Bloomberg Article; Billionaires’ Wine Thirst Quelled by Record Bordeaux Futures, Sale Prices

Billionaires' Wine Thirst Quelled by Record Bordeaux Futures, Sale Prices

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By Scot Reyburn - Aug 3, 2011 5:37 AM ET

Chateau Lafite 1982

Three bottles of Chateau Lafite from the 1982 vintage. Wines from the first growth chateau in Bordeaux have been fetching record prices at auction, fueled by demand from Asian bidders. Source: Sotheby's via Bloomberg

A barrel sample of 2010 Chateau Grand Puy Lacoste, a Bordeaux fifth growth, awaits tasters at the chateau's tasting room in Pauillac, France. The wine is a standout, with a futures price of $90 a bottle. Photographer: Elin McCoy/Bloomberg

Surging demand for Chateau Lafite and other French trophy labels, especially from Asia, has pushed both prices at auction and wine futures to records. Not all wine dealers are happy.

The prices for some of the most expensive bottles are starting to discourage even billionaire collectors, said dealers -- some of whom had warned in January of a bubble that could burst in 2011. Chinese and other buyers balked as some Bordeaux producers raised prices as much as 80 percent last month for the new vintage offered "en primeur," when it is still in barrels.

"En primeur sales have halved," Simon Staples, fine wine and marketing director of the London-based merchants Berry Bros & Rudd, said in an interview. "It's a combination of high prices and the fact that the chateaux released less than last year."

Sales growth is also slowing at auctions. Takings at the biggest three wine auction houses in the first six months of 2011 were up by 46 percent on the same period in 2010, according to Bloomberg calculations, down from the 88 percent sales increase in 2010.

The Liv-ex Fine Wine 50 index, tracking daily price movements of the 10 most recent vintages of Bordeaux's five First Growth chateaux, declined from 445.49 points on July 1 to 434.17 points on Aug. 1. The London-based index, based on trade sales, rose 136.67 points to 401.11 last year.

The future sale prices were boosted by scores of more than 90 for the vintage from the critic Robert Parker.

Futures Increase

Chateau Latour 2010 was released at 780 euros ($1,106) a bottle, a 30 percent increase on the also highly rated 2009 vintage. Chateau Ausone was pitched at 1,120 euros a bottle, 17 percent higher than last year. The 108 euros being charged for bottles of Carruades de Lafite -- the second wine of Chateau Lafite -- was a 59 percent increase.

Last year, Asian buyers snapped up a third of the Berry Bros. Bordeaux 2009 futures allocation. Only 5 percent of the merchant's 2010 wines have gone to the region, Staples said.

"The 2009 vintage was the first that attracted a lot of Chinese en primeur investment," said Staples. "They've seen it has really increased in value and have been put off by the prices of the 2010s. If it isn't in a bottle, they can't show it off to their friends."

Chinese consumers continue to spend millions on older vintages in bottles at specialist auctions. Sotheby's (BID), Christie's International and Acker, Merrall & Condit took a record $258.3 million in wine sales in 2010, more than double 2009. About two-thirds of the most expensive lots were selling to Asian bidders, according to both Christie's and Acker.

Auctions Increase

Sotheby's and Christie's raised $53 million and 28.7 million pounds ($47.1 million) at wine sales in the first half of 2011, increases of 49.3 percent and 120 percent respectively. Acker took $54.8 million, up 10.4 percent. The total for all three, about $155 million, compares with $106 million a year ago.

Growth for all three companies was primarily driven by sales in Hong Kong. Sotheby's HK$96.8-million "Ultimate Cellar" auction on April 2 was the New York-based company's 15th straight 100 percent-successful "white glove" sale in the region.

Hong Kong

"The market has continued to grow because we've had some unbelievable collections to sell in Hong Kong," Serena Sutcliffe, Sotheby's worldwide head of wine, said in an interview. "Some individual prices have come down. Lafite has leveled out. It couldn't continue to rise with every sale. Now buyers are looking at other chateaux and they've begun to close the gap."

In October 2010, a 12-bottle case of Lafite's 1982 vintage, sourced directly from the chateau, sold for HK$1 million ($128,000) at Sotheby's Hong Kong. The wine fetched HK$605,000 a case at the same auction venue in April.

By contrast, Chateau Mouton-Rothschild '82 fetched HK$169,400 a case at Sotheby's Andrew Lloyd Webber Wine Collection auction in January. The price in Hong Kong climbed to HK$217,800 in April at Sotheby's "Ultimate Cellar" sale.

John Kapon, chief executive of Acker, believes the problematic 2010 futures campaign will drive Chinese buyers back into the auction market.

"Bordeaux has scared off Asia just as it was coming to the table," Kapon said in an interview. "People from that region will notice they can get three bottles of 1995 Bordeaux for the price of one bottle of 2010. They don't like paying for things and having to wait years to get them."

Record Bottle

The French collector and restaurateur Christian Vanneque had to wait six months to take possession of a bottle of 1811 Chateau d'Yquem for which he paid a record 75,000 pounds ($122,070).

The price, paid in a private sale brokered in January by the London-based Antique Wine Company, was the highest for a bottle of white wine, according to the Guinness Book of Records.

The 200-year-old sweet Sauternes was handed over at a ceremony in the Ritz hotel in London on July 26. It will be put on display at Vanneque's new restaurant, SIP Sunset Grill in Bali, Indonesia, the Antique Wine Company said in an e-mailed statement.

(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

To contact the editor responsible for this story: Mark Beech at mbeech@bloomberg.net.

Here is what to do if you are missing a W-2

Here is what to do if you are missing a W-2 Internal Revenue Service Thu Mar 03 2011 Before you file your 2010 tax return, you should make sure you have all the needed documents including all your Forms W-2. You should receive a Form W-2, Wage and Tax Statement, from each of your employers. Employers have until January 31, 2011 to send you a 2010 Form W-2 earnings statement.   If you haven't received your W-2, follow these four steps:   1. Contact your employer if you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.   2. Contact the IRS. If you do not receive your W-2 by February 14th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:   Employer's name, address, city and state, including zip code and phone number Dates of employment An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.   3. File your return. You still must file your tax return or request an extension to file April 18, 2011, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible.  There may be a delay in any refund due while the information is verified.   4. File a Form 1040X. On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.   Form 4852, Form 1040X, and instructions are available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Don’t overlook these tax break

