Tax Planning Tips for 2008 & 2009
December 31st, 2008
Now that Christmas is over and we’re going into the New Year, you’re probably thinking about your tax planning for 2008 and 2009. Here are some helpful hints compliments of Joanna Hoffman - Carolina Accounting and Tax Solutions - www.carolinaats.com or 919-789-8000.
Minimum Wage-In NC, minimum wage will increase to $7.25 on 7/24/09 ($2.13 for tipped employees). This increase makes NC and Federal minimum wage rates the same.
Mileage Rates - During 2008, the standard mileage rates changed as follows:
1/1/08-6/30/08 $0.505-Business $0.14-Charity $0.19-Medical/Moving
7/1/08-12/31/08 $0.585 $0.14 $0.27
(The rates for 2009 have not been announced yet).
1099 Forms-New reporting rules have changed the due dates for many types of 1099’s from the end of January to mid-February for brokerage and mutual fund companies.
Bonus Depreciation-The new Stimulus Act provides an additional depreciation deduction of 50% of the cost of any qualified assets purchased during 2008. The assets must be new and must have a life of 20 years or less. The bonus deduction is automatic, unless opted out (which will then apply to all assets in that class).
Over 70 1/2 IRA Contribution to Charity-For 2008, you can again transfer up to $100,000 of an IRA to a charity and pay no tax bill on it (and you also do not get the charitable contribution deduction for the transfer). The major benefit is that the amount contributed counts toward the required minimum distribution.
Convert Your Regular IRA to Roth IRA-If your adjusted gross income is under $100,000, you may want to consider rolling over your existing Regular IRA to a Roth IRA. The amount rolled over will be subject to income tax, but any future earnings will grow tax free under the Roth. Be sure to contact your financial advisor or Joanna Hoffman-919-789-8000 for more details.
Real Estate Tax Deduction-For those claiming the standard deduction, you can deduct real property taxes paid in 2008 on your return ($1000 for joint filers, $500 for all others). Personal property taxes do not qualify.
First Time Home Buyers Tax Credit-The 2008 Housing Act allows a refundable tax credit for first time home buyers (have not owned a home in the past 3 years) for the lesser of $7500 or 10% of the home purchase price. It applies to home purchased after 4/8/08 or before 7/1/09. The credit is really an interest free loan that will be recaptured on future tax returns over a 15 year period. AGI phase out and other limitations apply.
Energy Efficient Tax Credits-The Residential Energy Credits were renewed in the latest bill for 2009. So if you’re considering home improvements (i.e. water heater, heat pump, windows, etc.), wait until January to have those done. Those done in 2008 will not qualify. The credit varies by type of improvement, so call Joanna Hoffman-919-789-8000 for more details.
For all your real estate needs whether buying or selling, contact Michelle Edwards, Keller Williams Realty, 919-306-1639 or michelle@cmetobuy.com.
