McKonomics

Important Tax Figures for 2010

The following table provides some important federal tax information for 2010, compared with 2009. Many of the dollar amounts are unchanged or have changed only slightly due to low inflation. Other amounts are changing due to legislation.

Feeling Generous? Follow These Tax Rules to Ensure Deductions

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following guidelines and reminders about the rules:

Guidelines for Monetary Donations

To deduct a monetary charitable donation, regardless of the amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution.

H.R. Bill 436: The Storm That Could Destroy Your Estate Plan

Now is the time to proactively implement your estate plan! Why now you ask? Our answer is this....would you consider a potential increase in the value of assets that you intend to transfer to your next generation of up to 40% or more to be important to your estate plan?

Interested? Read on.

Year End Tax Planning - Businesses: Smart Moves To Take Before December 31

As December 31st approaches, where does your business stand on taxes? By making timely moves, you might be able to put a sizeable dent in your 2009 business tax bill. Here are some strategies to consider.

 

Unpack new equipment. This year's economic stimulus law extended the enhanced Section 179 deduction for another year. The maximum deduction in 2009 for business assets is generally $250,000. In addition, you may be able to claim a 50 percent "bonus" depreciation deduction on any excess cost.

 

Reminder: To qualify for either tax break, you must "place the property in service" before 2010.

Year End Tax Planning - Individuals: Mix Old Strategies With New

Tax planning can be critical at the end of the year. Here are some new ideas to contemplate, along with tried-and-true year-end tax techniques.

 

Get a new set of wheels. Under this year's economic stimulus law (the American Recovery and Reinvestment Act of 2009), you can deduct the sales and excise taxes attributable to the first $49,500 of the price of a new vehicle purchased before 2010. However, this deduction begins to phase out if your modified adjusted gross income (MAGI) exceeds $125,000 for single filers and $250,000 for joint filers.

 

Give to charity. If you donate to a qualified charitable organization, you can generally deduct the full contribution amount on your 2009 tax return. Note that donations made by credit card are deductible for this year even if you don't pay the bill until next year. Be aware you must observe strict recordkeeping requirements for all donations.

Pending legislation spurs analysis of tax increase scenarios for high income taxpayers

From AccountingWEB.com - The Senate health care reform bill, The Patient Protection and Affordable Care Act, now on the floor for debate, contains a provision for a .5 percent surtax on earned income of high income taxpayers, the first time a revenue raiser has been considered by the Senate that did not connect directly to health care. Deloitte Tax LLP has prepared scenarios that illustrate the potential impact of this surtax and the additional taxes likely to result from Obama's budget proposals on the tax liabilities of high income individuals.

 

"The introduction of this surtax [in the Senate bill] is significant," says Clint Stretch, Tax Principal at Deloitte Tax LLP, "because the proposed bill suggests that Majority Leader Reid is moving tax toward the House proposal in very small steps.  What he does is reduce the Cadillac plan tax and pays for that with the HI (high income) tax.  That tax is simply a surcharge on wages at a much lower rate and with a much lower threshold than the House proposal."

U.S. Starts Fiscal 2010 With $176 Billion Gap

From Reuters -  The U.S. government began fiscal 2010 with a record shortfall for the month of October, right after posting a record $1.4 trillion budget gap for all of the 2009 budget year, the Treasury Department said Thursday.

 

The department, in its monthly budget statement, reported a $176.36 billion budget gap in October, which was the fifth largest deficit for any month. That exceeded both Wall Street analysts ' expectations for $150 billion deficit, and the October 2008 deficit of $155.5 billion.

 

The report for October pointed to a growing gap between government spending and income at a time when a fragile economy is beginning to emerge from the steepest recession in 70 years. The federal budget year starts on Oct. 1.

A Shift in Value: The New Normal

In this week's Podcast Scott Heintzelman speaks with Tony Schiano, former CEO of Giant Foods who currently does consulting for Business Solutions International. Join in as Scott and Tony discuss the current state of the economy and how shoppers are making a shift in value.

Stay tuned over the coming weeks as we plan to interview other experts in the fields that impact our economy the most.  Enjoy the show, and check back for future episodes!

Click here for the Podcast or subscribe.

 

The Long Anticipated Pennsylvania State Budget

The state budget for Pennsylvania has finally been passed for the fiscal year 2009-2010. Over the course of the past few months, many strategies were proposed to alleviate the more than $3 billion budget deficit. Included in those strategies were a personal income tax rate increase, sales and use tax on professional services, and a combined reporting requirement for parent and subsidiary companies.

These items were taken off the bargaining table before the final budget passed. However, the state budget still brought about several significant tax changes. Among the changes were amendments to Pennsylvania's sales and use, personal income, corporate net income, capital stock and franchise, and cigarette taxes. In addition, there is a new gross receipts tax on managed care and a tax amnesty program that will begin in 2010. The following are a few changes that will affect corporate taxpayers:

Special Sales Tax Deduction for Car Purchases

With 2010 models arriving in dealer showrooms, the Internal Revenue Service is reminding taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns.

Purchases made before January 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).

The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.