Don't overlook these tax breaks. Tax credits, deductions and exemptions available to just about every taxpayer. Thu Mar 03 2011 Every year millions of taxpayers have the opportunity to take advantage of some significant tax breaks. According to an Associated Press report, there are $1.1 trillion in tax credits, deductions and exemptions in the tax code.  Those breaks come in different forms.  2009 tax data shows that home mortgage interest deductions saved 34.6 million taxpayers nearly $77 billion.  By deducting charitable donations, 36 million families cut their taxes by nearly $35 billion.   With just a little bit of knowledge, you could take a healthy bite out of your taxes.  To get you started, here are some of the most common tax breaks:   Charitable donations – most people know to claim a deduction for a qualifying cash donation to a charity, but don't forget those donations of clothing in "good used condition or better,"  or other goods.  Just be sure to have a receipt from the charity that states the value of your donation. Childcare – for many working families, it's an unavoidable expense.  Claiming the child and dependent care credit can ease the burden.  It is important to request receipts from your childcare provider that show your payments. Work related expenses – you may be able to write off unreimbursed job search expenses if you were out of work.  These could include employment agency fees, transportation, lodging and food on overnight trips for interviews.  Or if you relocated for your job, you may be able to write off some of the relocation expenses. Energy efficient home improvements - if you're doing home improvements, consider energy efficient external windows and doors, insulation, heating and cooling equipment, and more.  You could get a tax credit up to 30% of the cost of qualifying items. You could also get a tax credit for 30% of the cost of renewable energy home additions such as a solar energy systems or a geothermal heat pump. This credit has a lifetime limit of $500 after 2010. Automobile tax credit – a hybrid gas-electric or alternative fuel vehicle could get you a 2010 tax credit if you bought a qualifying  vehicle before the end of 2010. American Opportunity Credit – you could get a tax credit for up to $2,500 for college tuition and related expenses that you paid during the year.   You can also get a deduction on the state income tax you paid the previous tax year, and any real estate or property taxes you paid during the year.  You can also claim the sales tax you paid on the purchase of a car if you itemize deductions.  And the list goes on.   Make sure you're not missing a break you have coming.  Before you complete your tax return, do a little digging.  Make a list.  Then you can sit down with your tax professional and have a discussion about everything that is available to you.   HELPFUL HINTS Understand the difference between a deduction and a credit. A deduction reduces the income on which your tax is determined..  A credit reduces your taxes dollar-for-dollar, making it the more valuable of the two.

Additional Info; Non Deductible payments for home owners

Nondeductible payments
You cannot deduct any of the following items.

• Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance.
• Wages you pay for domestic help.
• Depreciation.
• The cost of utilities, such as gas, electricity, or water.
• Most settlement costs. See Settlement or closing costs under Cost as Basis, later, for more information.
• Forfeited deposits, down payments, or earnest money.

                        Per the IRS Pub. 530         http://www.irs.gov/publications/p530/ar02.html

Are Closing Costs Tax Deductible

Are Closing Costs Tax Deductible?

if you have to pre-pay any mortgage interest as part of your closing costs,  that interest will be tax deductible......

First Time Home Buyers > Are Closing Costs Tax Deductible?

Date: 04/03/2007

Much is said about the great tax benefits of becoming a homeowner. If you are looking to buy a house soon, you should know that the interest you pay on your mortgage loan will usually be completely tax deductible. That is, each year you can deduct the total amount of interest you have paid on your home loan. Depending on the size and terms of your loan, this could mean a deduction of several thousand dollar deduction each year. Not bad! Yet, what about any of the other fees associated with the home purchase? Are those pesky upfront closing costs tax deductible? The answer is part of them may be deductible. Closing costs are made up of a laundry list of various charges. They include things like lenders fees, real estate appraisals costs, private mortgage insurance, homeowners insurance, recording fees, title searches and title insurance, as well as many other possible costs. The unfortunate truth is that most of these fees are not deductible. There are a few exceptions however. These depend on when exactly you buy your house. For example, if you have to pre-pay any mortgage interest as part of your closing costs,  that interest will be tax deductible. You may have to prepay if you close on any day other than the first of the month. This is typically the day your future mortgage payments will be due and if your home loan closes on the 15th perhaps, then your lender will require you to prepay interest for the 15 days before the next month begins. Since this is still interest, even though it is included in your closing costs you can deduct it from your yearly tax returns. If you have to pay pro-rated property taxes, these will also be tax deductible. You pay this when the seller's property tax payment extends into the month you take possession of the home. At closing, you will be charged for the portion of the taxes due for the number of days you were the owner that month. The government then allows you to deduct this pro-rated property tax that year. And do not forget about mortgage points! These are deductible. This is a percentage of the loan amount that you pay your lender at closing to basically "buy down" your interest rate. If you are purchasing a home, the total amount of loan points are fully deductible for that year's tax returns. If you are refinancing, the points can still be deducted, but the deductions must be amortized or spread out over the course of the loan. Another exception comes if the property you are buying is a rental or investment property. In this case the transfer taxes that are a part of your closing costs will be deductible. Things like hazard insurance or association dues for rental properties are also tax deductible. Check with your financial advisor for more specifics on the tax benefits related to rental/investment home loans. So while most closing costs are not deductible, you can still enjoy the great savings that come from mortgage interest and points!

http://www.homeloanbasics.com/articles/FirstTimeHomeBuyers/AreClosingCostsTaxDeductible/

Article; Tax Changes to Watch for on Your 2010 Return

Tax Changes to Watch for on Your 2010 Return Andrea Coombes Thursday, February 17, 2011 Share retweet provided by Market Watch Many familiar provisions remain, but tricky differences lurk Your 2010 return is less complicated than it might have been, thanks to the Tax Relief Act in December, but there are changes that could trip you up. Lawmakers' agreement to extend the Bush-era tax cuts means many of the tax provisions you've come to know and love are still in place — and the Form 1040 is similar to last year. But there's bad news for some taxpayers. For instance, in 2009 unemployed workers could exclude up to $2,400 of unemployment benefits from income; that provision did not get extended for 2010, said Steve Henley, national tax practice leader with CBIZ MHM, in Atlanta. "For some reason, they decided not to extend that," he said. "That's probably a little bit of a surprise for some taxpayers." Other tax breaks are gone, too, such as the three extra standard deductions — for real-estate taxes, taxes on a new-car purchase and disaster losses — that non-itemizers could use to lower their bill in 2009. Still, other than the disappearance of Line 40b to claim those extra standard deductions, Form 1040 is essentially the same as last year. "Because Congress acted at the end of the year to extend a whole bunch of stuff that was ready to expire, [the changes are] not quite as bad this year as in past years," said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill.-based tax publisher and unit of Wolters Kluwer. The Tax Relief Act, among other perks, resuscitated the deduction for state and local sales taxes — a boon to taxpayers in income-tax-free states — and the above-the-line deductions both for student tuition and fees, up to $4,000, and for teachers' classroom expenses up to $250. And, for high-income filers, the new law extends through 2012 the Bush-era provision repealing the income limits on itemized deductions and personal exemptions. Before, taxpayers above certain income levels lost part or all of their exemptions and itemized deductions. Those limits were slowly phased out; 2010 is the first year they're gone completely (separate income limits still apply on some deductions). Plus, Congress extended the alternative-minimum-tax patch, preventing millions of taxpayers from losing access to a number of tax breaks under that parallel system. The AMT exemption amount in 2010 for single filers is $47,450 and for married-filing-jointly filers it's $72,450. A big perk, for eligible families: The adoption credit is now refundable, and worth up to $13,170 in 2010 and 2011. In 2012, it drops down to $12,170 and won't be refundable, according to CCH. Confused? Another change this year is that you get an extra weekend to sort it all out. The tax deadline is April 18, thanks to a holiday in Washington on April 15. Your IRA Also thanks to the new law, people 70 1/2 or older can donate up to $100,000 to an eligible charity directly from their IRA, count it as a required minimum distribution, yet still avoid an income-tax hit on that money (but they can't deduct it as a charitable donation). And they get until Jan. 31 this year to make such a contribution for 2010. The tax break is also available in 2011. See this IRS page for more on what qualifies as an eligible charity. Meanwhile, if in 2010 you took advantage of the ability to roll money from a traditional IRA to a Roth IRA — income limits on such transfers no longer exist — you can choose to pay the income tax on that conversion over two years, half in 2011 and half in 2012. Or, you can include that income on your 2010 return. If you want to pay the tax now — maybe you're in a lower tax bracket in 2010 than you expect to be this year — be sure to check the appropriate box on Form 8606. "Probably most people, now that [income-tax] rates are basically the same for 2011 and 2012 will elect to defer those payments," Luscombe said, "but taxpayers should look at that and make sure it's the right decision for their circumstances." "If they were unemployed in 2010, had low income and anticipate they might be in a higher tax bracket in 2011 and 2012, it might make sense for them to pay the tax in 2010," he said. Homeowner Tax Breaks Are you eligible to claim the home-buyer tax credit on your 2010 return? You won't be able to e-file. The IRS wants you to snail-mail information with your return. The credit is worth up to $8,000 for first-time home buyers and $6,500 for long-time homeowners who lived in their home for more than five years. Read the rules for the first-time home buyer tax credit on IRS.gov. If you claimed the credit in 2008, you are among the unfortunate group that must pay the credit back over the next 15 years — and 2010 is the year your first bill comes due. Also, if you claimed the home-buyer credit in 2008 or 2009 and then moved out of the house, you may have to pay back the credit. Check out Form 5405 for the details. (Did you know that doing a Google search of "Form 5405" — plug in any IRS form number — will get you the IRS page you need?) If you've had a problem with so-called "corrosive drywall" in your home, the IRS may let you treat that as a casualty loss. See this IRS page for more. But, bad news for homeowners who didn't jump on the tax credit for energy-efficient home improvements, such as new doors and windows: That tax break got trimmed for 2011. Still you can take it for 2010 if you made the eligible energy-efficient upgrades by the end of the year. Andrea Coombes is MarketWatch's personal finance editor, based in San Francisco.

