Tax TipsTax Tips

PRESENTED BY:PRESENTED BY:

Jim Griffing, Treasurer, Silver Fox Associate.

George Connelly, Silver Fox Advisor.

Griffing BackgroundGriffing Background

Jim Griffing is both a CPA and CFE.

After years of experience as a Regional Tax Partner with another firm, he founded Griffing & Company, P.C., a full service certified public accounting firm in 1987.

MS in Taxation degree from Drexel University.

Connelly BackgroundConnelly Background

George Connelly is the head of the Chamberlain Hrdlicka law firm’s Tax Controversy and Litigation Section.

His previous experience includes working for the IRS

as a Special Trial Attorney.

He received a bachelor's degree in accounting from Northwestern University and later graduated from the Northwestern Law School.

Making Work Pay CreditMaking Work Pay Credit

A refundable tax credit against income tax in an amount equal to the lesser of 6.2% of the individual’s earned income or $400 ($800 for married couples filing jointly).

Phased out for individual’s with AGI in excess of $75,000 ($150,000 if filing jointly).

Withholding effects everyone receiving a W-2, even those over the AGI threshold.

Economic Recovery PaymentEconomic Recovery Payment

Individuals on fixed incomes (primarily Social Security recipients, railroad retirees, disabled veterans, and retired government workers) will receive a onetime payment of $250.

This payment will reduce any Making Work Pay credit to which the individual would otherwise be entitled.

First-Time Homebuyer Tax CreditFirst-Time Homebuyer Tax Credit

Credit is raised to $8,000 Extended through November 30, 2009 Also, eliminates any required repayment to the

IRS after 36 months in the home Starts to phase-out for taxpayers with AGI in

excess of $75,000 ($150,000 for joint filers)

Property Tax Write-Off With Standard Property Tax Write-Off With Standard DeductionDeduction

Taxpayers who take the standard deduction can add the amount of property taxes paid this year, up to $500 for single filers and $1,000 for joint filers.

Sales Tax Deduction on New-Vehicle Sales Tax Deduction on New-Vehicle PurchasesPurchases

Maybe be able to deduct the state and local sales and excise taxes on purchases of new cars, light trucks, motor homes and motorcycles between Feb. 17 and Dec. 31.

Phased out for joint filers with modified AGI between $250,000 and $260,000.

‘‘Cash For Clunkers’ RebateCash For Clunkers’ Rebate

Can get a rebate of up to $4,500 on vehicles that get 18 miles per gallon or less, have been registered and insured for at least a year on the trade-in date, and must be less than 25 years old.

Education CreditEducation Credit

HOPE education credit renamed to the American Opportunity Tax Credit

Extended to all four years Maximum amount is $2,500 per year on $4,000

in qualifying payments Phased out for AGI at $80,000 ($160,000 filing

jointly)

Earned Income Tax CreditEarned Income Tax Credit

Increased to 45% of the first $12,570 of earned income for taxpayers with three or more qualifying children.

Phase out range has been adjusted upward by $1,880 for joint filers.

Unemployment CompensationUnemployment Compensation

An amount up to $2,400 of unemployment compensation can be excluded from a recipient’s gross income for 2009.

Qualified Tuition ProgramsQualified Tuition Programs

For 2009 and 2010 the new law allows beneficiaries of qualified tuition programs to use tax-free distributions to pay for computers and computer technology, including internet access

Business IncentivesBusiness IncentivesBonus DepreciationBonus Depreciation

The new law extends through 2009, the bonus depreciation (50%)

Allowed under the 2008 Economic Stimulus Act for property.

Also, the regular dollar cap for new vehicles placed in service in 2009 is raised again by $8,000, effective January 1, 2009.

Code Sec. 179 ExpensingCode Sec. 179 Expensing

The increased 2008 small business expensing amount of $250,000 and the increased threshold for reducing the deduction of $800,000 have been extended to 2009.

Work Opportunity Tax CreditWork Opportunity Tax Credit

The Work Opportunity Tax Credit reduces the taxes for small businesses hiring target groups like ex-felons, unemployed veterans, food stamp recipients and disconnected youth. Credit can be as high as $9000 in some instances.

Estimated TaxesEstimated Taxes

The new law decreases required estimated tax payments from 100% to 90% of 2008 tax for individuals whose income primarily comes from a small business in 2009.

COBRA BenefitsCOBRA Benefits

An individual who is involuntary separated from employment between September 1, 2008, and January 1, 2010, can elect to pay 35% of his/her COBRA coverage and have it be treated as paying the full amount.

Employers receive a credit to cover their extra expense.

Energy IncentivesEnergy IncentivesResidential Energy Property CreditResidential Energy Property Credit

Raised to 30% Maximum cap is $1,500 for 2009 and 2010

installations $500 lifetime cap is eliminated Effective for property placed in service after

December 31, 2008 and before January 1, 2011.

Improvements eligible include insulation materials, exterior windows/doors, central air conditioners, propane or oil water heaters.

