Tips to Save Tax Dollars Before the “Sunset”
The past year has had several tax bills that will impact your 2009 tax return(s). Additionally, there are many tax provisions that are set to expire and “sunset” back to previous tax limits and standards. The following are a few of the tips to consider before filing in 2009:
- Self-employed Pensions (SEP) – If you are considered self-employed, you can establish and contribute to a SEP retirement plan. This plan must be established and funded by the due date of your tax return, including extensions. For tax year 2009, you can possibly contribute up to $49,000 (and even more if you are age 50 or older).
- Section 179 Expensing – Businesses should consider this option which allows the entire cost of the asset to be expensed in the year of purchase rather than capitalizing and claiming deductions over a period of future years. For 2009 a maximum election of $250,000 can be made as long as all qualifying conditions are satisfied.
- Bonus Depreciation – Businesses should consider claiming bonus depreciation on assets purchased during 2009. This election allows you to write-off 50% of the cost of the asset rather than capitalizing and claiming deductions over a period of future years. This is an alternative to not claiming the section 179 election (see above).
- Energy Tax Credits – If you are a homeowner and made energy saving improvements to the residence, you are eligible for a tax credit. Some common examples include extra insulation or energy saving windows. This credit is limited to $1,500.
- Roth IRA Conversion – In 2010, the opportunity to contribute and covert any IRA into a Roth IRA without the $100,000 income restriction is available. The tax triggered can potentially be paid in tax years 2011 and 2012.
These are just a few of the tax opportunities available to you and your business for the upcoming tax filing system. Please give us a call if you would like to discuss any of these “tips” and their applicability to your situation.