Federal Tax Update
Нижеизложенное, в большинстве своём, представляет интерес для людей с более сложными налоговыми декларациями, которым нужно планировать утёканиe бабла на 1-3 года вперёд.
Разбиваю на хорошие и нехорошие.
Хорошие новости:
Tax Increase Prevention and Reconciliation Act (signed May 17, 2006)
Investment income
Tax rates on capital gains and qualified dividends: the reduced rate of 15% is now extended to the end of 2010. This was set to expire on 12/31/08.
Planning: Investors can now take a longer term view of their stock and mutual fund portfolios, since the tax treatment of related income and gains is now known, at least through 2010.
Roth IRAs
Beginning in 2010, the $100,000 income ceiling for converting traditional IRAs to Roth IRAs is eliminated. Any converted amount is taxable, but not subject to the 10 percent early withdrawal penalty. Taxpayers who convert in 2010 may report half of the income in 2011 and half in 2012. In 2011 and beyond, all conversion amounts are taxed in the year of conversion.
Planning: While Roth IRA’s are not for everyone, if they are advantageous, this provision opens up many possibilities for maximizing their effect. Taxpayers should look into consolidating previous employer 401k plans into a rollover IRA, or open non-deductible IRA accounts, so they will be eligible for conversion in 2010.
Alternative minimum tax (AMT) for individuals - one-year fix
The AMT exemption increases to $62,550 for joint filers and $42,500 for single filers for 2006. Without this provision, these amounts would have been $45,000, and $33,750, respectively. In addition, non-refundable personal tax credits, such as the dependent care, and hope scholarship credit, may be used to offset the AMT in 2006, as they could in 2005.
Section 179 expensing
The expanded thresholds for immediate write off are extended for two more years, through 12/31/09 (the current limit for 2006 is $108,000). Without this extension, the maximum amount would have dropped to $25,000 on 1/1/08.
Нехорошие новости:
Kiddie Tax
This now applies to children under 18, instead of under 14, effective for the 2006 tax year. This may be a problem for people who have gifted assets to children to shift income, based on the kiddie tax only applying to the younger age.
Foreign income exclusion
Three technical changes effective in 2006 were made to the foreign income exclusion and foreign housing exclusion which, taken as a whole, may result in substantial increase in tax for those affected.
Other provisions:
Starting in 2006 payers will have to report tax-exempt interest information to the IRS in a manner similar to taxable obligations. Even though the income is not taxable, it can affect other items on a return, such as taxability of social security benefits.
a.
p.s.If you filed a 6 months extention with the IRS, kindly file your individual income tax return by Oct. 15th.
Разбиваю на хорошие и нехорошие.
Хорошие новости:
Tax Increase Prevention and Reconciliation Act (signed May 17, 2006)
Investment income
Tax rates on capital gains and qualified dividends: the reduced rate of 15% is now extended to the end of 2010. This was set to expire on 12/31/08.
Planning: Investors can now take a longer term view of their stock and mutual fund portfolios, since the tax treatment of related income and gains is now known, at least through 2010.
Roth IRAs
Beginning in 2010, the $100,000 income ceiling for converting traditional IRAs to Roth IRAs is eliminated. Any converted amount is taxable, but not subject to the 10 percent early withdrawal penalty. Taxpayers who convert in 2010 may report half of the income in 2011 and half in 2012. In 2011 and beyond, all conversion amounts are taxed in the year of conversion.
Planning: While Roth IRA’s are not for everyone, if they are advantageous, this provision opens up many possibilities for maximizing their effect. Taxpayers should look into consolidating previous employer 401k plans into a rollover IRA, or open non-deductible IRA accounts, so they will be eligible for conversion in 2010.
Alternative minimum tax (AMT) for individuals - one-year fix
The AMT exemption increases to $62,550 for joint filers and $42,500 for single filers for 2006. Without this provision, these amounts would have been $45,000, and $33,750, respectively. In addition, non-refundable personal tax credits, such as the dependent care, and hope scholarship credit, may be used to offset the AMT in 2006, as they could in 2005.
Section 179 expensing
The expanded thresholds for immediate write off are extended for two more years, through 12/31/09 (the current limit for 2006 is $108,000). Without this extension, the maximum amount would have dropped to $25,000 on 1/1/08.
Нехорошие новости:
Kiddie Tax
This now applies to children under 18, instead of under 14, effective for the 2006 tax year. This may be a problem for people who have gifted assets to children to shift income, based on the kiddie tax only applying to the younger age.
Foreign income exclusion
Three technical changes effective in 2006 were made to the foreign income exclusion and foreign housing exclusion which, taken as a whole, may result in substantial increase in tax for those affected.
Other provisions:
Starting in 2006 payers will have to report tax-exempt interest information to the IRS in a manner similar to taxable obligations. Even though the income is not taxable, it can affect other items on a return, such as taxability of social security benefits.
a.
p.s.If you filed a 6 months extention with the IRS, kindly file your individual income tax return by Oct. 15th.