Client Organizer and What’s New for 2009 – 2010

Tax Credits

>  Residential Energy Property $1500 tax credit limited to 30% of cost of qualifying improvements.

> Tax credits for electric vehicles purchased after February 17, 2009 and before January 1, 2012.  Plug-in electric fuel size 4-wheel vehicle credit is from $2,500 – 7,500 (or two and three wheel plug-ins up to $2,500 tax credit).

> First-time homebuyers’ credit of $8,000 refundable is good till July 1, 2010 if escrow opened by May 1, 2010.

> Rebates 2009 - $400 per person maximum based on earned income, and this time the rebate was accounted for in your withholding tables.  If self-employed, you will see the rebate on your return.  Parents with college or tech school students – tax credits (good for 4 years) on tuition to $2,500 can also include books and supplies.  Limited by AGI of $160,000 for joint filers and $80,000 for single filers.  Student loan interest is still deductible, limited by AGI of $125,000 single and $225,000 joint.

> 2009, dividends and capital gains may be taxed at either 0% or 15% for 2009 and 2010.  We need to look at two issues here:  first, planning income to take advantage of 0% - 15%capital gains; second, the 15% rate could go away in 2011.  If so, we may want to accelerate gains in 2010.

Relief Aid:

> Don’t forget that sale tax on autos purchased in 2009 is deductible.

> The standard business mileage rate for 2009 and 2010 is .55 and .50, respectively.

> If you had a loan balance reduced or are losing or under threat of losing your home to foreclosure, there are tax strategies to avoid a large tax bill for debt forgiveness.

> California has suspended NOLs (net operating losses) in 2009, but is exemption for “small businesses”.  Federal law allows up to 5 years carryback on business losses.

> Property taxes are now deductible even if you don’t itemize!

> Unemployment up to $2,400 is not taxable by Uncle Sam.  California doesn’t tax unemployment.

> Beginning January 1, 2009, any time your property is not used as your principal residence it will reduce the amount of your home sale exclusion of $250,000 per person.  Please advise me if you plan to convert rental property to a principal resident to use the exclusion later.

Please see accompanying organizer for deductions and as an aid for 2009 tax preparation.  We look forward to meeting with you and discussing all your tax and accounting needs.