Boston.Com Article; IRA distributions and taxable Social Security benefits

 IRA distributions and taxable Social Security benefits

Posted by Andrew Chan
February 9, 2011 03:00 PM
Is the income I receive from my IRA distribution included in the calculation to determine how much of my social security benefits will be taxed?

Generally, yes! If the IRA distribution you receive is taxable and not a return of your previous non-deductible contributions, it will be included as part of your Adjusted Gross Income (AGI) on your tax return. The amount of your social security benefits that is taxable is determined by calculating your "combined income". Your "combined income" equals your AGI + your nontaxable interest + 50% of your social security benefits.

If your IRA distribution is taxable (as described above), it should be included in your AGI and thus your "combined income" for purposes of determining what portion of your social security benefits are taxable.

If you know your federal tax filing status and your "combined income", you can use the following guidelines from the Social Security Administration to see how much of your benefits are taxable:

If you file a federal tax return as an "individual" and your "combined income" is:
- between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $34,000, up to 85 percent of your benefits may be taxable.

If file a joint return, and you and your spouse have a "combined income" that is:
- between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $44,000, up to 85 percent of your benefits may be taxable.

If you are married and file a separate tax return, you probably will pay taxes on your benefits.

For more information about calculating your "combined income" or the taxation of social security benefits visit the Social Security Administration's web site at www.ssa.gov.

