2008 - Fourth Quarter
It's Tax Time! - November, 2008Get busy!---especially if you think you will owe.
December is the month for tax planning. If you feel you're going to have a major tax liability for 2008, please get the data to us ASAP so we can do the projections and consider options to reduce your taxes.
Remember, you must sell those loser stocks in order to get a tax write-off. Capital losses are limited to $3,000 per year, net of gains and losses.
If you are considering converting your IRA to a ROTH, in most cases, it would be best to wait until 2010 when there is no limit to your other sources of income. NEW
Economic Act of 2008
The new act restored your ability to donate a portion of your IRA to your favorite charity to a maximum of $100,000. If you're over 70 1/2 and want to reduce your required minimum distributions, this is a good way to lower your tax bill for future years.
Also, folks who ride their bicycles to work are now entitled to a $20 per month fringe benefit from their employer, and finally, the sales tax deduction is back.
---David S. Nelson, CPA
Time to Prepare - November, 2008
Loser Stocks -
To take advantage of those loser stocks, you must sell them to claim a loss for 2008. The maximum write-off is $3,000 per year. Any remaining losses will be carried-over to following years until exhausted.
Bad News For IRAs
The Treasury DID NOT suspend the minimum distribution requirement for 2008 from IRAs for those 70 1/2 years of age.
Donations to Charity
There is still time to donate those unwanted items to your favorite charity to lock in a deduction for 2008. Valuation worksheets are available on our Worksheets page at our website. We recommend you take photos of your donations as well as getting receipts.
Timely Tips for: Roth IRAs and Capital Losses
You must sell those loser stocks in order to get a tax write-off. Capital losses are limited to $3,000 per year, net of gains and losses.
If you are considering converting your IRA to a ROTH, in most cases, it would be best to wait until 2010 when there is no limit to your other sources of income.
You may want to hold off on that new hot water heater.
The new tax law provides for a 10% credit for 2009 on energy efficient skylights, windows, outside doors, high efficiency furnaces, water heaters, or central air systems. If you have one of those projects on your mind, you may want to think about waiting to take advantage of the new credit.
Stock Market Losses? ---Make them count.
With stocks at a 5-year low, consider selling and taking your losses now. Capital loss deductions are limited to $3,000 a year, but the balance carries over.
Consider taking a position in a similar investment to lock in the "low" and avoid the 30-day wash rule.
---David S. Nelson, CPA