Advantages of contributing to a Roth IRA

Look to contribute to a Roth IRA each year since the earnings from these tax-advantaged savings vehicles are never taxed (unlike traditional IRA's which are taxed as ordinary income at your marginal tax rate at the time you take distributions from your traditional IRA). Also, Roth IRA balances are not subjected to the required minimum distribution rules when you reach 70 1/2 years old. Therefore, if you do not need the money at that time, you can continue to let your money grow tax-free and ultimately leave a larger sum to your decedents if you so choose.


Now for some of the mechanics of the Roth IRA:

You can contribute up to $5,000 ($6,000 if age 50 or over) for 2008 and 2009. Keep in mind that your modified adjusted gross income (MAGI) has to be below $166,000 to contribute the full amounts previously mentioned. If your MAGI is between $166,000 and $176,000, then you can contribute some amount less than the full limit. If your income exceeds $176,000, they you are not eligible to contribute to a Roth IRA for 2009. In 2008, this phase-out range is $159,000 to $169,000.

For single individuals, this Roth IRA phase-out limit is lower: $105,000 to $120,000 for 2009. In 2008, a single individual’s income restriction is between $101,000 and $116,000.

Remember that you still have until April 15 of this year to make a contribution to any IRA account for 2008.

Finally, a big advantage to a Roth IRA is that you can use this as an emergency fund since you can withdrawal your principal (the amount you've actually contributed to the Roth IRA) at any time without penalty. This will allow you to garner a market rate of return on your emergency funds while possibly building a source of retirement income at the same time.

Please visit www.taxsmarty.com for more helpful tax tips and information.

Tax provisions of the recently passed federal stimulus plan

Are you asking "how does the recenlty passed stimulus bill affect me personally right now?". If so, please check out this great summary of the tax provisions of the new "American Recovery and Investment Act of 2009" from our partners at CCH, Inc. Please click here to read this summary on how the new provisions can/will affect your tax situation, whether from a personal or business perspective.

It remains to be seen if these provisions along with some of the other "stimulus" provisions of this bill positively affect our national economy to any great degree since many government programs such as these tend to deliver much less than advertised, but we at TaxSmarty are always in favor of giving back dollars to the american people through tax cuts of some kind (preferably the simpler the better and more immediate than not!).

TaxSmarty's Tax Tip and Discussion Blog

Welcome to TaxSmarty's Tax Tips and Discussion Blog! Our goal to to provide income tax help to the "folks" so that you can minimize your tax burden and take advantage of every opportunity you have to keep more of what you earn. We will be blogging about various tips and strategies that you can use to legally minimize the income tax you pay to the federal government as well as your state and local government where applicable. We plan to make entries to our blog on a weekly basis during tax season and also plan to continue blogging throughout the remainder of the year. Before we get started with our initial blog entry, a little bit about our firm:

TaxSmarty provides an easy, accurate, secure and inexpensive way to complete your federal and state tax returns and efile those returns with the IRS and State taxing authorities using our CompleteTax system. Taxes have never been this easy!
We offer a plethora of free income tax information and planning resources on our website in addition to professional review of self-prepared income tax returns as well as a full-service preparation of income tax returns for reasonable fees. You can reach us on the web at www.taxsmarty.com or via email at info@taxsmarty.com

Markus & Rispoli Accounting, PLL is the professional services firm who owns and operates TaxSmarty. We provide quality and personal tax preparation and planning for individuals and small businesses along with accounting services such as write-up/bookkeeping, Quickbooks set-up and support, business systems evaluation and consulting, among other services. Markus & Rispoli Accounting has been providing quality and personal tax and accounting services to our clients since 1996. We are registered with the Accountancy Board of Ohio as a registered public accounting firm and our managing partner, Greg Markus, is a licensed CPA in the State of Ohio. We are committed to uncompromising business ethics and corporate social responsibility.
Tax Tip of the Week: Completing and updating your W-4 federal income tax withholding certificate to maximize your take-home pay.

Tip of the Week: Adjusting your federal W-4 to increase your take-home pay

In order to maximize your take-home pay, you should make sure that you claim all of the personal exemptions that you are entitled to on your W-4 Federal Income Tax Withholding Certificate. Many people unknowingly claim “0” or “1” when they are entitled to claim several more exemptions for their spouse, dependent children or other dependents and exemptions related to itemized deductions that a person is entitled to (e.g. mortgage interest and points, property taxes, state and local income taxes). After all, if you are receiving a large refund from the IRS or your State government, you have really just provided each of these entities with an interest-free loan. Just think – you could have used the extra money throughout the year to pay down your mortgage, credit card balances, pay cash for a large purchase or simply have earned some interest income from placing these additional funds into a savings account or CD. The W-4 form contains instructions on how to correctly calculate all of your withholdings that you are entitled to claim. This concept should also be applied to your state equivalent of the W-4 form if your state has an income tax withholding requirement.