Lawmakers Ask Bush To Suspend RMDs For 2008

Sixty-one members of Congress are displeased with the Treasury Department's recent decision not to provide relief from required minimum distributions from IRAs and similar arrangements for 2008 (TAXDAY, 2008/12/22, T.1). The bipartisan group of lawmakers asked President Bush to use his executive authority to suspend RMDs for 2008 and, moreover, to allow individuals to recontribute RMDs already taken for 2008.........

CCH News

Gov't Letter On Minimum Distributions -2008

The Honorable
U.S. Senate / U.S. House of Representatives
Washington, DC

Dear _______________:

This letter follows up on our previous response to your letter regarding required minimum distributions from individual retirement arrangements (IRAs) and 401(k) plans in light of the recent financial downturn.............

Kiplinger

Christmas Video - Awesome Christmas Lights

Happy Holidays To All !

Medicare Part D: Penalties For Brand Drugs Hidden From Beneficiaries

PART D GUIDE
Click here for the complete Part D guide

It's Open Enrollment For Drug Coverage To December 31, 2008
Many Plans Will Cost More In 2009
It Pays To Compare

AARP has called on Medicare to prohibit a little-known practice that some Part D drug plans are using to charge enrollees a sometimes substantial penalty if they choose certain brand-name drugs instead of their generic equivalents. Under a formula known as reference-based pricing, Medicare currently allows plans to charge enrollees the full price of the brand-drug plus the normal copay for that drug minus the full price of the generic............

AARP

The IRS Examination (Audit) Process

January 2006

The IRS examines (audits) tax returns to verify that the tax reported is correct.

Selecting a return for examination does not always suggest that the taxpayer has either made an error or been dishonest. In fact, some examinations result in a refund to the taxpayer or acceptance of the return without change..............

Internal Revenue Service

Bad News For Seniors: No IRA Help For 2008

December 18, 2008 --The Treasury has decided against granting any relief to retirees who were hoping to take smaller 2008 distributions from their depleted individual retirement accounts. ..........

Forbes

IRS Comprehensive Tax Guide Available Free At IRS.gov

WASHINGTON — December 17, 2008 --The IRS has placed its comprehensive tax guide for individuals on IRS.gov, updating it for tax year 2008. The updated on-line version of IRS Publication 17, “Your Federal Income Tax,” contains more than 900 interactive links..........

Internal Revenue Service

Tax Planning Before Year-End - Bonus & Section 179 Depreciation Deductions

The Bonus Depreciation provision allows you to depreciate 50 percent of the adjusted basis of certain qualified property during the year that the property is placed in service.

To take advantage of this bonus depreciation provision for 2008, you must place the property in service (that is, buy it and have it operating) after December 31, 2007 and before January 1, 2009......................

About.com

Credit-Card Issuers Get Stingy

For consumers drowning in high-rate credit-card debt, balance transfers -- those "0% for 12 months!" offers -- are often important, if temporary, lifelines. For anyone else with credit-card debt, they're a useful way to keep interest-rate payments low.

But as credit-card issuers themselves flail in stormier economic seas, some are making such offers more restrictive and expensive. That means consumers must make sure that transferring their debt makes prudent financial sense............

Wall Street Journal

Banks And Consumers Brace For New Credit Card Rules

WASHINGTON (Reuters) – December 13, 2008 -- The U.S. credit card industry, harshly criticized for imposing surprise fees and interest rate hikes on consumers, may face a day of reckoning on Thursday................

Yahoo News

Will Gift Cards Keep On Giving When Company Goes Bankrupt?

Gift cards should be worry-free, thanks to a new Michigan state law that bars hidden fees and extends expiration dates to no less than five years.

But shoppers have another concern: Will those retailers be around in 2009 to redeem those cards?........................

MILive

Required Minimum Retirement Withdrawals waived....In 2009

What about 2008?
The temporary suspension of RMDs is great news for older account holders who would be facing this task in 2009. But the new soon-to-be law doesn't do a thing for folks who have a Dec. 31, 2008, RMD deadline to meet and are confronting the same lost value concerns.

There's still hope that Treasury will issue a ruling to help out those folks via a regulatory pronouncement. Several members of Congress have been urging Secretary Henry Paulson and crew to do just that.............

Don't Mess With Taxes Blog

Don't Miss These Last Minute Tax Breaks

The tax season deadline is the last thing most of us want to think about during the holidays. Although April 15 may seem a long way off, now is the time to make sure you’ve taken advantage of some of the tax breaks available to you in 2008, according to the Michigan Association of CPAs. That’s because many opportunities to reduce your tax bill will expire once the new year begins. With that deadline in mind, here are some that you shouldn’t miss...........

Michigan Association of CPAs

Social Security Podcast: When Should You Start Receiving Benefits?

