1) Federal Estate and Gift Tax - under current law, the federal estate tax is to expire for 2010 and then reappear in 2011 with a top rate of 60% and only a $1 million exemption. The generation-skipping tax will also end for a year, but the gift tax will continue with a top rate of 35%. This issue will definitely be dealt with during 2010, so stay tuned.
2) Expiring "write-offs" - Business R & D credit, college tuition deduction (NOT the Hope or Lifetime Learning Credits), direct donations of IRA distributions - these should all be extended retroactive to 1/1/2010, but it may take a little time to get this done, so stay tuned on these as well. However, the suspending of the mandatory annual IRA payout that was put into law for 2009 will most likely NOT be extended due to the general market recovery.
3) Raising of the Alternative Minimum Tax (AMT) exemptions - this is something that has now been dealt with on an annual basis for the last several years so as not to have the unintended consequences of affecting "the average joe/jane" by subjecting him/her to the alternative minimum tax that was meant for "high incomers" with a large percentage of itemized deductions. Congress has avoided overhauling this section of the tax code and will probably continue to volley this around for the next year or two.
4) Bush tax cuts set to expire - This will be a contentious issue due to the expanding federal deficit and Washington politics, especially as it relates to the top individual tax rate. At this point, we can probably expect to maintain the current tax rates for low and middle-income taxpayers, but an increase to the pre-2001 top tax rate of 39.6% from the current 35% is the most likely scenario.
5) Home Buyer's Credit - This break was extended and expanded. For all of the details, check out the official IRS release at www.irs.gov
For year-end tax tips, please see our Nov. 5 blog entry titled "Some Tax Planning Strategies as We Near the End of 2009".
For all of your tax preparation needs as we enter the 2009 filing season, please visit www.taxsmarty.com We are offering a new and improved CompleteTax® online filing program with four different levels, including a free filing option. Happy New Year!
Friends all nice post I also share with you something. Make sure that the Accountant has previous experience of dealing with contractors. Ask him or her how many contractors he or she has on their books. There is a morass of legislation, like IR35, that is aimed specifically at freelancers and it is crucial that your Accountant is up-to-date with all the legislation. Make sure that the Accountant has previous experience of your sector. If, for example, you are an IT Contractor, it is very useful if the Accountant has good knowledge of the sector. Choose the size of Accountancy firm that suits you. Some people may prefer to go with a large organisation with vast experience of the business but where you may be dealing with someone low down the organisation. Others may prefer a small firm where you are dealing with the owner or partner of the Accountancy company. Meet up with several Accountancy firms and let them know that you are doing this so that you can get the best offer for the best service. Decide beforehand whether you want the Accountant to do all the admin or whether you are happy to do a lot of the book-keeping with the Accountant mainly giving advice and doing your end-of-year returns. Once you have decided yourself what you want to do and what you want the accountant to do you can then ask the price. Ask the Accountant for a full list of services that they can provide as you may not have though of everything.
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