Tax Central

We are dedicated to keeping clients abreast of the latest tax law changes, planning strategies and vital tax-related information. This section includes a library of timely articles, due date reminders and much more. The articles are categorized by subject matter, which can be accessed from the links.
Click on your topic of interest and find a wealth of information.

NEW TAX LAW & PROVISIONS FOR 2010 & BEYOND

Congress and the Administration are struggling to get the economy back on track and have passed new or extended old tax provisions that they feel will help stimulate the economy. There are also provisions that were in prior legislations that are just taking effect. The new administration has vowed to quickly provide more stimulus incentives right after taking office in January of 2009, so you may wish to revisit the articles from time to time during the year. This section includes the more prominent changes affecting individuals and small businesses in 2010 and later years.

How Will the Health Care Bill Affect Your Taxes?: On March 23, 2010, President Obama signed into law the new health care legislation. The legislation will affect virtually every individual in one way or another and will significantly impact tax returns in the future. The following overview of the tax-related...
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New Employee Hiring Incentives: The “Hiring Incentives to Restore Employment Act of 2010,” more commonly referred to as the HIRE Act, was passed by Congress and recently signed into law by the President. The Act provides employers with incentives to hire unemployed individuals....
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Big Break for Adoptive Parents: As part of the Health Care Legislation passed earlier this year, the credit for expenses of adopting a child was increased and made refundable. Prior to this change, the credit was non-refundable and could only be used to reduce the adoptive parent’s...
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Big Break for Self-Employed Health Insurance Deduction: Background - A self-employed individual (or a partner or a more-than-2%-shareholder of an S corporation) can deduct as an above-the-line expense 100% of the amount paid during the tax year for medical insurance on behalf of himself, his spouse and his...
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Employer Tax-Free Medical Benefits Available to Children Under Age 27: As a result of changes made by the recently enacted Affordable Care Act, health coverage provided for an employee's children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010. Generally, under pre-Act law, to be...
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Hitting the Restart Button on RMDs in 2010: For 2009, Congress suspended Required Minimum Distributions (RMDs) from IRAs and other qualified retirements accounts for taxpayers age 70½ and older, giving their retirement accounts a chance to recover from the market crash of 2008. This suspension...
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Small Employer Simple Cafeteria Plans: For years beginning after Dec. 31, 2010, small employers (average of 100 or fewer employees on business days during either of the two preceding years) may provide employees with a “simple cafeteria plan.” (Code Sec. 125(j)) Under such a plan,...
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Long-Range Tax Planning Clouded: Long-range income-tax planning for individuals has always been challenging, what with the steady stream of changes and last minute action by Congress. This year, it goes to an all-new level taking into account the sunset provisions for many current benefits...
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2010 Brings Increased Deduction for Domestic Production Activities: The domestic production deduction was created to encourage manufacturing and production within the U.S., and it provides a substantial business deduction equal to 9% (up from 6% in 2009) of the lesser of:(1) the taxpayer’s net income from qualified...
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Expensing Limits Boosted For 2010: Generally, taxpayers can elect under Sec. 179 to expense the cost of business machinery and equipment placed in service during the tax year, instead of depreciating it over a number of years. As part of the stimulus legislation, these amounts had been...
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Advanced Lean-Burn Technology Vehicle Credits: 2010 is the final year for the advanced lean-burn technology motor vehicle tax credit. Advanced lean-burn technology vehicles are passenger cars or light trucks with an internal combustion engine designed to operate primarily using more air than is...
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Inherited Basis in 2010: Legislation enacted nearly 10 years ago repeals the estate tax for individuals dying in 2010, and then brings it back for those dying after 2010. Although many had thought Congress would revoke the repeal for 2010, and keep the tax at 2009’s level,...
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President's Budget Proposal Includes Tax Increases: On February 26, President Obama released his 2010 federal budget proposal totaling a record $3.55 trillion. Entitled "The New Era of Responsibility," President Obama's budget contains a minimum of $1 trillion in tax increases over the next decade on higher...
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Non-Itemizers Get a Real Property Tax Deduction: For 2008 and 2009, taxpayers who do not itemize were able to add to their standard deduction the cost of their real property taxes, not to exceed $500 ($1,000 for joint filing taxpayers).Possible Extension - An extension of this benefit for 2010 in included...
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A New Twist For Home Sales: With the advent of the home sale gain exclusion back in the 1990s, taxpayers have been using that provision of the law in a popular strategy to exclude gain not just from their primary residence but also from rentals and second homes as well. They do...
