Things in the tax world are constantly changing. For now, here are some things to look out for in 2010:
Home-buyer credit and recapture: If you took the first time home-buyer credit for a home purchased between April 8, 2008 and December 31, 2008, the 15 year repayment period begins in 2010. There is still an $8,000 credit available for first-time home purchases through April 30, 2010. If you enter into a binding contract by April 30, you have until June 30 to close. If you have owned and lived in your home at least 5 years and buy a new home by April 30, you may qualify for a $6,500 credit. Income limitations apply. Please note, if within three years the home ceases to be your main home, the credit will need to be repaid.
Roth IRA Conversions: You can now convert your Traditional IRA to a Roth IRA regardless of your income level. If you convert in 2010, you can opt to spread the tax over two years. Roth IRAs allow for tax-free income in retirement. If you’re thinking about converting, let us know. We’ll run tax projections for you.
Income Limitations: Typically, when your income exceeds certain levels, your itemized deductions and exemptions are reduced. For 2010 only, those reductions will not apply. This is good news not only for high-income individuals, but also for anyone considering converting their IRAs to Roths.
IRA Contributions: The maximum IRA contribution remains $5,000 ($6,000 if you are over 50). If you are interested in making a contribution, please ask how it will affect your tax situation and whether Traditional or Roth contributions would be more beneficial.
Gifts: The annual gift exclusion for 2010 is $13,000. You may gift anyone up to $13,000 without tax consequence (to you or the recipient).
If you have any questions about how these or other tax law changes affect you, please contact us for a complimentary planning appointment.