If you wondered about the best age to retire, listen to Social Security’s new podcast, “Deciding When to Start Receiving Retirement Benefits,”.............

Social Security Administration

IRS Reminder: Make Use Of Recent Tax Law Changes For 2008 And December 31 Is The Last Day For Most Of These Actions

Hear a podcast in English or Spanish.
WASHINGTON — Tax year 2008 is quickly nearing an end. The Internal Revenue Service reminds taxpayers to avoid putting off important financial tasks until the last minute. The important deadline of Dec. 31 is fast approaching for many tax-planning issues..........

Internal Revenue Service

IRS Interest Rates Drop for 1st Quarter 2009

WASHINGTON – December 10, 2008 -- The Internal Revenue Service today announced in Revenue Ruling 2008-54 that interest rates for the calendar quarter beginning Jan. 1, 2009 will drop by one percentage point. The new rates will be: ......................

Internal Revenue Service

Smart Tips About Gift Cards

Many people find gift cards to be a convenient and thoughtful way to allow friends and family to choose their own presents at the holidays. While this may be true, the Michigan Association of CPAs warns of some potential pitfalls to be aware of when giving or receiving a gift card..........

Michigan Association of CPAs

Michigan's New Gift Card Law

Here’s some welcome news just in time for the holidays. The state of Michigan has put into place new consumer-friendly laws governing the sale of certain gift cards. As of Nov. 1, stores must honor the gift cards and gift certificates they sell for at least five years from the date of purchase...................

Consumer Reports

Year-End Planning For Businesses

This is a particularly tricky year for tax planning. While 2008 may have been a bad year for your business, 2009 could be even worse. If there were ever a year to get professional advice, this is it........................

Small Business Taxes & Management

IRS Offers Tips For Year-End Donations

WASHINGTON — December 9, 2008 -- Individuals and businesses making contributions to charity should keep in mind several important tax law provisions that have taken effect in recent years.................

Internal Revenue Service

Stimulus Payments - What You Need To Know

If you missed the Oct. 15 deadline for filing an income tax return for a economic stimulus payment, don't worry. You can receive a payment in 2009 by filing an income tax return when the filing season opens in January. The IRS will have more information shortly.............

Internal Revenue Service

IRS Frequently Asked Tax Questions & Answers

To search the Frequently Asked Questions (FAQs), enter your search terms or questions in the box below..............

Internal Revenue Service

Michigan Income Tax - Frequently Asked Questions

Individual Income Tax

List of Topics

Michigan Treasury

Michigan Business Tax - Frequently Asked Questions

NOTICE: The MBT was amended by 145 PA 2007 on December 1, 2007. Act 145 imposes an annual surcharge to taxpayers' MBT liability, as well as makes other changes. Due to PA 145, some of the FAQs have been rescinded and revised answers have been issued. See below for a list of the rescinded answers................

Michigan Treasury

Don't Rush On Mandatory Withdrawals From Retirement Accounts

Some relief might be on the way for senior citizens required to take minimum withdrawals from their individual retirement accounts at a time when the stock market has blown a hole in their financial portfolios............

AccountingWeb

Year- End Tax Planning For Individuals

It's about that time to do some serious year-end tax planning. We'll deal with your personal return first, then cover business planning. If you have your own business please read both sections before taking any action.

Don't underestimate the importance of year-end planning. You can save big tax dollars by deferring or shifting income from one year to another. Next year is too late; even the end of December may be too late for some techniques...........

Small Business Taxes Management

IRS Announces 2009 Standard Mileage Rates

WASHINGTON — November 24, 2008 -The Internal Revenue Service today issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:...................

AICPA Aims "Feed The Pig" at 25-34 Year Olds

The American Institute of CPAs is launching a new series of ads for its "Feed the Pig" financial literacy campaign at adults in the 25-to-34 age group.

The public service announcements, co-produced with the Ad Council, aim to teach young adults how to save money even in today's difficult economic environment.......

WebCPA

CCH Projects Inflation-Adjusted 2009 Personal Vehicle Use Limits

CCH has projected the maximum allowable value for employer-provided vehicles under the cents-per-mile method for computing the fringe benefit of personal use of a company vehicle. Relying on the consumer price index recently published for October 2008 (the measuring month specified under Code Sec. 280F(d)(7)), these amounts will remain at $15,000 for cars and drop to $15,200 for trucks and vans........

Information About Your Michigan Business Tax Account

Coming Soon! Businesses will soon be able to view their Michigan Business Tax (MBT) account information. Taxpayers will not be able to access self service until after the filing of their first MBT return. Note: in order to protect the privacy and security of taxpayer records, taxpayers will be required to provide shared secrets. Shared secrets are account and tax year specific........

