Lead taxwriters in the House and Senate have emerged from lengthy negotiations to announce a deal on legislation to extend various popular tax breaks that expired at the end of 2009. For individuals these include the deduction for state and local sales taxes, the additional standard deduction for real property taxes, and the above-the-line deduction for qualified tuition and related expenses. These tax breaks aren’t particularly controversial, but every year there’s a struggle to reach agreement on whether to offset the revenue loss with a tax increase somewhere else, and if so, how to do that. Despite the agreement between Democrats Max Baucus of the Senate Finance Committee and Sander Levin of the House Ways and Means Committee, it isn’t yet clear that the votes are available to pass this legislation. (more…)
Archive for May, 2010
Extenders: Deal or No Deal
Friday, May 21st, 2010Forbes Quotes Us on Roth Conversions
Thursday, May 20th, 2010Forbes quotes us in this article about converting from a traditional 401k account to a Roth IRA. In case you came here from that article looking for our piece discussing strategies available for isolating basis in a 401k conversion, that would be right here.
Legalizing — and Taxing — Internet Gambling
Thursday, May 20th, 2010Barney Frank, Democrat of Massachusetts, and Ron Paul, Republican of Texas, may seem an unlikely pair to be lead cosponsors of legislation, but they’ve found common ground on legislation that would legalize, regulate and tax Internet gambling. Frank testified in favor of the legislation at a Ways and Means Committee hearing on May 19. Testimony against came from Bob Goodlatte, Republican of Virginia. (more…)
Tax News
Thursday, May 20th, 2010Interest rates. The interest rates the IRS charges on underpayments or pays on overpayments remains unchanged at 4% for the third quarter of 2010. These rates are available in our Reference Room.
Final Regs on 401k Diversification
Thursday, May 20th, 2010The Pension Protection Act of 2006 added rules requiring 401k plans (and certain others) to give participants an opportunity to change from an investment in stock of the company where they work to a diversified investment. Generally you have this right from day one for your own contributions to the plan, and the plan must permit this for company contributions when you’ve completed three years of service. Final regulations (PDF) have been issued providing details that may be of interest to plan designers and administrators. Changes from the proposed regulations are relatively minor but may be helpful, including a clarification that reinvestment of dividends on employer stock won’t create a violation of the rules.
Estate Tax Update
Wednesday, May 19th, 2010Remember the estate tax? We used to have an estate tax, way back in 2009. Depending on your political persuasion, you may know it better as the death tax. Strictly speaking it’s not a tax on deaths or on estates: it’s a tax on transfers of wealth at death to noncharitable beneficiaries other than a spouse. Whatever you like to call it, it’s currently in play. (more…)
Form Released for Payroll Tax Exemption
Wednesday, May 19th, 2010Businesses hiring unemployed workers can qualify for an exemption from paying the 6.2% Social Security payroll tax this year. The IRS has released a revised version of Form 941 that can be used to claim the exemption beginning with the second quarter of 2010. (more…)
IRS Guidance on Small Business Healthcare Credit
Tuesday, May 18th, 2010The new healthcare law provides a tax credit for certain small businesses (including tax-exempt organizations) employing moderate- and lower-income workers. This credit is in effect right now. For years 2010 through 2013, a qualifying business can recover up to 35% of the amount it pays in health insurance premiums for its employees. The IRS has issued guidance on how this part of the new law works. (more…)
Tax News
Tuesday, May 18th, 2010Disaster relief. IRS has announced extended deadlines for victims of recent storms in Mississippi.
How Spreads Cost Investors Money
Monday, May 17th, 2010People who buy and sell stocks are aware of the brokerage commission they pay on those transactions. Many of them aren’t aware of another cost — a hidden one — called the spread. The spread can be insignificantly small, but it doesn’t have to be. This is one of the reasons frequent trading tends to produce inferior results. (more…)
