2009 Things to Think About

2008 was a huge year for tax law changes, and Congress may be just as prolific in 2009. Several recent changes and proposals provide food for thought.

Extended provisions Extended through

Charitable distributions from IRAs 12/31/09

Sales tax deduction 12/31/09

Tuition and fees deduction 12/31/09

Teacher’s classroom expenses 12/31/09

Personal credits allowed against AMT 12/31/08

Increased AMT exemption (AMT patch) 12/31/09

Estate tax issues

The lifetime exemption from estate tax changed on January 1, 2009 to $3.5 million per person. This significant increase, compared to the $2 million exemption last year, creates a real need for everyone to review their wills and trusts.

The beginning of a new year is a great time to open up your documents and review them with your attorney. Since your last review, you may have gained beneficiaries, received an inheritance, won the lottery, or experienced another significant economic event.

Expect to review your documents again next year, after the 2009 Congress has had time to tinker with the estate tax rules. Estate planning is a constantly moving target!

2008 installment sales

When a new Congress comes into office, there is always speculation about income tax changes. Possible changes to capital gain rates were mentioned during the campaign, but we will have to wait and see what Congress actually passes. Potential change opens up an opportunity.

Taxpayers who had 2008 installment sales may want to extend their 2008 tax returns, rather than filing by April 15, 2009. The extension will give the taxpayer six additional months to make a more informed decision regarding the reporting of their installment sale. If Congress raises the capital gain rate, the taxpayer may choose to report all gain on the 2008 return rather than paying tax each year as the payments are collected.

First-time home buyers

The new stimulus plan changed the home buyer credit. First-time buyers (those who have not owned a home in the three years prior to the purchase date) may qualify for up to $8,000 credit on their tax return. The credit won't have to be repaid unless the home is sold within three years. Income limits apply. Home purchases must close before December 1, 2009, and the home must be a primary residence.

As always, these comments should open the door to more in-depth analysis of your situation. Please call us any time we can help you.

News from our office

We are happy to introduce you to our new staff members:

Renee Arndt, MS, joined us in September. She has experience working with individuals and small business owners in Wisconsin, Florida and Texas.

Josh Little, MBA, moved to Austin from Beaumont and joined our firm in November.

Don Kalmbach joined us at the beginning of February. Don will assist Kathy to help us provide a friendly front-desk welcome.

Don, Debbie, Lisa, Josh, Renee, Ann, Kathy

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