Michigan Treasury

Baucus And Colleagues Unveil Pension Modifications, Tax Relief Legislation

A bipartisan group of senators, including Senate Finance Committee Chairman Max Baucus, D-Mont., announced legislation on November 19 that includes modifications to pension distribution requirements and expansion of some earlier tax breaks for small businesses. The Worker, Retiree, and Employer Recovery Bill of 2008 alters provisions included in the Pension Protection Technical Correction Bill of 2008 (HR 6382), extends for one year business tax relief that was included in the first economic stimulus package, and allows companies to write off a greater percentage of their investments in business assets to increase their cash flow..........

CCH

CCH Projects Inflation-Adjusted 2009 Luxury Auto Limits; Limits Drop For Trucks And Vans

Working with the "new cars" and "new trucks" components of the October 2008 Consumer Price Index, CCH has calculated the unofficial depreciation limits on luxury automobiles first put into use during the 2009 tax year for business and investment purposes. Based on those inflation-adjusted computations (as specified under Code Sec. 280F(d)(7)(B)), the 2009 Code Sec. 280F limits on the amounts of depreciation deductions for passenger automobiles will remain the same as in 2008, while the depreciation limits for trucks and vans actually will drop when compared to their counterparts in 2008..............

Year-End Tax Planning Checklist Includes Tips For 2008 Tax Savings

We may have a new President-Elect, but taxpayers have only six weeks to make certain moves that will help ensure tax savings when they file in April 2009. According to Bob Trinz, Senior Tax Analyst for the Tax & Accounting business of Thomson Reuters, "Factors that challenge year-end planning include the stock market's swoon, the economic climate, and the strong possibility of tax changes next year. In fact, there might be another economic stimulus package enacted before the end of this year.".................

AccountingWeb

Time To Review Seniors' Drug Options

Medicare beneficiaries may be better off shopping around this year for prescription-drug plans.

The 10 drug plans with the largest enrollments will raise their premiums by 31% on average in 2009 -- some by more than 60% -- according to an analysis of Medicare data by Avalere Health, a Washington consulting firm...........

Wall Street Journal

2008 Michigan Business Tax Draft Forms

Below are links to advance copies of the 2008 draft MBT forms........

Michigan Treasury

The Emergency Economic Stabilization Act Of 2008 - Part 1

Special Report

The Emergency Economic Stabilization Act of 2008 extends a number of expired or expiring tax provisions, energy incentives along with disaster relief and some other provisions. While the Act contains mostly beneficial tax provisions, there are some negatives. Our discussion of the law will be broken down into several parts. As usual, there are a number of provisions of interest to only selected taxpayers (e.g., banks, coal miners, etc.). We will list, but not discuss, these provisions in the last installment........

Small Business Taxes and Management

Making The Most Of College Tax Breaks

Some parents spend years saving for their children’s college education, while others scramble to search out scholarships and loans at.........

Michigan Association of CPAs

Expect Changes In Drug Co-Pays For Medicare

On Eve of Open Enrollment (November 15), Many Plans Announce Shifts; Poring Over the Fine Print

Millions of older Americans are bracing for big increases in their Medicare drug-plan premiums next year. But consumers also need to watch for changes in co-payment costs, which often can represent the biggest out-of-pocket expense for plan beneficiaries.......

Wall Street Journal

5 Quick Steps To Keep More Money In Your Pocket

Skyrocketing gas prices have gotten a lot of media attention this year, but most consumers have surely noticed that the costs of many basic goods have also crept higher, taking a toll on their monthly budgets. The Michigan Association of CPAs offers these suggestions on the best ways to boost the cash in your pocket........

Michigan Association of CPAs

Legal Documents You Need To have

It’s a good idea for everyone to take steps to ensure that their wishes are carried out in case of their illness or death. According to the Michigan Association of CPAs, there are a number of legal documents that can communicate your wishes and make life easier for your loved ones...............

Michigan Assoiation of CPAs

Michigan Rollout Of 2008 Business Tax Forms

On Wednesday afternoon at about 3:00 - November 5, 2008, at the Michigan Tax Conference - Rock Financial in Novi, I will have the privilege and responsibility to moderate the official rollout of the Michigan Business Tax forms. The actual presentation will be done by Floyd Schmitzer, the Director of the Bureau of Tax Processing at the Michigan Department of Treasury.

The forms will be a draft version, pending any subsequent legislation in the lame duck session of the Michigan legislature. The final version will be posted on the Michigan Department of Treasury website and mailed to all registered taxpayers after the holidays and in time for tax season.

