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constitute a professional service. Always consult with a competent
professional for advice on tax, accounting and other financial matters
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Date last modified:
01/02/09
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Tax News You
Can Use
- In 2009 ONLY, taxpayers 701/2 and older can skip taking their
Required Minimum Distribution from IRA's and other retirement plans.
The IRS will not impose a penalty on missed or smaller distributions.
- Determining your tax filing status takes
many factors into consideration. Briefly, if you are unmarried
without dependents living with you, you file as
Single. If you are married,
you file Married Filing Joint or
Married Filing Separate. If you
are married, have lived apart from your spouse for more than six months
during the current tax year and are providing a home for dependents living
with you, you may qualify to file as Head of
Household. Finally, if you lost your spouse during the
tax year and you have minor children living with you, you may qualify to
file as Qualifying Widow(er) for three
years as long as you remain unmarried. In Oregon, couples who are
Registered Domestic Partners, must file
their state return either as married joint or married separate.
- Maintaining a home for determining Head of
Household tax filing status includes the following expenses:
| Rent |
Utilities |
| Mortgage Interest |
Upkeep/Repairs to Home |
| Property Taxes |
Groceries Consumed at Home |
| Property Insurance |
Other Household Expenses |
The person who pays more than one-half of the total cost of
maintaining a home meets the requirement of "providing a home for a
dependent".
- Selling online (such as via Ebay) may be considered a taxable
activity. If you are a 'casual seller', meaning you sell
occasionally without intent to make a profit, you probably don't need
to report the activity. If you are a more active seller or you
are selling items at a profit or you are selling collectibles, you
must report the income either as a hobby venture or a business.
- In some cases, the IRS will permit a taxpayer to take the
mortgage interest and property tax deductions
even if he or she is not liable for the mortgage. The taxpayer
must have paid all the mortgage payments, property taxes and general
upkeep for the home. The home must be considered the
taxpayer's in all respects other than having his/her name on the
loan.
- The IRS permits taxpayers receiving refunds to
split their refund among one, two or three accounts,
including IRA accounts, when choosing direct deposit. Form 8888 will
be required when designating more than one account.
-
Health Savings Accounts (HSA)
help alleviate the burden of medical expenses and provide some tax
advantages. Only high deductible health insurance policies qualify.
- You can open a
Roth IRA for 2008 or contribute to
an existing one up until April 15, 2009. The maximum annual contribution is $5,000 per year;
after-tax dollars. Those over 50 can contribute an additional $1,000. Earnings on your Roth are federally tax-free if your
account has been open for five years and you are at least 59½ years
old. Contact Bill for more information on Roth IRAs.
- The Saver's Credit
offsets the cost of contributions to IRAs, 401(k) plans and
certain other retirement plans. The credit is figured as a percentage of the
qualifying contribution. For 2008 returns, the federal tax credit applies to Individuals filing
as single with incomes up to $26,500; filing as head of household up to $39,500
and married couples up to $53,000. Other requirements are the taxpayer must be
18, not a full-time student and not claimed as a dependent on another person's
return.
-
Employers can give their bicycle-commuting employees
up to $20.00 per month as a non-taxable fringe benefit to cover the costs of
pedaling to work.
- For 2009, if you have a household employee, like a nanny or caregiver, you must report and pay payroll taxes on wages when they exceed $1,700
per year.
- Washington State residents do not pay individual
income tax. Businesses may need to collect sales tax and fulfill other
reporting requirements. Visit the
Washington State Department of Revenue's website for more information.
- Do not ignore letters from the IRS or state revenue agencies. Respond promptly, or seek professional assistance, when information is requested.
Procrastination can be costly!
Links to More Tax Tips and Information
◊
Social Security
◊
Energy Tax Credits
◊
Education Deductions and Tax Breaks
◊
Tips for Sole Proprietors and Business Owners
◊
Tax Filing Deadlines, Extensions and Quarterly
Estimates
◊
Life Planning in the 21st
Century
◊
Important Documents to Keep
Resources You Can Use
- To stay on top of Social Security news, you can sign up
for a free monthly email newsletter. To get it, go to www.ssa.gov/enews
- You can download forms, publications and information
from the IRS website. Go to www.irs.gov
- For the Oregon Department of Revenue, go to
http://www.oregon.gov/DOR/.
You should be able to access other states from the IRS website.
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