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Now is a Good Time for Tax Planning
– November 19, 2009

As the end of the year approaches, tax planning becomes very important. Tax provisions ending in 2009 as well as strategies to reduce taxable income should be considered. The following checklist is a guide to planning for your 2009 taxes.

Individual Tax Provisions Expiring in 2009

moneyEnding in 2009 but are likely to be extended to the year 2010:

  • Extension of the estate tax, with an exemption amount of $3.5 million
  • Extension of the research and development credit
  • Extension of the individual Alternative Minimum Tax "patch"
  • Extension of the first-time homebuyer credit: $8,000 for first-time buyers and $6,500 for current homeowners (must have used the home for 5 of the previous 8 years). Provisions expire April 30, 2010. Recently extended and expanded in the Worker, Homeownership and Business Assistance Act.
  • Longer NOL carrybacks (currently up to 3, 4, or 5 years for eligible small businesses for 2008 or 2009 net operating losses). The election is for either 2008 or 2009 net operating losses, not for both years. Recently expanded in the Worker, Homeownership and Business Assistance Act.

Ending in 2009 and not likely to be extended into future years:

  • Bonus depreciation (both the 50% first-year depreciation and the $8,000 additional first-year depreciation for new vehicles expire in 2009)
  • Required minimum distributions (requirements generally applicable are suspended for 2009)
  • Code Section 179 expensing (The limit for 2009 is the same as the 2008 limit, $250,000 with a threshold for the deduction phased out at $800,000), the 2010 limit is $125,000 with a threshold of $500,000
  • New car purchases (most taxpayers can deduct the general sales tax paid on new vehicles purchased before 2010 as either an additional standard deduction or as an itemized deduction)
  • Additional standard deduction for real property taxes
  • Higher education above-the-line deduction of up to $4,000

 

Business Tax Provisions Expiring in 2009

  • 15-year cost recovery for leasehold and restaurant improvements
  • Enhanced deduction for charitable contributions of food to charitable organizations; also, books and computer equipment to qualifying schools

 

Tax Provision Continuing Through the Year 2010

  • The residential energy property tax credit is 30 percent (the maximum credit is $1,500 for 2009 and 2010)

 

Other Items

Roth IRA Conversions

  • In 2010, the $100,000 AGI limit on Roth IRA conversions is removed

Kiddie Tax

  • The kiddie tax has changed for 2009 and 2010. Children qualify for the kiddie tax if they are a dependents under the age of 19 or full-time students under the age of 24 (a child's allowable investment income amount is $1,900 for 2009)

 

 

Keri Colvin

Keri Colvin
Tax Department
318.429.2095
kcolvin@hmvcpa.com
Keri is a member of the tax department in our Shreveport location. She received her Bachelor of Science in Accounting and Master of Professional Accountancy at Louisiana Tech University in Ruston, LA.

 

 

 

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