Tax Interview Sheet

Article; Understanding the Schedule A

Schedule A: box-by-box Bankrate.com The easiest way to reduce your tax bill is to reduce your taxable income. You don't have to take a pay cut to do this. You can use tax deductions. The Internal Revenue Service allows each taxpayer a standard deduction amount based on filing status. Some individuals, however, find that they get a better tax break if they itemize their deductions. This means keeping track of your expenses, meeting some income thresholds and deductibility limits and filing Schedule A. You must file the long 1040 tax return to use Schedule A. This combination means that filing your taxes will take a while. But it also could mean more money in your pocket, instead of Uncle Sam's, when you're through. Schedule A generally allows you to subtract from your income the amounts you spent on medical care, other taxes, some interest payments, charitable gifts, casualty losses and even several miscellaneous expenses. Let's see what you can itemize. Be sure to enter your name, and your spouse's if you're filing jointly, at the top of the form. As for the Social Security number sought by the IRS, enter the one of the main taxpayer. Now, to the numbers. Schedule A is divided into sections for the various deductions you're allowed. First, medical and dental expenses. Medical and dental This is a popular section of the Schedule A. Most of us spend a lot at the doctor's office or corner drugstore, and we look forward to letting the government help out at tax time with these costs. Unfortunately, Uncle Sam has limited just how helpful he will be. You can deduct medical and dental expenses that exceed 7.5 percent of your adjusted gross income. With an AGI of $40,000 your medical deduction threshold is $3,000. That means of your $5,000 total medical expenses, you can deduct only $2,000, the amount that exceeds 7.5 percent of your income. Don't be discouraged. There are some medical costs that are often overlooked, such as mileage to the hospital, the costs of special medical equipment or even a portion of long-term care premiums you pay. And don't forget to count the medical care of your spouse and dependents. Add all these up and enter the amount on line 1. On line 2, enter your AGI from line 35 of your 1040. The 7.5 percent test is taken on line 3, where you figure your deductibility threshold. Then you subtract line 3 from your total medical costs on line 1 and enter the amount on line 4. This is what you can deduct. If you don't meet the test, enter zero here. Taxes At federal tax time, some other taxes do come in handy. You can deduct many of them in this next section of Schedule A. If you live in a state that collects state or local income taxes, the amount you paid goes on line 5. That includes any that were withheld from your paycheck (and shown on your W-2), as well as tax payments made directly to your local tax collector. Mandatory contributions you made to the California, New Jersey or New York Non-occupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund or Washington State Supplemental Workmen's Compensation Fund also can be counted on line 5. Property owners can deduct real estate taxes they paid. Enter the amount on line 6. These taxes are what you get each year, usually from a county tax assessor. If they are paid by your mortgage company with escrowed funds, remember that you can only deduct the actual amount of taxes paid in the tax year, not the full amount of escrow payments you sent in to your lender. Some states, counties and cities levy personal property taxes. The most common of this type of collection is on autos. This is not your license plate tag fee. It is a tax based on the value of your vehicle. Car taxes, as well as other personal property tax bills, can be deducted on line 7. Line 8 gives you the chance to deduct what the IRS calls "any deductible tax" not listed earlier. A common entry here is a deduction for foreign taxes paid in connection with investments funds. When you make an entry here, be sure to write out on the dotted line precisely what other tax you are deducting. Add the amounts from 5 through 8. There is no limit or minimum to meet for this section. Enter the full amount of nonfederal taxes you paid on line 9. Interest The next section, interest you paid, is for the almost exclusive benefit of homeowners. While interest paid on personal loans won't help you at tax time, interest on home loans -- both your primary residence and a second home -- is deductible. On line 10, enter home mortgage interest you paid. Generally, this amount is reported to you on a Form 1098 you get from your lender by the end each January. If you bought your home last year and paid points for the loan, those points (each point is 1 percent of your loan amount) will be listed on the 1098, too, and should be included on line 10. If you paid mortgage interest not reported on your 1098, put it on line 11. This might be the case if you sent in an extra house payment late in the year and your lender didn't properly credit the additional money. And if you paid interest to the person from whom you bought the home, it also goes on line 11, along with the seller's name, address and tax ID number. Any points not listed on your 1098 might be found on your settlement statement. Also, if you took out a home improvement loan secured by your house and used part of that loan money to improve your residence, you may be able to deduct some of the points. These non-1098 point amounts go on line 12. Interest paid on money borrowed to buy investment property, such as stocks and bonds, can be deducted on line 13. You may have to complete Form 4952, Investment Interest Expense Deduction, to claim this interest. Now add lines 10 through 13. There is no limit here either. This total amount of interest paid goes on line 14. Charitable gifts The IRS allows you to deduct your donations to approved philanthropic groups. This next section is where you detail your gifts. On line 15, enter all the monetary gifts (cash or check) that you made to qualified charities. This includes contributions to religious groups (churches, synagogues, mosques); nonprofit organizations (Salvation Army, Red Cross, Goodwill Industries, United Way); veterans' associations; not-for-profit schools; and public park and recreational facilities. If a gift was $250 or more, you must have a receipt from the recipient. Gifts of property are reported on line 16. Here you count the value of the used clothing, household goods or vehicles that you donated. Keep itemized lists of what you've donated and its fair market value -- the price at which the property would change hands between a willing buyer and a willing seller -- for your own records. Do not include these lists with your return. However, if the amount of any single noncash contribution is greater than $500, you also must complete and attach Form 8283, Noncash Charitable Contributions. And if your deduction is more than $5,000, the IRS may require you to get appraisals of the donated property. You also can deduct your travel costs to do charitable work, as well as out-of-pocket expenses related to a charitable endeavor, such as stamps for a group's mailing. These amounts would be included on line 16. But if your philanthropic efforts and gifts are motivated primarily by potential tax deductions, be aware that the IRS does set some limits here. Annual cash contributions can't exceed 50 percent of your adjusted gross income. Annual gifts of property -- such as stocks, bonds and artwork -- can't exceed 30 percent of your AGI. If you give more than those limits, you can carry over the amount that you're unable to deduct. You have five years to deduct it on future tax returns. If you have a carryover from last tax year, enter the allowable amount (again, within the percentage guidelines) on line 17. Add lines 15 through 17. This amount represents your deductible gifts to charity and goes on line 18. Casualty and theft losses There is never anything good when you're the victim of a casualty or theft. The IRS understands that, and allows you to recover some of your losses on your taxes. Most taxpayers think they can deduct casualty losses only if they suffer catastrophic damages. It's true that victims here get special tax options. But you don't have to live through a fire, flood, hurricane, tornado or earthquake to file a casualty deduction. Losses from theft and vandalism are eligible losses, as are any damages from an automobile accident as long as it wasn't the result of driver negligence. You don't, however, get to deduct the full amout of your unexpected loss. You'll have to complete Form 4684 to determine how much you can enter on line 19. Job and miscellaneous expenses The next portion of Schedule A lets you take into account money you spent in connection with your job, as well as a variety of miscellaneous expenses. This catchall section, however, has a threshold you must meet before these expenses can be deducted. The total here must exceed 2 percent of your AGI. For our taxpayer making $40,000 that would mean these costs must go over $800 before they can be deducted. On line 20, enter the total of all your job-related expenses for which you weren't reimbursed. Since you've got a percentage target you must meet, be thorough here. Some of the items you can count are professional memberships and journal subscriptions, uniforms you buy and the cost of keeping them clean, as well as expenses of looking for another job in the same field. You also might have to file and attach Form 2106, Employee Business Expenses, especially if you claim any travel, transportation, meal or entertainment expenses. Even the IRS realizes how complicated tax filing can be, so it allows you to count what you paid a tax preparer or adviser as a miscellaneous deduction. You can also deduct the cost of tax-preparation software programs and any fee you paid for electronic filing. These amounts go on line 21. Line 22 is for other expenses, such as charges you incur in managing your investments. This includes custodial and trust administration fees, accounting charges, safe deposit box rentals if you keep investment-related material in it, subscriptions to financial publications and any fees reported in box 5 of a Form 1099-DIV. List the type and amount of each expense on the dotted lines next to line 22. If you need more space, attach a separate sheet with the details. Add your work-related and miscellaneous expenses shown on lines 20 through 22 and enter the total on line 23. Now you must calculate if you have enough to deduct. On line 24 enter your AGI from line 35 of your 1040 form. Multiply that income by 2 percent (.02) and enter the result on line 25. This is the threshold your expenses must exceed. Subtract this line 25 percentage from line 23's expenses total and enter the difference on line 26. This is your allowable deduction amount. If your threshold amount is larger than your total expenses here, you don't get to deduct any of them. Enter zero on line 26. Other miscellaneous deductions The expenses you detailed on the lines above were limited by your income. But the IRS removes that restriction on expenses in seven specific areas. One of the most common deductions listed here by individual taxpayers is gambling losses. Enter your gambling losses on line 27. Remember, however, that while your gambling losses aren't restricted by a percentage of your income, they are limited by your good luck. You can only deduct those losses up to how much you won. That is, if you won $1,000 and had losses of $1,700 you can only deduct $1,000. And don't forget to include your winnings on line 21 of your 1040. Other miscellaneous deductions allowed on line 27 are casualty and theft losses from income-producing property, federal estate tax on some inherited income, amortizable bond premium on some bonds, deduction for repayment of amounts under a claim of right, certain unrecovered investment in a pension and impairment-related work expenses of a disabled person. For more details, see IRS Publication 529, Miscellaneous Deductions. List the type and amount of each expense on the dotted lines next to line 27. Again, if you need more space, attach a separate statement. Total itemized deductions Now you get to see just how much your Schedule A entries can help you cut your taxes. Add the amounts on lines 4 (medical), 9 (taxes), 14 (interest), 18 (charity), 19 (casualty and theft), 26 (job and most miscellaneous) and 27 (other miscellaneous) and enter the total on line 28. But write the amount in pencil. The IRS takes one last shot at limiting your total deduction amount based on your income. That means you might have to make some changes to your itemized total depending on how you answer the boxes under line 28. If your AGI is less than $139,500 and you file as single, married filing jointly, qualifying widow or widower or head of household, your amount is safe. (The income limit is $69,750 for married filing separately taxpayers.) Check the "No" box, write your total deduction amount in pen on line 28 and also enter it on line 38 of your 1040. But if you check the "Yes" box, you'll have to use the worksheet on page A-6 of the instructions for Schedule A. There, you're done. It took a while, but now you can check the numbers. If the itemized deduction amount is more than your standard deduction, your tax bill should be lower.

2011 Tax Season

2011 Tax Season
Tax season is upon us, and I am sending out this notification reminding prior clients & informing new clients of my expertise in preparing tax returns. With over 7 years in the field, I can comfortably tout my experience, having been employed by various financial institutions including tax specialists; H & R Block and Back Bay Tax & Accounting.

As always, I offer my clients a convenient and efficient service, valuable insight regarding their tax situation in addition to an affordable price.
General tax returns, Fed & State E-filed, start at $50.00 and depending on the complexity of the return could impact the price. In light of the challenging economic times I also offer special pricing available for referrals, returning clients, students & seniors.


In addition to individual tax preparation, I handle small business accounting and tax service's, I am also a certified Notary Public in the state of Massachusetts .
Please contact me with any questions


Thank you,

Jay Email; JNZCapital@Gmail.com
Website (under construction); JNZCapital.com
Blog; Jnzcapital.blogspot.com

Yahoo Smart Money Finance Article

Posted January 19, 2011
Many Miss Out on Retirement Tax Credit
By Joe Mont

BOSTON (TheStreet) -- A federal income tax credit of up to $2,000 may be overlooked by most Americans with retirement plans who can take advantage of it.

The Saver's Credit is designed as an incentive for low- to middle-income workers to save for retirement. But, according to the Transamerica Center for Retirement Studies, very few workers who may be eligible may even know it exists.

The Saver's Credit may be applied to the first $2,000 of voluntary contributions an eligible worker makes to a 401(k) or similar employer-sponsored retirement plan or IRA. Credits of up to $1,000 for single filers and $2,000 for married couples are offered.

But only 12% of full-time workers with annual household incomes of less than $50,000 are aware of the credit, according to a survey conducted by the center of 3,598 full-time and part-time workers.

