16. January 2010 by admin.

Some confusion out there about Roth changes.  The following are effective in 2010….

The tax that has to be paid when you  CONVERT a REGULAR IRA to a ROTH IRA can be paid either

• all in 2010
• all in 2011
• OR 1/2 in 2011 and 1/2 in 2012

Additionally, the limits on Roth contributions do not exist for 2010.

It would seem like a good deal to wait and pay 1/2 in 2011 and the other half in 2012 BUT that may not be the best answer.  We anticipate the highest marginal tax rate will go up (anybody want to bet it don’t?) in the next two years.  That means the same amount of income might be taxed as at higher rate.

 It could be taxed at a higher rate because you are going to have a better year and your tax situation calls for a higher rate than the one you are in now… regardless of the increase in tax rates.

Also, if you have Net Operating Losses in either 2010 or 2011, these may be used to offset the tax on the conversion and it worth more in 2010 than in 2011 or 2012.

That’s alot of concenses tax info on Conversions to Roth.  If you have any questions, please post a comment on this blog, or contact us at USATaxHelp.com.

Happy New Year!

Posted in Retirement Accounts, Income Tax | 1 Comment »

7. December 2009 by admin.

If you participate in an Employer sponsored Simple IRA, you can put an max of $11,500 in 2009 PLUS $2,500 for being over age 50.  That total is $14,000 maximum as an employee deferral.  Additionally, the employer has some matching options.  By far we have found the most popular Employer matching option to be… the employer matches up to the lower of 3% of your wages or whatever you put in as an employee.

Whatever is withheld from the paycheck must be withheld in no later than the end of December for 2009 and paid in by the employer no later than January 31^st, 2010.

i.e.  Your wages for 2009 are $36,000 x 3% = $1,080.  If you only contribute $800, Employer can only put in $800.  If you contribute $3,000, Employer can only put in $1,080.

There is no commitment to put to the maximum, nor is there a commitment that you continue to participate in a subsequent year.

Note:  Participation in an employer sponsored plan subjects you to limits on Regular IRA contributions.  Contact us for more info at www.USATaxHelp.com

Posted in Retirement Accounts, Payroll Tax, Sub S Corporations, LLC's, Income Tax | 1 Comment »

7. December 2009 by admin.

$5,000 into a REGULAR IRA is the max for a single individual UNDER age 50 who does not participate in an employer sponsored retirement plan and still receive a tax deduction.  Add $1,000 if over age 50.

Can contribute till April 15^th, 2010 for 2009.  Note:  There is NO tax deduction for contributing to a ROTH IRA.  The benefit of the ROTH is the earnings are not taxed during the growth phase of the investment (same as any retirement account) BUT the gains when taken out in retirement are NOT taxed.

The amount you or your spouse can contribute may be reduced depending on your Adjusted Gross Income.  Contact us if you need more details at www.USATaxHelp.com

Posted in Retirement Accounts, Sub S Corporations, LLC's, Income Tax | 1 Comment »

7. December 2009 by admin.

$5,000 into a REGULAR IRA is the max for a single individual UNDER age 50 who does not participate in an employer sponsored retirement plan and still receive a tax deduction.  Add $1,000 if over age 50.

Can contribute till April 15^th, 2010 for 2009.  Can file your tax return WITH the Regular IRA as if it has already been made, then use the refund to make the actual REGULAR IRA contribution as long as you do it before April 15, 2010.

The deductible amount if you or your spouse participate in an employer plan may be reduced depending on your Adjusted Gross Income.  Contact us if you need more details at www.USATaxHelp.com

Posted in Retirement Accounts, Sub S Corporations, LLC's, Income Tax | No Comments »