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Investment Planning |
Tax Planning for 2009 and 2010
Here's a summary of new tax rules and opportunities to plan for 2010.
Withholding for 2009 should be fine-tuned by December 31 to avoid an underpayment penalty. New withholding tables reflect the payroll tax credit of $400 for singles and $800 for couples. However, married workers will see a $600 payroll tax savings and will be under-withheld by $400 (the $1,200 combined withholding decrease, less the allowed $800 credit). The IRS treats withholding as if it were paid evenly throughout the year, so you have the opportunity to catch up before year's end. The required withholding amount is 90% of your 2009 tax liability, or 100% of your 2008 tax bill (110% of your 2008 tax bill if your AGI exceeded $150,000 in 2008).
Energy-Saving Improvements made to your principal residence in 2009 and 2010 are eligible for a credit of 30% of the cost, up to $1,500. Examples of qualifying improvements include windows, doors, skylights, metal and asphalt roofs, furnaces, water heaters, and central air conditioning.
Health Savings Account (HSA) owners are allowed higher deductible contributions in 2010. The ceiling will rise to $6,150 for families and $3,050 for individuals. Those born before 1956 can contribute an additional $1,000. The cap on out-of-pocket costs will increase to $11,900 for families and $5,950 for individuals.
Roth IRA Conversions will become more popular, thanks to the removal of the income cap on conversions beginning in 2010. The Roth IRA conversion rules are complex, and we will analyze the pros and cons during our annual client reviews in 2010.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.