"There are people who meet the income eligibility requirement and are saving through a 401(k) plan who could be claiming the credit, but they just don't know about it," says Catherine Collinson, president of the center, which is funded by contributions from Transamerica Life Insurance.

The center is advocating improved outreach.

"It seems like over time it has gotten lost in the shuffle," she says of the credit. "It was introduced all the way back in 2001 and made permanent in 2006 with the Pension Protection Act. It is there and available, but I think the outreach has just moved on to other tax credits and other types of things."

Taxpayers can only claim the credit on Forms 1040A, 1040 and 1040NR.

"One of the concerns is that, especially for people saving in a 401(k) plan, it is not reflected on the 1040EZ form," Collinson says. "Lower- to middle-income workers are probably the most likely of all income levels to use the 1040EZ form, and because there's no place to put it on the form, they may be completely missing the tax credit ... and are simply not aware of it."

How to claim the credit
The credit is available to workers who have contributed to a company-sponsored retirement plan or IRA in the past year. Single filers with an adjusted income of up to $27,750 last year or $28,250 this year are eligible. For the head of a household, the adjusted income limit is $41,625 last year and $42,375 this year. For those who are married and file a joint return, the adjusted income limit is $55,500 last year or $56,500 this year.

The filer cannot be a full-time student or be claimed as a dependent on another person's tax return.

If you are using tax preparation software to prepare your tax return, use Form 1040A, Form 1040 or Form 1040NR. If prompted, be sure to answer all questions about the Saver's Credit, Retirement Savings Contributions Credit and Credit for Qualified Retirement Savings Contributions.

If you are preparing your tax returns manually, complete Form 8880, the Credit for Qualified Retirement Savings Contributions, to determine the exact credit rate and amount. Then transfer the amount to the designated line on Form 1040A, Form 1040 or 1040NR.

http://www.mainstreet.com/article/moneyinvesting/taxes/many-miss-out-retirement-tax-credit

Yahoo Smart Money Finance Article

What to Take to Your Tax Preparer Greg Bocquet Friday, January 28, 2011 Share Taxes are a tricky and complex business for most Americans. Whenever you buy something big or send someone to college, it seems like there's a new form, a new receipt or a new statement to consider. Plus, there is the fear of being audited to add to the stress. Jennifer Rempe, senior tax analyst for the Tax Institute, the research arm of H&R Block, says that while about 1% of all tax returns are audited, most of them are "correspondence audits" in which the IRS sends a letter asking for clarification of a certain piece of data. Such audits are almost always easy to resolve with the proper paperwork and having your documents in order can have other benefits too. You will lower your tax burden through maximum deductions, get your refund faster and save on the time needed to prepare your return. Plus, you will already have all of your documents ready to resolve any issues that arise. Read on for the essential documents that everyone should bring to their tax preparer to save the most money they can. Your Taxes Are Yours Alone Even if someone else fills out and files your forms, no one but you will be liable for the information. Problems with the tax return go to the taxpayer, not the accountant or whoever signed the forms. "If the tax preparer relies in good faith on the information the taxpayer provides for them, they can't be held responsible," Rempe says. Bottom line: If you don't give your accountant the right forms, you won't get the right deductions. Last Year's Tax Return Whether you are an experienced record-keeper or just beginning to get organized, you can probably find a copy of last year's return somewhere, and it may be the most important thing you can give your tax preparer. Other than all the Social Security numbers, names of dependents and addresses of property that are necessary for informational purposes, last year's return is a good blueprint for your tax preparer to follow. It will help him or her see what credits you have previously qualified for and identify red flags when the information is inconsistent. Rempe agrees: "Barring serious life events, last year's tax return gives a good idea of what your tax burden will look like this year," she says. W-2 If you work full-time, chances are you have taxes withheld from every paycheck to cover your tax burden for the year. If so, your employer will send you a W-2 form by Jan. 31 reporting your total income and the total amount that you have already paid in income, Medicare and Social Security taxes. For people who had more than one job as a regular employee, each employer will send a W-2 to detail your pay. Unfortunately, if you moved during the year your former employee might not have your current address and your W-2 may never reach you. But keep in mind, your Social Security number didn't change, so while the IRS will know how much you made, employees might need to call their former employers to ensure they get their tax forms in time. 1099 Simply stated, 1099 forms are issued for all additional income that has not yet been taxed. Freelancers and temporary or contract workers typically don't have their taxes taken out at the source. Instead they are paid per job, often by multiple employers, and are responsible for paying the appropriate taxes on that income. Instead of a W-2, this income will be reported on a 1099-MISC form, which is considered "additional income." Because these forms can often come from a variety of employers, it's important for all freelancers or contract workers to track down their 1099s themselves. The IRS will not accept an "I didn't get my 1099" excuse if it audits your return, meaning you'll still have to pay taxes on the amount, along with an additional penalties. 1099s also report dividends from stocks or mutual funds (1099-DIV), or interest earned on savings or other bank accounts (1099-INT), as well as a few others. Unemployment Forms Last year was tough for Americans: Many lost their jobs, and many more had trouble finding new ones. With so many people receiving unemployment benefits last year, President Obama was even forced to agree to tax cuts for people making more than $250,000 a year to get Republicans in Congress to approve an extension of unemployment benefits. Though it's a federal program, unemployment assistance is administered by state governments, and of course all of them do it differently. Some states automatically withhold taxes from unemployment payments (because unemployment income is taxable) and others don't. And some states automatically provide year-end information on a 1099-G form, and others don't. To ensure you get the assistance you need, Rempe of H&R Block recommends contacting your state's unemployment office, because simple bank statements showing your unemployment checks won't do. "Since different states do it differently, the amount of your checks doesn't tell you all of the information," she says. "If your state sends you paper checks, keep the last pay stub of the year to get year-to-date information. If they don't, you should call them and ask for a year-end summary." Are You a Schedule C or Schedule D? Instead of spending 80 hours a week hustling for jobs last year, many frustrated Americans took to sites like eBay or Craigslist to make some extra cash. There are a couple ways this can affect your tax reporting, but remember that anything that you sold for a loss does not need to be mentioned on your taxes. Conversely, if all you did was sell the contents of the attic or your dad's garage that you finally helped him clear out, then any money you made (meaning items you sold for more than their original selling prices) must be reported on Schedule D, a form that is submitted with your individual tax return. If what you did was a little more organized -- you bought things at local garage sales and flea markets so that you could flip them and make money -- then you'll need to report the profits (and expenses) of your little operation on a Schedule C form. If your net profit is more than $400, you will need to pay the self-employment tax. Rempe says the difference is all about intent. Since the distinction is vague, though, best practices apply: Save your receipts and be prepared to document the price at which you bought something. 1098 Now that all your income is accounted for, it's time for the fun part: expenses, deductions and credits. This is the part of the tax process -- if you prepare your returns -- where you can watch your base taxable income drop and expected refund rise with every step. So satisfying! 1098 forms cover the specific tax-deductible expenses that the government forces some institutions to report. If you paid tuition to attend college, or for a child in school, you will receive a 1098-T in the mail to document tuition expenses. If you are a homeowner, your mortgage lender will send you a 1098 that details the mortgage interest you paid (which is deductible) and the real estate taxes you paid last year. If you made a contribution to charity, the organization will send you a 1098-C detailing the amount of the contribution, or the monetary value of a vehicle or other goods you may have donated. If your student loans accumulated at least $600 in interest during the year, your lender must issue you a 1098-E to document the exact amount of interest added to your loan balance, because that is also deductible. All of these documents are issued to you, the taxpayer, so if you do not collect them (which may sometimes mean making a phone call to the charity or school to provide them with the current address), then your tax preparer will not be able to claim the appropriate deductions for you. Taxes on Personal Property Just as the government likes to support homeowners by offering them a range of credits and deductions, it also has provisions for people who make other large purchases, like buying a car, boat or mobile home. These purchases involve expenses that aren't charged at the point of sale, known as personal property taxes, which are deductible from your income taxes. These charges most often refer to the license plates on your car, or the registration fees for your boat, for example, that are collected by someone other than the dealership. While you should keep receipts for any big purchases, make sure to also keep records of your registration fees and bring them to your tax preparer. This also goes for old vehicles, which might also grant you a big deduction. Home Office Receipts With more people freelancing, blogging and otherwise working from home, maintaining a home office can be a huge expense. Consequently, the IRS respects the needs of taxpayers who work at home, but imposes some strict conditions to ensure they don't take advantage of the system. First, a home office has to be used exclusively for business to qualify as a home office at all. If a computer is used half the time for work, you can't simply claim half the related expenses. A space that has personal as well as business uses is not a home office (for tax purposes), although a small desk or table in a corner of your living room used only for business IS considered a home office deduction. Once you have established exactly what your home office includes, then you can start deducting. If your home office takes up 20% of the home or apartment you live in, then you can claim 20% of your rent and utilities as expenses for your home office. Job Search Receipts Just as many people are working from home, a lot of people are still looking for jobs, and sometimes the accompanying costs of a job search can be significant. But in the same way that the IRS imposes strict conditions on home offices, job search expenses can be tricky, Rempe of H&R Block says. For example, you can't just have your friend look over your resume for $20 and then claim that as a job expense -- the friend would have to claim the income on his or her tax return. You also can't claim that $500 suit as a business expense and then wear it to a wedding a week later. What you can do, though, is keep receipts for any job search expenses that could not be anything other than job-related. That leadership seminar you paid $200 for? It counts. That $60 for a membership on a job search website? That counts too. Business lunches can be more complicated, though. If you meet a prospective employer over food or coffee, note the details on the back of the receipt if you plan to claim the expense, and keep in mind you must be able to prove (via e-mail, for example) that the lunch had to do with finding a job.

