The uncertain economic climate has prompted many individuals and businesses to carefully examine their finances. Now more than ever, it makes good financial sense to do what you can to minimize your tax burden.
This 2010 Tax Planning Guide suggests a number of strategies that can help lower your federal income-tax liability. As you read through it, please keep in mind that everyone’s tax situation is different. Before implementing any of the strategies discussed in the guide, you will want to secure professional advice.
What's New?
A revised version of the first-time homebuyer
tax credit is available for qualifying purchases
before May 1, 2010. Certain “long-time residents” also
may be eligible for a credit.
The rules limiting itemized deductions
and personal exemptions when adjusted gross income
(AGI) exceeds certain thresholds do not apply in
2010.
The 15% and 0% tax rates on long-term capital
gains and qualified dividends are set to expire
after 2010. In 2011, a 20% maximum capital gains
rate generally will go into effect, and dividends
will be treated as ordinary income — no special
tax rate will apply to dividends.
Regular individual income-tax rates are
also scheduled to increase after 2010. Unless new
legislation is enacted, the 10% rate will disappear
and the top four pre-2001 tax rate brackets — 28%,
31%, 36%, and 39.6% — will be reinstated.
The lowest bracket will be 15%.
Starting in 2010, the income and filing
status restrictions on converting a traditional
individual retirement account (IRA) into a Roth
IRA no longer apply.
Businesses engaged in manufacturing, construction,
and certain other domestic production activities
may deduct 9% of qualified production activity
income,
up from 6% in 2009. (Other limitations apply.)
Employers with 500 or fewer employees have
a new retirement plan option beginning in 2010
called the DB(k) plan.
A
longer carryback period is available to business
taxpayers for net operating losses arising in
any tax year ending after December 31, 2007, and
beginning before January 1, 2010.