Friday, February 12, 2010

Sarah, Superman and Soul Music

Reading about the recent TEA Party convention in Nashville made me think what an odd mix of stuff is going into this "revolution." In some meaningful ways the TEA party folks do indeed have something to be upset about, oddly they do not really know what that is but their mood and anger is sensing something that is real. At its core I think it is a fear of unsustainable deficits and a big government that essentially appears to have no regard or concern for the common good or the future of our nation. Of course mixed in with this is an almost virulent anti-intellectualism, racism, xenophobia and to put it simply, an odd sort of proud stupidity. Into this stage strides Ms. Sarah Palin. Liberals often wonder why fans do not see Ms Palin as stupid, but they are missing the point. Her supporters in the TEA party movement wear their lack of regard for any nuanced thinking or even knowledge of our country’s history VERY proudly. Her "stupidity" IS her calling card and a point of pride against the "professor of law" we now have in the White House. How else can you possible explain cheers when she derides Detroit law enforcement officers for reading the Christmas Day airplane bomber Umar Farouk Abdulmutallab his Miranda rights! I thought it strange that a group that harbors such a deep distrust for our government would be so quick to give up rights that folks fought and died for to this very same government! OR the cheers for Mr. Tancredo when he derided "People who could not even spell the word 'vote' or say it in English" for helping to elect Obama. This is odd when addressing a country literally built on immigration (in fact he was only addressing a crowd of 600).


It is sad that this revolution is so ill-focused and dumb, all gut emotion and no intellect, for they are touching something real in their very justified anger toward our wayward government. Our leaders and their corporate handlers are ever so slowly selling our very country down the drain and that is indeed something to get mad about.

So in ending this little diatribe I was thinking that Superman had his "Truth, Justice and the American Way" and Sarah has her “Energy, Tax and Lift American Spirits.” I think Sarah’s theme for her TEA party speech should have been soul great Eddie Floyd's song "Raise your Hand" with is lyric: "Just raise your hand cause I'll understand"

Wednesday, February 10, 2010

2010 filing season gets underway; IRS expects many early filers

The IRS opened the 2010 federal income tax filing season on January 15 when it announced it would start accepting electronically filed 2009 individual income tax returns. The IRS anticipates that more than 60 percent of individual taxpayers will file their 2009 returns electronically and it is preparing for a large number of individuals to file early. Triggering early filing is the expected interest in refunds because of the economic slowdown.
E-file
Electronic filing has exploded since the IRS first accepted e-filed returns. More than 95 million returns were filed electronically with the IRS in 2009 compared to just 4.2 million in 1990.
Paper returns take four to six weeks for the IRS to process before refunds are issued. According to the IRS, taxpayers who e-file their returns and use direct deposit should receive their refunds in as few as 10 days. However, more complex returns generally take longer for the IRS to process and issue a refund if one is due.
Some taxpayers may not be able to e-file their 2009 returns. The IRS cannot electronically process 2009 returns that include Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. Taxpayers claiming the first-time homebuyer credit on a 2009 return must file a paper return. Taxpayers submitting Form 5405 must attach documentation substantiating their homebuyer credit. The IRS can only process these documents manually.
Refunds
Thanks to recent legislation, taxpayers have one more option to save their refunds. You can use all or part of your refund to purchase up to $5,000 in U.S. Series I Savings Bonds. The total amount of your purchase must be a multiple of $50. The bonds will be issued in the taxpayer's name or, if married filing jointly, the bonds will be issued in the names of both spouses. Bonds will be delivered to taxpayers by mail.
You may also be able to split your refunds among different accounts if you choose direct deposit. The IRS allows taxpayers to select up to three different accounts. This is a great option to deposit part of your refund into a retirement savings account.
Preparers
Your federal income tax return is one of the most important and sensitive documents you sign. Trust its preparation to a professional.
Our office adheres to a high professional standard and code of ethics. Unfortunately, not all preparers do and some taxpayers have been harmed by the actions of unscrupulous preparers. The consequences can be severe. Although the preparer signs the return, you are responsible for the accuracy of every item on your return.
Avoid preparers who claim they can obtain larger refunds than other preparers. If a preparer asks you to sign a blank return that should also raise a red flag.
The filing season can be stressful. It doesn't have to be. Our office is ready to help you. Please contact us today if you have any questions.