Yahoo Smart Money Finance Article

What's New on the 2010 Form 1040 Bill Bischoff Friday, January 28, 2011 By now, some of you may already have your 2010 W-2 and 1099s in hand. If not, it won't be long. So it's not too soon to think about starting your 2010 Form 1040. Before you begin, there are some key changes to note. Here's what you need to know. Due Date is April 18 Even though April 15 falls on a Friday this year, the deadline for your 2010 Form 1040 is Monday April 18. Reason: Emancipation Day is a District of Columbia holiday, and it falls on April 15. So the tax filing deadline for the whole nation is deferred to April 18 . If your return won't be ready by then, you can extend the deadline all the way out to October 17 by filing Form 4868 on or before April 18. No More Phase-Outs for Itemized Deductions and Exemptions For years, high-income folks have seen their write-offs for the most popular itemized deduction items (including mortgage interest, state and local income and property taxes, and charitable donations) reduced by a nasty phase-out rule. Another nasty phase-out rule reduced or eliminated personal and dependent exemption deductions. Thankfully, both phase-outs were completely repealed for 2010 as part of the Bush-era tax cuts. So you can write off the full amount of your itemized deductions and exemptions on your 2010 Form 1040 without any worries and without having to fill out phase-out worksheets to penalize yourself. More good news: the recent tax cut extension legislation repealed the phase-outs for 2011 and 2012 as well. Liberalized Adoption Credit For 2010, the maximum adoption credit was increased to $13,170 (up from $12,150 in 2009). In addition, the credit was made 100% refundable for the 2010 tax year (previously, it was nonrefundable). That means you'll receive a check for any leftover adoption credit after your federal income tax bill has been reduced to zero. To claim the credit, fill out Form 8839 (Qualified Adoption Expenses), and enter the credit on line 71 of Form 1040. One-Time Break for Self-Employed Individuals Self-employed folks can generally deduct their health insurance premiums on page 1 of Form 1040 (use line 29 for 2010). The deduction reduces their federal income tax bills, which is nice. However, the self-employed have never been allowed to deduct those premiums when calculating their self-employment tax bills on Schedule SE. Good news: for 2010 only, you can deduct health insurance premiums on line 3 of Schedule SE. So those premiums will reduce both your income tax bill and your SE tax bill. Unfortunately, this break will not be available for 2011 and beyond unless Congress extends it. Homebuyer Credit Repayment Rules Kick In As I explained in an earlier column, you may have to repay part or all of the credit claimed for a 2008 or 2009 home purchase with your 2010 Form 1040. In most cases, however, only those who purchased homes in 2008 will be affected. They will generally have to repay 1/15 of the credit with the 2010 Form 1040. If this rule impacts you, fill out Form 5405 (First-Time Homebuyer Credit and Repayment of the Credit), and enter the repayment amount as an addition to your tax bill on line 59 of Form 1040. Real Estate Tax Deduction for Non-Itemizers is Gone For 2008 and 2009, unmarried individuals who did not itemize could write off up to $500 of state and local real property taxes by claiming an increased standard deduction. Married joint-filing couples could write off up to $1,000. This add-on standard deduction deal for real estate taxes expired at the end of 2009, and it was not reinstated for 2010. Deductions for Sales Taxes on New Vehicle Purchases Are Gone The 2009 Stimulus Act created a temporary write-off for non-itemizers who paid state and local sales taxes on new vehicles purchased between 2/17/09 and 12/31/09. The write-off came in the form of an additional standard deduction allowance. Similarly, itemizers were allowed to claim an extra itemized deduction for such taxes. Both breaks lapsed at the end of 2009, and they were not reinstated for 2010. Break for Unemployment Benefits Is Gone In 2009, the first $2,400 of unemployment benefits was federal-income-tax-free. This break was not continued for 2010. Therefore, 100% of 2010 unemployment benefits generally must be reported as income on Form 1040 (use line 19). Your Tax Preparer Might E-File Your Return This Time Over the last few years, Congress has made tax-law changes that place increasing pressure on professional return preparers to electronically file more and more returns. As a result, your preparer might be forced to e-file your 2010 Form 1040 even if your returns for earlier years have always been done on paper. Get used to it.

http://custom.yahoo.com/taxes/article-111872-5cc81c6a-7a82-4485-8532-908e59dcf761-whats-new-on-1040-in-2010

Summary of Federal Tax Law Changes for 2010-2017

 
Summary of Federal Tax Law Changes for 2010-2017
Updated for Tax Year: 2010
Learn how federal tax law changes could impact your tax return in 2010 and beyond.

Many of the tax breaks in recent tax-relief bills were designed to be phased in over a number of years, or are indexed to inflation. To help you determine how these tax laws affect your long-term planning, this article explains the changes scheduled to come into effect through 2017.

Pick a year from the list below to learn what tax changes affect that year's returns. We include changes for 2010 because they affect the tax returns you'll be working on in the spring of 2011. Congress made many significant tax changes in late 2010, including passage of the Tax Relief Act, that will have a major impact over the next several years.

• 2010
• 2011
• 2013
• 2017

 

Started or Continuing in 2010

Tax Credit of up to $8,000 for First-Time Homebuyers and $6,500 for Existing Homeowners

The Congress and the Obama Administration extended and expanded the wildly popular 2008 first-time homebuyer tax credit. In addition, the income limits were increased, making even more people eligible.

