New Tax Law Alerts
Fraudulent E-Mails– Phony e-mails claiming to be from the IRS have been circulating. As fraudulent e-mails containing harmful viruses or requesting personal information in an identity theft scam are becoming more and more frequent we want to remind our clients that the IRS does not send unsolicited e-mails to any taxpayers nor do they request personal information via e-mail. Visit www.irs.gov/privacy for more information.
Report of Foreign Bank and Financial Accounts (FBAR)-If you have an interest in or signature authority over a foreign financial account, you may have a FBAR filing requirement if the aggregate value of these accounts was $10,000 or more at any time during 2009. FBARs are due by June 30, 2010 and there are hefty penalties for failing to file a timely FBAR. Some taxpayers may be eligible for an extension to file until June 30, 2011.
Converting to a ROTH IRA- This is a reminder that beginning in 2010, all taxpayers regardless of income level can convert a traditional IRA to a ROTH IRA, as the $100,000 AGI limitation previously in place has been lifted. Also, for 2010 conversions only you can elect to spread the income triggered by the conversion evenly over 2011 and 2012, thereby deferring the federal income tax due on the converted amount.
Energy Credits– There have been some changes to the energy credits available for 2010. Individual taxpayers may be eligible for the Residential Energy Efficient Property Credit, which is limited to 30% of the cost of qualified property or the Nonbusiness Energy Property Credit, which is limited to 30% of the cost of qualified energy efficient improvements and/or residential energy property. Each credit is generally limited to $1,500, although certain types of property may not be subject to a limitation. The certification requirements are also now more stringent and require a written statement from the manufacturer that the property meets the energy efficient requirements.
CA Mortgage Forgiveness Debt Relief- California has extended the Mortgage Forgiveness Debt Relief law through December 31, 2012. Under prior law, if your home loan was forgiven in 2009 you could have taxable cancellation of debt (COD) income for state purposes. Under the new law most joint filers will be able to exclude up to $500,000 of COD income (single, RDP, and separate filers can exclude up to $250,000) for debt forgiven between January 1, 2009 and December 31, 2012. The COD exclusion applies only to your qualified principle residence, although relief may be available under other provisions of the law for rental property, vacation homes, etc.
CA New Home Credit– California now allows a new home or first time home buyer credit for purchases made between May 1, 2010 and December 31, 2010. If you are under contract by December 31, 2010 you will be allowed to take the credit as long as you close escrow on or before July 31, 2011. The credit, limited to 5% of the purchase price of the home with a maximum credit of $10,000, is taken ratably over 3 years and is available on a first come, first serve basis until the funds reserved for the credit are exhausted. The new home credit is available for purchases of a never previously occupied home. The first time home buyer credit is available to individuals (and their spouses) who have not owned a principal residence in the previous 3 years. You cannot claim either credit if you claimed the New Home Credit in 2009.
ShareThis