Saturday, February 6, 2010

Kiplinger 10 part "What is Deductable" quiz

Fun 10 question "is it deductable" quiz from Kiplinger's - http://content.kiplinger.com/quiz/what-is-tax-deductible/ (we got them all correct, but you knew that!)

Thursday, February 4, 2010

Hiromi live at Sculler's Jazz Club

Had the profound pleasure and honor to see Japanese jazz piano giant Hiromi at Sculler’s in Boston last night (2/3/2010). She was playing in support of her superb new solo piano album on Telarc “Place to Be.” The petit 30 year old Hiromi unleashed one of the most astonishing displays of instrumental virtuosity I have ever witnessed. From the explosive opening Gershwin tune to the last number, the Boston tribute called “Cape Cod Chips.” She was unrelentingly amazing, at once lyrical and dynamic with a laser beam focus. As an artist who seemed to totally inhabit every tune she played and never once lost her bearings no matter how long or florid her arpeggios or the intricacies of the rhythmic patterns. In that case her only antecedent seemed to be Art Tatum or perhaps her mentor Oscar Peterson (for whom she did a heartbreaking tribute last night). There was no doubt from anybody witnessing this amazing show that we were hearing something that was rare, wonderful and totally delightful. Her piano virtuosity was such that you felt that she could play anything she desired at any point in time, musicianship that was proscribed by no physical boundaries whatsoever. I need to be very clear that while her technical skills are often mentioned, I felt that all that skill was put into service for the music alone and never used in a gratuitous manner. Every tune Hiromi played last night was deeply imbued with a selfless joy of making music.


I spoke briefly with the gracious and humble Hiromi after the show, and on walking back I passed jazz impresario Fred Taylor who books Sculler’s Jazz Club. I remember him from back in the halcyon days of the Jazz Workshop and Paul’s Mall on Boylston Street and I looked at him and said the only thing I could think of; “wow” to which he replied back “wow.”

You can read more about Hiromi on her website - http://www.hiromimusic.com/

Wednesday, February 3, 2010

Tuesday, February 2, 2010

2010 Haiti donations deductable on 2009 tax return

Washington 1/22/2010 - Taxpayers will be able to write off charitable donations to Haiti earthquake relief efforts when they file their 2009 taxes this spring under a bill President Barack Obama signed Friday.
The measure sped through Congress, receiving final approval Thursday.
Under current law, donors would have to wait until they file their 2010 returns next year to take the deductions. The bill would allow donations made by the end of February to be deducted from 2009 returns.
The hope is to encourage more donations. Obama has enlisted two former presidents – George W. Bush and Bill Clinton – to help raise money for quake victims.
A similar law was enacted in 2005 for donations to victims of the Indian Ocean tsunami in December 2004.
The White House announced this week that the president and first lady Michelle Obama donated $15,000 from their personal bank account to the Haiti relief effort.

Monday, February 1, 2010

How Do I? Convert my traditional IRA to a Roth IRA?