Existing homebuyers are eligible to receive a tax credit of 10% of the purchase price up to $6,500 if they bought and closed on a replacement home by September 30, 2010. In order to be eligible for the credit, homeowners must have lived in the same principal residence for any five-consecutive-year period during the past eight years. They are not required to sell or dispose of their current home, but the new home must become their principal residence.

If you purchased and closed on a primary residence before September 30, 2010, and are a "first-time" homebuyer, you can qualify for a tax credit of 10% of the purchase price up to $8,000. To be eligible, you must not have owned a residence in the United States in the previous three years.

To qualify for either credit, you must have signed a binding contract to buy the house by April 30, 2010, and closed on it by September 30.

Members of the armed forces who were on official extended duty outside of the United States for at least 90 days between Jan .1, 2009, and May 1, 2010, may qualify for a one-year extension.

The credit is refundable to the extent it exceeds your regular tax liability, which means that if it more than offsets your tax liability, you'll get a refund check. But it does not offset the Alternative Minimum Tax.

In addition, income limits were expanded from earlier versions of the credit. Homebuyers who file as single or head-of-household taxpayers can claim the full credit if their modified adjusted gross income (MAGI) is less than $125,000. For married couples filing a joint return, the combined income limit is $225,000.

Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit. The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI over $245,000. Also, homes costing more than $800,000 are not eligible for the credit.

Payroll Tax Credit

For 2009 and 2010, Congress gave workers a credit of 6.2 percent of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, the credit starts phasing out at $75,000 of Adjusted Gross Income and dries up at $95,000. The phaseout zone for couples is $150,000-$190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check.

Self-employed taxpayers can reduce their quarterly estimated payments to get an advance benefit from the credit. The exact amount of the payroll tax credit for the year will be calculated on the filers' tax returns.

Indexed Tax Brackets

The 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent tax brackets all kick in at income levels that are more than 4 percent higher than they were in 2009.

Personal Exemptions

For 2010, each personal exemption you can claim is worth $3,650, the same as in 2009.

Standard Deductions

For 2010, the standard deduction for married taxpayers filing a joint return is $11,400, the same as in 2009.

For single filers, the amount is $5,700 in 2010, up by $250 over 2009. Heads of household can claim $8,400 in 2010, up $50 from 2009.

Non-itemizers can also add any casualty losses that occurred in presidentially-declared disaster areas.

Income Phaseouts for Itemized Deductions and Personal Exemptions for High-Income Taxpayers

The amount of itemized deductions and personal exemptions you can take are normally phased out as your income rises. In 2010, however, those income limits have been repealed, and the recent tax relief act extends the repeal for two more years, through 2012.

Section 179 Expense Deduction

The maximum amount of equipment placed in service in 2010 and 2011 that businesses can expense was increased to $500,000. And the annual investment limit was raised to $2,000,000. Thus, you won't begin to lose the benefit of expensing until you place more than $2,000,000 of assets in service in 2010 and 2011. The allowance drops to $125,000 for tax years beginning in 2012.

Tax-Free Parking for Employees

Companies can pay for $230 a month of parking tax-free for employees. The cap on tax-free transit passes is now $230 a month as well, the same as for parking.

Tax Credit for College Tuition

For 2010 through 2012, the Hope credit is replaced by a new credit. Now called the American Opportunity Tax Credit, it provides a credit of up to $2,500 per student per year for four years of college. It now also covers the cost of books, and begins to phase out at $80,000 of Adjusted Gross Income for single filers and $160,000 for joint filers. If the credit is more than your income tax liability, 40 percent of it is refundable. Also, the full credit is allowed against the Alternative Minimum Tax.

Child Tax Credit

If the credit exceeds the filer's tax liability, all or part of the credit will be refunded if the filer earns more than $3,000 in 2010, down from $12,550 in earnings previously.

Earned Income Tax Credit (EITC)

For families with three or more children, the maximum Earned Income Tax Credit for 2010 rises by $628.50. And the phaseout of the credit for joint filers starts at higher income levels in 2010, allowing more of them to claim the credit.

Nontaxable Combat Pay Allowed for Earned Income Tax Credit (EITC)

The election to include nontaxable combat pay in the calculation of earned income for the Earned Income Tax Credit applies for 2010.

Direct Donations of IRAs to Charity

IRA owners age 70½ and older can donate up to $100,000 of their IRAs to charity through 2012 without having to report the withdrawal as income and deduct the donation as a charitable contribution. Deductions will not be limited by the Adjusted Gross Income cap on charitable contributions or the itemized deduction phaseout.  Keeping IRA distributions out of adjustable gross income in the first place can also have other benefits.  Amounts donated in this way count as all of part of the IRA owner's required minimum distribution.

Higher Income Limits for Deductible IRAs and for Roth IRAs

If you are covered by a retirement plan at work, you can take a full IRA deduction in 2010 if your modified Adjusted Gross Income is less than $109,000 (married filing jointly) or $66,000 (single or head of household). A partial deduction is allowed until your Adjusted Gross Income reaches $109,000 if you are married filing jointly, or $75,000 if you are single or a head of household. Also, the opportunity to contribute to a Roth IRA is now phased out as your modified Adjusted Gross Income rises between $166,000 and $176,000 if you are married filing jointly, or $105,000 to $120,000 if you are single or a head of household.

Roth IRA Conversions

Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to convert a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate. For conversions in 2010, taxpayers can spread the tax due over two years. Half of the conversion will be taxed in 2011, and the remainder will be taxed in 2012. Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which does not have income limits for contributions) and immediately convert to a Roth.

Contribution Limit for 401(k) Plans

The maximum employee contribution is $16,500 in 2010 for 401(k) and similar workplace retirement plans, including 403(b)s and the federal Thrift Savings Plan. Workers age 50 and older in 2010 can put in an additional $5,500, making their maximum $22,000.

Tax Rate on Capital Gains

The tax rate on capital gains from the sale of assets held longer than one year remains at zero percent for people in the 10 percent or 15 percent tax brackets. The 15 percent maximum tax rate on long-term capital gains for taxpayers in higher brackets also remains the same.

Tax Rate on Dividends

Similarly, the special 5 percent maximum rate on dividends of taxpayers in the 10 percent and 15 percent tax brackets remains at zero percent.

Estate Tax Exemption

For 2010, there is no federal estate tax.  However the executors of estates where the taxpayer died in 2010 can elect to apply the 2011 exemption of $5,000,000, with a maximum estate tax of 35%.  Different rules for the step up in cost basis apply in these two years, meaning some estates may find the 2011 rules more beneficial.  The estate tax was reinstated in the 2010 Tax Relief Act.

Higher Annual Gift Tax Exemption

For 2010, you can give up any individual up to $13,000 without owing any gift tax.

Credit for Residential Energy Efficient Property

The credit for 30 percent of the cost of installing solar water heating equipment, solar electric equipment, geothermal heat pumps or small wind turbines in your primary residence or a second home is unlimited in 2010. But the credit for fuel cell property cannot exceed $500 per half-kilowatt capacity.

Credit for Energy-Saving Home Improvements

The tax credit for the cost of energy-saving home improvements is 30 percent for 2010, up to a combined maximum of $1,500 in both 2009 and 2010. It applies to qualified insulation, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners.

Converting a Second Home to a Primary Home

If you convert a second home into a principal residence after 2008, you may not be able to exclude all of your gain. A portion of the gain on a subsequent sale of the home will be ineligible for the home-sale exclusion of up to $500,000, even if the seller meets the two-year ownership-and-use tests. The portion of the profit that's subject to tax is based on the ratio of the time after 2008 when the house was a second home or a rental unit, to the total time you owned it. So if you have owned a vacation home for 18 years and make it your main residence in 2011 for two years before selling it, only 10 percent of the gain (two years of nonqualified second home use divided by 20 years of total ownership) is taxed. The rest qualifies for the home-sale exclusion of up to $500,000.