For 2009, disaster losses can be claimed even if the taxpayer takes a standards deduction. The losses no longer have to exceed 10% of the taxpayer’s AGI.

Disaster LossesDisaster Losses

Roth IRA 2010 ConversionsRoth IRA 2010 Conversions

Conversion available to Roth IRA without the income limitation for one year only.

Tax can be divided up between 2011 and 2012.

IRA Distributions to Charities IRA Distributions to Charities Excluded From IncomeExcluded From Income

IRA owners age 70 ½ or older can transfer up to $100,000 from their IRAs tax-free to charities.

Net Operating Loss CarrybackNet Operating Loss Carryback

Small businesses can offset losses by getting refunds on taxes paid up to five years ago.

Tax-Exempt OrganizationsTax-Exempt Organizations

There is a new and more complex Form 990 to file each year.

If a tax-exempt organization does not file their Form 990-N for 3 consecutive years they will loose their tax-exempt status.

Tax-Free Exchange of Rental PropertyTax-Free Exchange of Rental Property

Beginning March 10, 2008 you may qualify for a tax-free exchange of one piece of rental property you own for a similar piece of rental property, even if you have used the rental property for personal uses.

Tax Rates for the Years 1988-1990Tax Rates for the Years 1988-1990

Tax YearTop Marginal Tax

Rate (%)

Tax Rate On The Capital Gain (If Seller (If Seller Had Owned the Had Owned the Sold Asset for Sold Asset for Any Length of Any Length of

Time)Time)

Taxable Income Over-

1988 28  28 29,750

1989 28  28 30,950

1990 28  28 32,450

Tax Rates for the Years 1991-1997Tax Rates for the Years 1991-1997

Tax Year

Top Marginal Tax Rate

(%)

<1 yr. 1 yr. or moreTaxable

Income Over-

1991 31 31 28 82,150

1992 31 31 28 86,500

1993 39.6  39.6 28 89,150

1994 39.6  39.6 28 250,000

1995 39.6  39.6 28 256,500

1996 39.6  39.6 28 263,750

01/01/97-05/06/97 39.6  39.6 28 271,050

Tax Rates On Capital Tax Rates On Capital GainsGains

(If Seller Had Owned the Sold Asset (If Seller Had Owned the Sold Asset For…)For…)

Tax Rates for the Years 1997-2002Tax Rates for the Years 1997-2002

Tax Year

Top Margina

l Tax Rate (%)

<1 Yr.1 to 5

yrs.>5yrs.

12 to 18 month

s

18 months to 5 yrs.

Taxable Income Over-

05/07/97- 07/28/9

7 39.6 39.6 20 20 - - 271,050

07/29/97- 07/21/98 39.6 39.6  - - 28 20

271,050(1997)278,450 (1998)

07/22/98- 12/31/0

0 39.6 39.6 20 20 - -

278,450 (1998)

283,150 (1999)

288,350 (2000)

2001 39.1 39.1 20 20 - - 297,350

2002 38.6 38.6 20 20 - - 307,050

Tax Rates On Capital GainsTax Rates On Capital Gains(If Seller Had Owned the Sold Asset For…)(If Seller Had Owned the Sold Asset For…)

Tax Rates On Capital GainsTax Rates On Capital Gains(If Seller Had Owned the Sold Asset For…)(If Seller Had Owned the Sold Asset For…)

Tax Year

Top Margina

l Tax Rate (%)

<1 Yr.1 to 5

yrs.>5yrs.

12 to 18 month

s

18 months to 5 yrs.

Taxable Income Over-

01/01/03- 05/05/0

3 35 35 20 20 - - 311,950

05/06/03-12/31/0

3 35 35 15 15 - - 311,950

2004 35 35 15 15 - - 319,101

2005 35 35 15 15 - - 326,451

2006 35 35 15 15 - - 336,551

2007 35 35 15 15 - - 349,700

2008 35 35 15 15 - - 357,700

Tax Rates for the Years 2003-2008Tax Rates for the Years 2003-2008

The Top 5 Things You Need to The Top 5 Things You Need to Know About Your Taxes...Know About Your Taxes...

Top 5 Things You Need to Know Top 5 Things You Need to Know About Your TaxesAbout Your Taxes

1. Taxes Are Not A Sport For Amateurs!

Top 5 Things You Need to Know Top 5 Things You Need to Know About Your TaxesAbout Your Taxes

2. Never Ignore Contact By The IRS!

Top 5 Things You Need to Know Top 5 Things You Need to Know About Your TaxesAbout Your Taxes

3. If You Get Behind, You Must Get In Compliance Before The IRS Will Consider A Collection Alternative!

Top 5 Things You Need to Know Top 5 Things You Need to Know About Your TaxesAbout Your Taxes

4. Trust Fund Taxes Must Be Paid Even If It Means You Go Hungry!

Top 5 Things You Need to Know Top 5 Things You Need to Know About Your TaxesAbout Your Taxes

5. A Person Who Represents Himself Before The IRS Has A Fool For A Client!

Questions?Questions?