Beginning in 2010, the income limitations that have prevented taxpayers with modified adjusted gross incomes of $100,000 or more and married taxpayers that filed their returns separately from converting a traditional individual retirement account (IRA) to a Roth IRA are eliminated entirely. As a bonus to kick off "unlimited Roth conversions," any income tax payments due on 2010 conversions may be deferred into 2011 and 2012. For higher-income individuals, 2010 presents a long-awaited and much anticipated opportunity to convert their savings into a Roth IRA providing tax-free distributions during their retirement years.
Eligibility for a Roth conversion in 2010 does not automatically make it a good decision for every taxpayer. Indeed, under the right circumstances, converting to a Roth IRA can provide potential significant tax and financial benefits. But every individual's needs and circumstances are unique, and a Roth IRA conversion must be assessed in light of your particular tax and financial situation. In addition, converting to a Roth IRA is not a "do-it-yourself" transaction, and you should consult with a tax professional about the benefits and drawbacks relating to your personal situation.
The new conversion opportunity does not apply to funds held in a 401(k). The conversion opportunity applies to traditional IRAs, in addition to SIMPLE IRAs and SEP plans.
Conversion methods
A conversion to a Roth IRA may generally be accomplished by one of three means:

-- Rollover. An IRA rollover involves making an eligible distribution from your traditional IRA that is rolled over into a Roth IRA within 60 days after the distribution. If the rollover does not occur within 60 days, it will be treated as an early withdrawal subject to a 10 percent early withdrawal tax as well as federal (and possible state) income taxation.
-- Trustee-to-trustee transfer. If your IRA trustee is the same trustee for your traditional IRA and Roth IRA, you may have that trustee make the account transfer on your behalf. Additionally, if the trustee is not the same, your traditional IRA trustee can also transfer the funds to your new, Roth IRA trustee on your behalf, even if they are not the same trustee for the accounts.
-- Account redesignation.
Regardless of type of means you use to convert to a Roth IRA, amounts converted from a non-Roth IRA to a Roth IRA are treated as distributed from the non-Roth IRA and rolled over to the Roth IRA. As mentioned above, a rollover must generally be effectuated within 60 days.
Income tax consequences
The government is encouraging Roth conversions not only to shore up retirement savings but also to gain short time revenues. It accomplishes the latter because a conversion from a traditional IRA is counted as a taxable distribution in which income taxes must be paid. Unlike such distributions outside of a Roth conversion, however, no early withdrawal penalty is imposed. Since you would be taxed on your traditional IRA distributions eventually anyway upon retirement, having the distribution taxed at the time of a Roth conversion can be viewed as an acceleration of that tax. In return, however, the funds that become part of your Roth account, including future earnings of them, become tax free forever into the future.
For conversions taking place in 2010, you have the option to elect to recognize the taxable income generated on the conversion amount ratably in adjusted gross income (AGI) in 2011 and 2012, instead of recognizing it all in 2010. This election does not spread the tax that would otherwise be paid in 2010 to 2011 and 2012; rather, it spreads the income realized in 2010, half into 2011 and half into 2012. That income, half in 2011 and half in 2012, is taxed at 2011 and 2012 rates, respectively, along with any other income normally realized for those years. It is important to "do the math" on this election before making any decision.
Conversion transaction
The institution or brokerage at which you maintain your traditional IRA will generally have a Roth Conversion Form, or similar document, that you must fill out to complete the transaction. The form may ask you for the name and account number of the IRA that you want to convert, whether you want to convert the entire amount of the traditional IRA, or only a part of the account, and the amount of the IRA you want to convert to the Roth IRA (or number of shares). Typically, the form will also inform your federal and state income tax withholding obligations regarding the transaction. You will have the opportunity to elect withholding, or elect not to have anything withheld from the funds in order to meet your anticipated income tax obligations from the transaction.
Note. Whether you pay the taxes on the transaction from the funds transferred to the Roth IRA itself, or with outside funds, is an important decision you make. In general, taxpayers are better off paying the tax, if they can, with funds outside the account. You should discuss the taxation aspect of the conversion with your tax advisor.
If you have any questions about converting your traditional IRA to a Roth IRA, please contact our office. Since, in essence, you are voluntarily pre-paying your taxes it is critical that you fully understand the tax consequences before you make this move!  We can help determine if converting your account is the best decision considering your financial and tax situation and needs, and help you with the transaction.