Refundable Child Tax Credit

The income threshold needed to qualify to claim the child tax credit if it exceeds your regular income tax bill is $3,000.

College Savings Plans

529 College Savings Plans can now be tapped tax-free to pay for a computer or Internet access.

Estimated Tax Relief for Owners of Small Businesses

If an individual's Adjusted Gross Income for 2009 was less than $500,000 and more than half of the gross income was from a business with fewer than 500 workers, the estimated income taxes for 2010 estimated tax payments can be based on the lesser of 90 percent of tax liability for 2009 or 2010. The usual estimated tax benchmarks of 100 percent or 110 percent of tax liability do not apply.

Domestic Production Activities Deduction

In 2010, this deduction increases to nine percent of qualifying business net income. This deduction applies to businesses engaged in construction, engineering or architectural services, film production, or the lease, rental or sale of equipment you manufactured. However, the rate remains six percent for oil and gas companies.

Educators' Deduction

You can deduct up to $250 ($500 if married filing joint and both spouses are educators, but not more than $250 each) of any unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. You must have worked at least 900 hours a school year in a school that provides elementary or secondary education.

This deduction has been extended through the end of 2011.

Tuition and Fees Deduction

You can deduct up to $4,000 of college tuition and fees through 2011.

Income Earned Abroad

The maximum foreign earned income exclusion is increased to $91,500. This is a $100 increase from 2009.

Limits on Deducting Farm Losses

Beginning in 2010, the amount of farm losses you can enter to offset nonfarm income is capped at the greater of $300,000 or your net farm income over the past five years. But this limit will apply only if you get federal farm payments or Commodity Credit Corporation (CCC) loans. You can take suspended losses in later years. The caps will also apply to partners and S corporation owners.

Exemptions for the Alternative Minimum Tax

For 2010, the exemption levels were increased to $72,450 for married couples filing jointly, $47,450 for singles and heads of household, and $36,225 for married couples filing separately.

Partial Exclusion for Unemployment Benefits

For 2010, the first $2,400 of unemployment benefits you receive is no longer tax-free.

Sales Tax Deduction for New Vehicles

Beginning in 2010, buyers of new vehicles no longer get a tax benefit for sales tax paid on new vehicles, unless they itemize and elect to deduct sales taxes instead of state income taxes.

Starting in 2011

Lower Tax Rates Extended

The 2010 Tax Relief Act extends through the end of 2012 the tax rates in effect in 2010. They had been scheduled to increase to the higher tax rates that were in effect prior to 2001.

Estate Tax

For individuals dying after 2010, the federal estate tax continues with a $5 million exemption and a 35 percent maximum rate. The current federal estate tax rules are scheduled to end after 2012.

Lower Capital Gains and Dividend Tax Rates Extended Through 2012

The tax rate reductions for long-term capital gains remain in effect for 2011 and 2012.

Child Tax Credit

The credit of $1,000 per eligible child continues through 2012. The credit was extended by two years by the 2010 Tax Relief Act.

Payroll Tax Credit

Starting in 2011, the partial credit for payroll taxes paid by employers is no longer available.

Section 179 Expense Deduction

The $500,000 maximum amount of equipment placed in service that businesses can expense and the annual investment limit of $2,000,000 remain in effect for 2011.

Tax Credit for College Tuition

The American Opportunity Tax Credit remains in effect through 2012.

Earned Income Tax Credit (EITC)

Temporary increases in the Earned Income Tax Credit for filers with three or more children and the higher income levels for the phaseout of the credit have been extended through the end of 2012.

Mortgage Insurance Premiums

The special itemized deduction for mortgage insurance premiums paid on mortgages taken out after 2006 expires on Dec. 31, 2010.

Credit for Energy-Saving Home Improvements

The 30 percent tax credit of the cost of energy-saving home improvements was extended by the Tax Relief Act of 2010 through 2011.

Starting in 2013

Tax Relief for Taxpayers Who Lose Their Homes Due to Foreclosure Expires

Beginning in 2013, debt forgiven in connection with the foreclosure of a principal residence will once again be considered taxable income (unless you are in bankruptcy or insolvent).

Starting in 2017

Credit for Residential Energy-Efficient Property

The credit for 30 percent of the cost of installing solar water heating equipment, photovoltaic or fuel cell equipment, geothermal heat pumps or wind turbines in your primary residence or a second home does not apply after 2016.

http://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/Summary-of-Federal-Tax-Law-Changes-for-2010-2017/INF12041.html

NY Times Your Money Article; Smarty Pig Cuts Interest Rates…Again

By TARA SIEGEL BERNARD

SmartyPig customers received a disappointing note when they logged into their accounts this week: the online savings bank cut its interest rate — the second rate cut in less than four months — to 1.35 percent from 1.75 percent.

So the Pig is no longer the star of the high-yield savings scene that it once was. Now, it's largely on par with other high-yield online savings accounts (Can we still call them that?) at institutions like American Express and Sallie Mae (which is still much better than most big brick-and-mortar banks).

SmartyPig customers with balances less than $50,000 will now earn the 1.35 percent rate, while savers who hold balances of more than $50,000 across all their accounts will continue to receive 0.50 percent. That follows a cut from 2.15 percent to 1.75 in September (for balances under $50,000).

The move is frustrating for SmartyPig savers, including myself, who thought the Pig was a bit different from the rest and had hoped that it had figured out a way to pay a slightly more competitive rate (idealistic, I know). I called up the Pig's chief executive, Bob Weinschenk, for an explanation, and it seems that the company's business model has simply evolved.

Instead of rewarding customers with an especially enticing rate for a longer-term savings goal, it's simply more profitable to reward customers who want to save for smaller goals — usually over one to two years — and buy something, for which they'll receive a small bonus on top of the interest they've earned while saving up. SmartyPig also recently introduced a reloadable prepaid card, which provides cash back savings.

"Most of our customers are saving for things that are tangible and are within that time period," Mr. Weinschenk said. "One of the goals was to get off credit cards."

That's an admirable goal. But now it will take customers a little longer to reach those goals with the lower rates — though SmartyPig does make it easy to save by automatically shuttling your money into an account. That, after all, is often half the battle.

But from here on in, you can probably expect a rate that is competitive with other higher-yielding online banks, not one that exceeds those rates by much. Mr. Weinschenk said its partner bank, BBVA Compass, ultimately decides what to do with rates, though the Pig is "party to those discussions." But their agreement with the bank is to maintain a top tier rate, and the bank has.

For now, SmartyPig is working on beefing up its new mobile application — it enables you to reload its prepaid card with cash — which will eventually tell customers which retail partners offering discounts are nearby. It's also negotiating deals with retailers, where, say, a big-box store can run its own version of SmartyPig on its Web site and customize discounts for customers.

SmartyPig offended some customers by not sending out an e-mail notifying them of this most recent rate change, as it has in the past (customers do see a notice, however, when they log into their account). Executives realized that the omission was a bad idea and said it would send e-mails in the future.

Mr. Weinschenk said that the bank lost "an incredibly small number of people" when the Pig last cut rates. But that's probably because savers don't have many better options. If it lowers rates again, those numbers may grow.

http://bucks.blogs.nytimes.com/2011/01/06/smartypig-cuts-interest-rates-again/?ref=your-money