| Tax Tips |
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President Obama has wasted no time working to ease the current economic crisis. On February 17,
he signed the 2009 American Recovery & Reinvestment Act, which included nearly $300 billion in tax
cuts. So we're writing to summarize how recent tax law changes may affect you. Let's work together
to make sure you don't pay any more in tax than you have to! As always, call us for more information at
888-892-5132.
• President Obama has proposed to restore the 36% and 39.6% tax rates for individuals earning over
$200,000 and families earning over $250,000. These rates would take effect beginning in 2011.
If you expect your 2009 income to be significantly more or less than in 2008 (as may be the case if you
retire, buy or sell a business, or sell significant investments), consider timing income and deductions
for maximum tax advantage.
If you expect your income to go DOWN in 2009, consider delaying income (to subject it to tax at next
year's lower rate) and paying deductible expenses this year, to the extent possible.
If you expect your income to go UP in 2009, consider accelerating income from commissions, bonuses,
and qualified plan withdrawals (to subject it to tax at this year's lower rate), and delaying deductible
expenses until next year.
• The 2009 stimulus act extended the Alternative Minimum Tax (AMT) "fix" to avoid a last-minute
scramble, like the one that created havoc last year, to prevent it from penalizing more middle-income
taxpayers. The AMT exemption amount for the 2009 tax year is now $70,950 for joint filers.
• Remember that the IRS has tightened rules for substantiating charitable gifts. Now you'll need a
canceled check, bank record, or other receipt listing the charity's name, the date of the donation, and
amount of the contribution.
• The IRS has imposed new rules for charitable gifts of property. You can't claim deductions for used
clothing and household items unless they're in "good" condition. You'll need a qualified appraisal for
any item valued at $500 or more, and there are new restrictions on automobile donations. Don't let the
new rules stop you from giving! But be aware that you'll need the right substantiation to sustain your
deduction.
• Contribution limits for 401(k), 403(b), and 457 plans are $16,500 for 2009. The "catch-up" limit for
those age 50 or above will be $5,500.
• The 2009 stimulus act extends and expands tax credits for energy efficient home improvements and
business properties that expired at the end of the 2007. With energy prices fluctuating, it's important
to claim every available break.
• Mileage allowances for using your car are currently 55 cents per mile for business use, 24
cents/mile for medical or moving use, and 14 cents/mile for charitable use.
• The 2009 stimulus act extends the $250,000 Section 179 "first-year expensing" deduction through
2009. President Obama proposes to extend this through 2011.
• As healthcare costs continue to climb, it becomes more important to find tax-advantaged ways to
pay the bill. The Tax Court has issued several decisions clarifying how you might use a Section 105
medical expense reimbursement plan to write off medical bills as business expenses.
• SIMPLE IRA contribution limits are $11,500 for 2009. "Catch-up" contributions for those age 50 or
above remain unchanged at $2,500.
• Tax on long-term capital gains (from property you hold more than 12 months) is generally capped at
15%, even for taxpayers in the top brackets. President Obama has proposed creating a new top
capital gains rate of 20% for individuals earning over $200,000 and families earning over $250,000. If
you have appreciated assets such as securities, real estate, or a business you'd like to sell, consider
doing so before new rates become effective. Check with us first, to discuss if you can use tax-free
exchanges, installment sales, charitable trusts, or similar strategies to minimize or even eliminate tax
on those sales.
• President Obama has proposed to freeze estate-tax rates at 2009 levels. This would mean a "unified
credit" of $3.5 million per person ($7.0 million per couple), with a rate of 45% on assets exceeding that
amount.
Sincerely,
Eric L. Levenhagen, CPA
Any tax advice contained in the body of this presentation was not intended or written to be used, and
cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the
Internal Revenue Code or applicable state or local tax law provisions.
he signed the 2009 American Recovery & Reinvestment Act, which included nearly $300 billion in tax
cuts. So we're writing to summarize how recent tax law changes may affect you. Let's work together
to make sure you don't pay any more in tax than you have to! As always, call us for more information at
888-892-5132.
• President Obama has proposed to restore the 36% and 39.6% tax rates for individuals earning over
$200,000 and families earning over $250,000. These rates would take effect beginning in 2011.
