Year End Tax Planning Stratigies

Some Year-End Tax Planning Strategies
The 2009 tax year is drawing to a close. The sooner you address year-end tax planning issues, the better. Whether you are approaching year-end planning from an individual or business perspective, you can take action to benefit from favorable tax law provisions.

Careful planning can reduce your tax liability. The lower your liablity the more money you have available to invest, or save for future goals. Set goals, stay on track and make sound financial decisions.

IRA Charitable Donation Rule for 2009
Contributing to charity is a way to benefit others and realize valuable tax benefits at the same time. If you are an older IRA owner, you may be eligible for a special charitable contribution rule that extends through the end of 2009. Under federal tax law, an IRA owner age 70½ or older can directly transfer tax free up to $100,000 from the IRA to an eligible charitable organization in 2009. This planning option is eligible to IRA owners regardless of whether they itemize their deductions. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. The transferred amounts are not taxable to the IRA owner and no deduction is available for the amount given to charity. We can help you determine if this strategy would be beneficial to you in your planning.

IRA Contributions
The deadline for contributions to a traditional IRA for the year is the due date of your return, not including any extensions of time to file. Amounts you withdraw from your IRA are fully or partially taxable in the year you withdraw them. If you made only deductible contributions, withdrawals are fully taxable. Use Form 8606 to figure the taxable portion of withdrawals.

Withdrawals made prior to age 59 1/2 may be subject to a 10% additional tax. You also may owe an excise tax if you do not begin to withdraw minimum distributions by April 1st of the year after you reach age 70 1/2. These additional taxes are figured and reported on Form 5329 (PDF). Refer to Form 5329 Instructions for exceptions to the additional taxes. For information on Roth IRA contributions or distributions, refer to Topic 309. For information on conversions from a traditional IRA to a Roth IRA, refer to Publication 590.