Archive for March, 2009
3/13/09 QUOTE – “Fear is that little darkroom where negatives are developed.” -Michael Pritchard
by P. Lewis RobinsonMar
13
3/11/09 QUOTE – “As you slide down the banister of life, may the splinters never point in the wrong direction.” -An Irish Blessing
by P. Lewis RobinsonMar
11
3/9/09 QUOTE – “It is pretty hard to tell what does bring happiness; poverty and wealth have both failed.” -Kin Hubbard
by P. Lewis RobinsonMar
9
3/9/09 – I Have a Loss in My ROTH IRA. Can I Deduct it?
by P. Lewis RobinsonMar
9
There are two questions you need to ask: Do you have a loss, and is it deductible? This past year has seen the value of many retirement accounts, including Roth IRAs, decline. A decline in the value of securities in the account, absent a sale or abandonment of the securities in the account or their becoming worthless, is not a loss; the value of the securities can recover.
Assuming that securities within the account have been sold for less than the amount paid for them, then there is a loss. Now determine whether and to what extent the loss is deductible. You are permitted to deduct a loss in a Roth IRA, but only when all the amounts in all of your Roth IRAs have been distributed to you and the total distributions are less than your total contributions.
Assuming you can climb these big hurdles, losses from your Roth IRAs are then deductible only as miscellaneous itemized deductions. This means only amounts in excess of 2% of adjusted gross income (AGI) actually are deductible. Furthermore, any losses that are deducted as a miscellaneous itemized deduction are added back for purposes of calculating the alternative minimum tax (AMT). Thus, anyone subject to the AMT loses any tax benefit from Roth IRA losses.
J.K. Lasser: Your 365 Day-A-Year Tax Resource
3/6/09 QUOTE – “Humor is the great thing, the saving thing. The minute it crops up, all our irritations and resentments slip away and a sunny spirit takes their place.” -Mark Twain
by P. Lewis RobinsonMar
6
3/4/09 QUOTE – “There are three things in life that people like to stare at: a flowing stream, a crackling fire, and a Zamboni clearing the ice.” Charles Schulz’s Charlie Brown
by P. Lewis RobinsonMar
4
3/2/09 QUOTE – “There is nothing like returning to a place that remains unchanged to find the ways in which you yourself have altered.” -Nelson Mandela
by P. Lewis RobinsonMar
2
3/2/09 – Reduced Estimated Tax Burden in 2009 for Individuals With Small Businesses
by P. Lewis RobinsonMar
2
To the extent that tax isn’t collected through withholding, taxpayers generally are required to make quarterly estimated payments of tax, in an amount determined by the required annual payment. The required annual payment is the lesser of 90% of the tax shown on the return or 100% of the tax shown on the return for the prior tax year. However, under Code Sec. 6654(d)(1)(C) , the prior-year percentage is 110% if adjusted gross income (AGI) for the preceding year exceeded $150,000). An underpayment results if the required payment exceeds the amount (if any) of the installment paid on or before the due date of the installment.
The period of the underpayment runs from the due date of the installment to the earlier of (1) the 15th day of the fourth month following the close of the tax year or (2) the date on which each portion of the underpayment is made. If a taxpayer fails to pay the required estimated tax payments under the rules, a penalty applies, determined by applying the underpayment interest rate to the amount of the underpayment for the period of the underpayment. The penalty for failure to pay estimated tax is the equivalent of interest, which is based on the time value of money.
Taxpayers are not liable for a penalty for the failure to pay estimated tax in certain circumstances (e.g., for U.S. persons who did not have a tax liability the preceding year; if the tax shown on the return for the tax year (or, if no return is filed, the tax), reduced by withholding, is less than $1,000; or the taxpayer is a recently retired or disabled person who satisfies the reasonable cause exception).
New law. Effective on Feb. 17, 2009, the Recovery Act provides that notwithstanding Code Sec. 6654(d)(1)(C) , for any tax year beginning in 2009, in computing the amount of the required annual installments of estimated income tax of any qualified individual, “required annual payment” means the lesser of (1) 90% of the tax shown on the return for the tax year, or (2) 90% of the tax shown on the return of the individual for the preceding tax year. ( Code Sec. 6654(d)(1)(D) , as amended by Act Sec. 1212; Committee Report)
A qualified individual means any individual if the AGI on the tax return for the preceding tax year is less than $500,000 ($250,000 if married filing separately) and the individual certifies that at least 50% of the gross income shown on the return for the preceding tax year was income from a small trade or business. For estates and trusts, AGI is determined under Code Sec. 67(e) . A small trade or business is one that employed no more than 500 persons, on average, during the calendar year ending in or with the preceding tax year. ( Code Sec. 6654(d)(1)(D) ) © 2009 Thomson Reuters/RIA. All rights reserved
