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2010 Tax Planning Seminar - PowerPoint PPT Presentation


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2010 Tax Planning Seminar. Presented by. Your Firm Name. The clock is ticking on savings …. Tax Rate Forecast. Tax Credits and Deductions. Credits: reduce tax dollar for dollar Deductions: lower your taxable income. 2010 Child Tax Credit $1,000 per child. Education Credits.

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2010 Tax Planning Seminar


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    Presentation Transcript
    1. 2010 Tax Planning Seminar Presented by Your Firm Name

    2. The clock is ticking on savings….

    3. Tax Rate Forecast

    4. Tax Credits and Deductions Credits: reduce tax dollar for dollar Deductions: lower your taxable income

    5. 2010 Child Tax Credit$1,000 per child

    6. Education Credits Hope Scholarship Credit (American Opportunity Tax Credit) = $2,500 maximum Lifetime Learning Credit = $2,000 maximum

    7. Making Work Pay Credit A credit for wage earners and the self-employed • 6.2% of earned income or • $400 a year for single filers • $800 a year for joint filers

    8. Standard Deduction • Single Filers: $5,700 • Joint Filers: $11,400 • Married Filing Separately: $5,700 • Head of Household: $8,400

    9. Itemized Deductions Reduce Taxable Income • Medical expenses • Nonbusiness taxes • Interest expenses • Investment expenses • Professional fees • Charitable contributions

    10. Donating to Charity? • Donations of cash or property to qualified charities are deductible. • Charitable donations are limited to 50% of your adjusted gross income. • Deductions for vehicle donations are limited for vehicles worth more than $500.

    11. Health Insurance • Individual Coverage Mandate begins in 2014. • Subsidies will be provided for the uninsured. • New taxes will be levied to cover the costs of subsidies..

    12. Retirement Savings = Tax Savings

    13. Employer-Sponsored Plans • Defined Benefit Plans • Defined Contribution Plans

    14. 401(k) Contribution Limits 2010 Under Age 50: $16,500 Additional “Catch-Up” for those Age 50 and Older: $5,500

    15. The Roth 401(k) • Contributions are made with after-tax dollars. • Earnings grow tax free. • Distributions are tax free in retirement.

    16. How much of your incomewill you need in retirement?

    17. IRA Contribution Limits

    18. Roth IRAs • Make contributions with after-tax dollars • Receive tax-free distributions

    19. Roth IRA Income Limits*

    20. Roth IRA Conversions Income limits on conversions have been eliminated in 2010. You will be taxed on the conversion amount. You will not owe a penalty

    21. Tax Tip: IRA savings can be used without penalty for qualified college expenses or to help pay for your first home.

    22. Which IRA Is Best for You?Roth vs. Traditional

    23. Taxes Reduced for Capital Gains and Dividends through 2010

    24. Capital Gains Tax Rates • 15% for investors in the top four brackets • Zero tax through 2010 for investors in the 10% and 15% brackets

    25. WARNING! No Tax Relief for Short-Term Gains!

    26. Capital Gains Advantage Gain Tax Net Cash 11 months $50,000 $17,500 $32,500 12 months $40,000 $ 6,000 $34,000

    27. Other Gains Rates Unchanged Collectibles 28% Real estate depreciation recapture 25%

    28. WARNING! Large Gains Can Trigger the AMT

    29. AMT Danger Zones • Large capital gains • Numerous dependency exemptions • Large state income tax deductions • Large deductions for unreimbursed employee business expenses or miscellaneous expenses • Substantial medical expenses • Incentive stock options

    30. 2010 AMT Exemption Amounts (without further reform) • $45,000 for joint filers, down from $70,950 in 2009 • $33,750 for single filers, down from $46,700 in 2009

    31. Tax Tip: Offset gains in your portfolio with losses at the end of the tax year.

    32. Dividend Tax Rates • 15% for investors in the top four brackets • Zero tax through 2010 for investors in the 10% and 15% brackets

    33. Dividend vs. Ordinary Income Ordinary income rates 10% – 35% Dividend rates 0% – 15% Rates apply for both regular tax and AMT.

    34. Qualifying Dividends • Domestic corporations • Certain foreign corporations • Certain mutual fund dividends

    35. Non-Qualifying Dividends • Retirement plans or IRAs • Mutual fund interest and short-term gains • Money market interest • S corporation distributions

    36. 15% dividends cannot offset investment interest expense. 15% dividends also cannot offset capital losses.

    37. Ordinary Income Interest 15% Dividends vs.

    38. No 15% rate for dividends in retirement plans Hold stock earning dividends taxed at 15% outside of retirement accounts

    39. Not all stocks are created equal. • Some stocks do not pay dividends. • Choose investments that make sense for you.

    40. Current Income Capital Appreciation vs. Focus on Total Return

    41. Sell appreciated stock anduse the proceeds to… • Buy dividend-paying stock • Diversify investment holdings • Change asset allocations

    42. What is… ? Long-Term

    43. Tax Goals vs. Investing Goals Always consider: • Portfolio balance • Risk tolerance • An investment’s impact on your situation

    44. Plan around the “Kiddie Tax” Applies to children under age 19, or age 24 for full-time students.

    45. Good News for Business Owners • Tax incentives for hiring and retaining workers • Tax breaks for providing health insurance • Increased Section 179 expensing

    46. Hiring Incentives • New Hires: Social Security tax liability is waived through December 31, 2010. • Retained Hires: A $1,000 credit for each qualified new hire who is retained for one year.

    47. Available through 2011 Eligibility expanded through 2010 Work Opportunity Tax Credit (WOTC)

    48. “Green” Business Tax Breaks • Deduction for energy-saving improvements • Renewable energy production credits: • Solar • Biomass • Geothermal • Wind

    49. Health Insurance Reform • No employer requirement • “Pay or Play” rules starting in 2014 • Tax Credit for premiums in 2010

    50. Section 199 Domestic Manufacturing Deduction • 9% of QPAI in 2010 • 50% of wages apply