over $950.
(If your child had both earned and investment income, other thresholds apply)
Don't let your child miss out on their opportunity to receive a refund.
Charitable Contribution Record Keeping
There are strict record keeping requirements for deducting charitable contributions. For cash contributions under $250, you must have a bank record such as a cancelled check, credit card record, or receipt from the charity. For donations of $250 or more, a receipt from the charity must be obtained before filing your return.
Your Rax Refund
If you're among the many taxpayers who get a large tax refund this year, do yourself two favors:
Invest the refund instead of spending it, and
Adjust your 2010 withholding so that your money can be invested rather than giving the government an interest-free loan.
You can track your refund on our website by clicking here.
Extension request
As always, the deadline for filing a 2009 individual income tax return is April 15, 2010. If you cannot file your return on time, be sure to file an extension request with the IRS by this date. If you project that you owe money on your 2009 tax return you must pay it by the April 15 deadline to avoid penalties and interest (yes, even if you have an extension filed). An extension gives you six more months to gather your data, thus your new due-date is October 15, 2010.
Ross Tax & Accounting will gladly file an extension for you. Please contact our office for more information.