Taxes Archives

Avoid This $600 Mistake on Your Tax Return

Posted on February 1, 2009 by Bill Winterberg in Taxes

Last year I wrote about several technical issues regarding tax return filing, primarily dealing with the requirement to file a tax return in order to become eligible for the Economic Stimulus Payment (ESP).

Unfortunately, this year is beginning with similar issues concerning tax returns.

Recovery Rebate Credit Confuses Taxpayers

First, the IRS is reporting preliminary information from early returns where 15% of filers are completing the Recovery Rebate Credit (RRC) incorrectly.

Click here to read IRS Offers Tips to Avoid Recovery Rebate Credit Confusion. Update: The Wall Street Journal picked up on these errors in a February 4 column; click here to read Early Filers Pile On Errors.

Valuing the Economic Impact of the Worker, Retiree, and Employer Recovery Act of 2008

Posted on December 24, 2008 by Bill Winterberg in Taxes

H.R. 7327, the Worker, Retiree, and Employer Recovery Act of 2008, was signed by President Bush on December 23. The proposed bill, which in part offers a waiver of the 50% penalty for failing to take a minimum required distribution, has now become law.

Note that I write minimum required distribution, when most write required minimum distribution, commonly abbreviated RMD. Much of the tax information published by the IRS prior to 2008 referred to the distribution in the former state (MRD) which is how I learned it over the past decade. Alas, it appears the IRS has changed its references to the more common RMD beginning with 2008 publications.

I first blogged about the House passage of this bill here.

Changes to RMD Law Passes House

Posted on December 11, 2008 by Bill Winterberg in Taxes

Update 12/24/08: Want to know the economic impact of the RMD waiver? Read this post on FPPad.com.

Late on Wednesday December 10, the House of Representatives passed H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008. See the main House.gov press release here. This bill suspends the 50% excise tax assessed when a taxpayer fails to take minimum required distributions from a retirement account. (See Senate vote update below)

I first wrote about potential changes to the RMD laws in this FPPad post, Are You Ramping Up for Potential RMD Changes? It wasn’t clear if the changes to the RMD requirements were going to apply for the 2008 tax year, so depending on what Congress did, there may have been a potential opportunity to delay distributions if they had not yet been taken.

The bill that passed waives the 50% penalty for tax year 2009. Therefore, as of today, there’s no reason why an RMD for 2008 should be delayed any longer. The waiver of the penalty does not apply for tax year 2008.

How You Can Deduct Losses in IRA Accounts

Posted on November 24, 2008 by Bill Winterberg in Taxes

down I’m willing to bet that many advisers have clients who opened new IRA accounts over the last several years. These accounts are likely worth significantly less today than the total amount of original contributions due to the unprecedented market declines experienced over the last two months.

Is there any way to obtain at least some tax benefit from losses in IRA accounts?

Initially, one might think that there’s nothing that can be done to realize any tax benefits due to the losses in IRA accounts. But in fact, IRA account losses can be recognized and lead to tax benefits for the right kind of clients.

Are You Ramping Up for Potential RMD Changes?

Posted on November 19, 2008 by Bill Winterberg in Taxes

RMD Boy, if there’s one thing I hate about the arrival of the end of the year, it’s the last-minute tax-related agendas Congress mulls around.

Remember last year when the Tax Increase Prevention Act of 2007 (H.R. 3996) passed to provide temporary relief from AMT? And don’t forget the Economic Stimulus Act of 2008 passed just over a month later in 2008. These bills placed huge strains on the already overloaded IRS and threw monkey wrenches in some advisers’ tax planning strategies.

Case in point: the Wall Street Journal has a good article titled Feds Rethink Rules on Retirement Savings that discusses proposed changes Congress (or the Treasury, who knows?) may make to minimum required distribution laws for qualified and individual retirement accounts.

Click here to read Feds Rethink Rules on Retirement Savings

Give Back to the Community Through Tax Assistance

Posted on November 7, 2008 by Bill Winterberg in Professional Development, Taxes

Community service is a very important part of my personal goals. While the demands of managing our firm’s operations, organizing our FPA chapter’s Mid Winter Conference, and starting a family can get quite large, I make the choice to include volunteering in my schedule.

For the past several years I have volunteered with the AARP Tax-Aide program. Tax-Aide is the nation’s largest, free, volunteer-run tax preparation and assistance service.

Click here to go to the AARP website to read about Tax-Aide.

Blog Action Day: Advisers Must Act to Fight Poverty

Posted on October 15, 2008 by Bill Winterberg in Professional Development, Taxes

Today’s post is a part of Blog Action Day, a world-wide initiative of all bloggers to discuss global issues and encourage positive dialogue. For 2008, the Blog Action Day theme is Poverty.

Let’s face the truth. Financial advisers are some of the best-equipped individuals to help with the financial aspects of poverty. But as a profession and as a whole, advisers are not unified in their efforts to help those affected by poverty.

Recharacterize Underwater Roth IRA Conversions

Posted on October 13, 2008 by Bill Winterberg in Taxes

down chart Did you have clients perform an IRA conversion to a Roth IRA last year? If so, I’m willing to bet that the value of the account when the conversion took place is a bit higher than it is now. There may still be time to undo the conversion and potentially save clients money.

A quick review on conversions: Taxpayers (other than married filing separately) with a Modified AGI of $100,000 or less may convert assets in an IRA (including a SEP or SIMPLE after 2 years of participation) to a Roth IRA. Taxpayers owe ordinary income taxes on the amount converted, but not the 10% premature distribution penalty.

Is Cost Basis Reporting a Done Deal?

Posted on October 3, 2008 by Bill Winterberg in Taxes

On Friday October 3, President Bush signed the Emergency Economic Stabilization Act (H.R. 1424) into law. What started out as a three page bill grew quickly into a massive 451 page behemoth.

The bill includes an array of revenue offsets located in the tax extenders portion of the bill. One of the offsets of potential interest to FPPad readers is found in Section 403 (on page 244 in the PDF file linked above). It’s a requirement for brokers to report a customer’s basis in securities transactions.

CNN Money: Fraudsters in the Making?

Posted on August 25, 2008 by Bill Winterberg in Taxes

CA FTB Sometimes I manage to stumble across fairly good personal finance articles on the Yahoo! Finance homepage, a typical stop on my early morning Internet circuit.

Today’s story is a feature from CNN Money titled Millionaires in the Making. They highlight a young couple, John and Gina Rodrigues, who are in their late 20’s earning a healthy combined salary, saving a lot, and practicing frugal spending habits.

Although, one of Mr. Rodrigues’ past attempts at being frugal actually borders on fraud. Here’s the clip:

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FPPad

Avoid This $600 Mistake on Your Tax Return

Valuing the Economic Impact of the Worker, Retiree, and Employer Recovery Act of 2008

Changes to RMD Law Passes House

How You Can Deduct Losses in IRA Accounts

Are You Ramping Up for Potential RMD Changes?

Give Back to the Community Through Tax Assistance

Blog Action Day: Advisers Must Act to Fight Poverty

Recharacterize Underwater Roth IRA Conversions

Is Cost Basis Reporting a Done Deal?

CNN Money: Fraudsters in the Making?

Bill Winterberg’s Tweets

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