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Tax Credit to Aid First-Time Homebuyers: To stimulate home sales, Congress first established the first-time homebuyer credit in 2008, then modified it for 2009 (through November 30, 2009), and then extended it again through the middle of 2010 (2011 for certain service members) resulting in some...
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Years of Inflation and the AMT Pose a Growing Tax Threat: Your tax will be the higher of the tax computed the regular way or the Alternative Minimum Tax. Anticipating when the AMT will affect you is difficult, because it is usually the result of a combination of circumstances. In addition to those items listed...
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2010 Inflation Adjustments: Every year, many of the various tax limitations, deductions, allowances, etc., are inflation adjusted. The following are the more commonly-encountered values that apply to 2010, along with the prior year's amounts. Click here for the table.Please note...
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Tax-Free IRA to Charity Distributions May Be Extended: A provision that permits taxpayers age 70½ and over to make direct distributions (up to $100,000) from their IRA account to a charity was available in 2008 and 2009. The distribution is tax-free, but there is no charitable deduction. This...
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Tax-Free Provisions for Mortgage and Debt Relief Workouts: If the decline in the real estate market or the nation’s economic downturn has caused you to lose your home by foreclosure or short sale, or you voluntarily signed the deed over to the lienholder, you will probably be faced with debt relief income....
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Home Energy Credits: Tax Credit for Residential Energy Improvements – Energy property improvements to a principal residence located in the United States and placed in service during before the end of 2010 qualify for the residential energy improvement credit. 2010...
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Fiduciary & Partnership Extension Due Dates Earlier: The extended due dates for returns of calendar-year trusts and estates (1041), partnerships (1065), and certain other returns that generate form K-1s have historically been the same as for individual returns (1040). Since these returns generally include...
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Roth Conversion Limitations Eliminated: Beginning in 2010, legislation:(1) Eliminates the $100,000 modified AGI limit on conversions of traditional IRAs to Roth IRAs, and (2) Permits married taxpayers filing a separate return to convert amounts in a traditional IRA into a Roth IRA. Under...
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First-Time Homebuyer Credit: To stimulate home sales, Congress first established the first-time homebuyer credit in 2008, then modified it for 2009 (through November 30, 2009), and then extended it again through the middle of 2010 (2011 for certain service members) resulting in some...
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American Opportunity Credit: The Hope education credit, which provides a tax credit up to $1,800 for qualified higher education, has been enhanced and renamed for 2009 and 2010. For these two years, it will be called the American Opportunity tax credit. Where the Hope credit only...
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Making Work Pay Credit: For 2009 and 2010, we have the new “Making Work Pay” credit which the Obama administration says will cut taxes for more than 95% of working families in the United States. It provides a refundable credit of 6.2% of a taxpayer’s earned...
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AMT In Limbo: Without Congressional intervention the alternative minimum tax (AMT) exemption amounts for 2010 drop to $33,750 (down from $46,700) for unmarried taxpayers, $45,000 (down from $70,950) for joint filers, and $22,500 (down from $35,475) for married individuals...
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Computers and 529 Education Plans: Section 529 Education Plans are tax-advantaged savings plans that permit contributions of large sums of money to be used for the education of a designated beneficiary, and investment earnings generated by these plans are tax-free if the funds are used...
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Expanded Child Tax Credit: A credit of $1,000 is available to taxpayers for each qualifying child under age 17 for 2009 and 2010. This credit is phased out depending on income and the number of qualifying children. Taxpayers with “earned” (not investment) income whose...
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Work Opportunity Credit: This provision provides a credit to an employer for qualified wages paid to members of targeted groups. The credit, except for long-term family assistance recipients and summer youth employees, equals 40% (25% for employment of 400 hours or less) of...
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Break on Small Business Stock Capital Gains: To encourage the risk of forming new small businesses (sales of $50 million or less), the tax code (Sec. 1202) has for some time allowed taxpayers to exclude fifty percent (50%) of the gain from the sale of certain small business stock held for more than...
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Plug-In Electric Vehicle Credit: For vehicles bought after February 17, 2009 and before January 1, 2012, the Recovery Act creates a new 10% nonrefundable personal credit for low-speed vehicles, motorcycles, and three-wheeled vehicles that meet the criteria of a qualified plug-in electric...
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S Corp Built-In Gain Holding Period Shortened Temporarily to Seven Years: Under current law, if a taxable corporation converts into an S corporation, the conversion is not a taxable event. However, following such a conversion, an S corporation must hold its assets for ten years in order to avoid a tax on any built-in gains...
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