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Remember Your 2010 RMD
In 2009, those age 70 ½ or over
were given a one-year waiver on making required minimum distributions
(RMD) from qualified retirement accounts. This waiver has expired. So
unless Congress acts, to avoid penalties, please make any required
retirement plan distributions prior to year end.
New Small Business Bill adds
2010 Tax Incentives
In late September, 2010 the Small Business Bill was
signed into law. The bill includes an estimated $12 billion in tax
incentives for small businesses. Chief among them are: Section 179
Expensing. For qualified capital purchases in 2010 and 2011, taxpayers may
expense (versus depreciate) up to $500,000 in new purchases. In addition,
qualified leasehold investment property, restaurant property, and retail
improvements may be expensed up to $250,000.
Bonus Depreciation.
The bill extends the
special 50% first-year bonus depreciation for property placed in service
in 2010.
Cell Phone Bookkeeping.
You now longer need to keep a
log of business use of cell phones. The bill de-lists cell phones as
“listed property” requiring less substantiation to qualify cell phone
expense as a reasonable deduction. The bill also includes many provisions
to help stimulate lending money to small businesses so if you are looking
to expand your business it pays to review the possibilities with your
lender.
Tax Benefits You Might Overlook
As the tax season approaches take some time to
determine if you qualify for some of these often overlooked tax breaks.
Some of these tax saving ideas require that you itemize your deductions.
Others can be claimed by any qualifying taxpayer.
Charitable Volunteering
If you volunteer for a
charitable organization you may have deductible expenses. Did you purchase
supplies or required equipment? Perhaps you volunteer in a hospital and
need to purchase a uniform. The costs for the apparel AND the costs to
clean the uniform can qualify as charitable deductions. And don’t forget
mileage, it too can often be deducted.
Moving Expenses
While job related moving expenses are a well known
deduction, many clients don’t realize moving expenses for a first job may
also be deducted if the job passes a 50 mile distance test from the place
the newly employed person has been living.
Job Hunting Costs
Workers can often deduct job hunting costs provided
the expenses are associated with looking for a new job in your present
occupation. Qualifying costs include resume preparation, printing,
postage, phone calls and outplacement/employment agency fees. Remember
these costs, along with other miscellaneous itemized expenses, must exceed
2 percent of your adjusted gross income before they produce any tax
savings.
Child and Dependent Care Credit
Did you know the popular Child and Dependent Care
tax credit also applies to summer day camp costs? As long as the camp is a
day-camp and camp officials supervise the child while the parents work you
can claim the credit for the camp costs.
Mortgage Refinancing
Points
If you
refinance your house or buy a second residence, any “points” you pay for
the loan can be deducted proportionately each year over the life of the
loan. If you sell your home or refinance before you have deducted the full
cost of your “points”, you can then deduct the remaining amount in the
year of the refinancing or sale.
Caution: The lender in the subsequent refinancing must be
different to deduct the points this way.
Military Reservists’
Travel Expenses
Military reserve forces and National Guard troops
are allowed a deduction for travel expenses attending drills or meetings
provided you travel more than 100 miles and stay overnight for the
training exercise. This deduction includes mileage reimbursement at 55
cents per each mile traveled. Parking toll fees also qualify. You receive
this deduction whether or not you itemize your deductions.
So take a
minute to examine your activities over the past year and try to identify
items that may lower your tax obligation. If you have questions about
these topics or have other areas of concern please feel free to call.
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