If you expect your 2009 income to be significantly more or less than in 2008 (as may be the case if you
retire, buy or sell a business, or sell significant investments), consider timing income and deductions
for maximum tax advantage.
If you expect your income to go DOWN in 2009, consider delaying income (to subject it to tax at next
year's lower rate) and paying deductible expenses this year, to the extent possible.
If you expect your income to go UP in 2009, consider accelerating income from commissions, bonuses,
and qualified plan withdrawals (to subject it to tax at this year's lower rate), and delaying deductible
expenses until next year.
• The 2009 stimulus act extended the Alternative Minimum Tax (AMT) "fix" to avoid a last-minute
scramble, like the one that created havoc last year, to prevent it from penalizing more middle-income
taxpayers. The AMT exemption amount for the 2009 tax year is now $70,950 for joint filers.
• Remember that the IRS has tightened rules for substantiating charitable gifts. Now you'll need a
canceled check, bank record, or other receipt listing the charity's name, the date of the donation, and
amount of the contribution.
• The IRS has imposed new rules for charitable gifts of property. You can't claim deductions for used
clothing and household items unless they're in "good" condition. You'll need a qualified appraisal for
any item valued at $500 or more, and there are new restrictions on automobile donations. Don't let the
new rules stop you from giving! But be aware that you'll need the right substantiation to sustain your
deduction.
• Contribution limits for 401(k), 403(b), and 457 plans are $16,500 for 2009. The "catch-up" limit for
those age 50 or above will be $5,500.
• The 2009 stimulus act extends and expands tax credits for energy efficient home improvements and
business properties that expired at the end of the 2007. With energy prices fluctuating, it's important
to claim every available break.
• Mileage allowances for using your car are currently 55 cents per mile for business use, 24
cents/mile for medical or moving use, and 14 cents/mile for charitable use.
• The 2009 stimulus act extends the $250,000 Section 179 "first-year expensing" deduction through
2009. President Obama proposes to extend this through 2011.
• As healthcare costs continue to climb, it becomes more important to find tax-advantaged ways to
pay the bill. The Tax Court has issued several decisions clarifying how you might use a Section 105
medical expense reimbursement plan to write off medical bills as business expenses.
• SIMPLE IRA contribution limits are $11,500 for 2009. "Catch-up" contributions for those age 50 or
above remain unchanged at $2,500.
• Tax on long-term capital gains (from property you hold more than 12 months) is generally capped at
15%, even for taxpayers in the top brackets. President Obama has proposed creating a new top
capital gains rate of 20% for individuals earning over $200,000 and families earning over $250,000. If
you have appreciated assets such as securities, real estate, or a business you'd like to sell, consider
doing so before new rates become effective. Check with us first, to discuss if you can use tax-free
exchanges, installment sales, charitable trusts, or similar strategies to minimize or even eliminate tax
on those sales.
• President Obama has proposed to freeze estate-tax rates at 2009 levels. This would mean a "unified
credit" of $3.5 million per person ($7.0 million per couple), with a rate of 45% on assets exceeding that
amount.
Sincerely,
Eric L. Levenhagen, CPA
Any tax advice contained in the body of this presentation was not intended or written to be used, and
cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the
Internal Revenue Code or applicable state or local tax law provisions.
We offer a FREE initial consultation for business owners. Call today at 888-892-5132 and ask for Eric
to arrange a mutually convenient time or fill out the form below and we will contact you within one business day.
to arrange a mutually convenient time or fill out the form below and we will contact you within one business day.
ProWise Tax & Accounting is based in Mason City, Iowa and has services available for clients nationwide. The
services offered transcend accounting to include tax planning, tax preparation, outsourced bookkeeping and
financial management, new business development and incorporation services, and QuickBooks set up and support.
services offered transcend accounting to include tax planning, tax preparation, outsourced bookkeeping and
financial management, new business development and incorporation services, and QuickBooks set up and support.
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| 2009 Tax Outlook |
| ProWise Tax & Accounting, L.L.C. |
| Tax Consultants & Business Advisors Mason City, IA (888) 892-5132 |
| (888) 892-5132 |