Ed Kisscorni CPA

AICPA Offers Americans Financial Advice On Job Loss

New York (October 27, 2008) – CPAs serving on the National CPA Financial Literacy Commission of the American Institute of Certified Public Accountants (AICPA) are offering tips on managing personal finances in the event of a job loss. The United States lost more than 159,000 jobs in September, a five-year high, according to the Department of Labor. The total number to date for 2008 is 760,000. U.S. unemployment held steady at 6.1 percent in September, according to the Bureau of Labor Statistics.........

AICPA

Fidelity Investments Reports Nearly Half Of 61 Year-Olds Plan To Start Taking S.S. As Soon As Possible

Financial Needs and Health Concerns Cited As Top Factors in Decision to Begin Receiving Benefits at Age 62

BOSTON, Oct 27, 2008 (BUSINESS WIRE) -- In a new survey(1) released today, Fidelity Investments reports that nearly half (45%) of Americans age 61 today are planning to begin taking Social Security at the age of 62, the first year that eligible recipients can apply. The top reasons driving their decision to collect early are immediate financial needs and health and longevity concerns............

MarketWatch (Wall Street Journal)

CPAs Provide Tips On Calming Client Fears

The Texas Society of CPAs has provided five tips that CPAs can pass along to their clients to calm their financial worries............

WebCPA

Michigan Tax Values Go Down, But Property Taxes Go Up

These are very different times we live in. Last week at the Broadway Theatre Guild office, I ran into Ken Parrish, a CPA, long time friend and the Kent County Treasurer. I asked him his opinion on the current state of property taxes in Michigan. What's going to happen with declining property values and the resulting loss of property taxes. He said for most homeowners, property taxes in 2009 will probably go up. How can that happen?

This is how the property tax system works based on current law. This past year residential property values declined by 20% to 30% in some areas. Tax day in Michigan is December 31st. All property is to valued on December 31, 2008 for purposes of the 2009 property taxes. A logical person may conclude that all residential property taxes will go down in 2009. Not so.

The 1994 ballot proposal, known as Proposal A, specifies that property taxes cannot increase by more that the rate of inflation or 5%. Since 1994, because of low rates of inflation, property values for purposes of the property tax, known as Taxable Value, have increased at very low rates (the inflation rate) even at a time when property values were increasing at double digit rates. Now its payback time.

Property owners who have owned their homes for a large number of years have seen their state equalized value (SEV) go up while increases in Taxable Value have been held back by the Proposal A limitation. Now the reverse is happening. Property values are declining while inflation is up. The social security inflation adjustment will be 5.8%. We can expect the rate of inflation in Michigan to be up. For a long term property owner, this means their Taxable Value will increase even though their SEV will decrease. As long as the Taxable Value does not exceed the SEV, they will experience an increase in tax in 2009. New home owners may not experience a property tax increase.

In the 1990s, no one ever thought property values would decline while inflation is increasing. But, we are now living in a very different time. A ballot proposal which would have frozen the taxable value when the SEV goes down failed to make the ballot.

Ed Kisscorni Blog

New Tax Law Offers Opportunities

Is it time for the kids to get their own home?

Practitioners have a new tax benefit to consider, but, as has become an increasing Congressional practice, one that has a very short time line. The Housing and Economic Recovery Act of 2008 provides a credit of 10 percent of the purchase price (but not to exceed $7,500 ($3,750 for married filing separately)) for a principal residence by a first-time homebuyer (defined as one who has not owned a residence for the three years preceding the purchase). This is phased out for MAGIs in excess of $75,000 ($150,000 for married filing jointly). The credit is recaptured proportionately for each of the first 15 years the taxpayers own the property with any unrecaptured amount accelerated to the year of disposition. The recapture cannot exceed the amount of the gain on a sale to an unrelated party. This applies only to purchases made on or after April 9, 2008 and before July 1, 2009.


Note: This has the effect of an interest-free loan from the government repaid through the tax system, but its benefits may be attractive for extended year-end planning to buy a principal residence.


The credit is reduced by phasing out over a range of $20,000 of MAGI in excess of $75,000 ($150,000 in the case of a joint return).

An important and unusual feature of this credit is that it is refundable, meaning that even though the purchaser may have a small or no tax liability, the purchaser may receive the full amount of the credit in cash (or in part as an offset against nominal tax liability). Although in most cases this means that the purchaser will receive $7,500 in the year of purchase and then increase tax liability by $500 in each of the following 15 years, this benefit can be fairly substantial. If one assumes a rate of return on the $7,500 subsidy equal to the mortgage rate (assumed 6 percent), since the purchaser can “invest” in the mortgage itself by paying down the mortgage by that amount, then one calculates the approximate net present value of an undiscounted credit amount (generally $7,500) inflow followed by 15 successive outflows, each discounted by 4.5 percent (the after-tax rate of return assuming the purchaser is in the 25-percent rate in each future year) for the number of years from the date of purchase. This amounts to $2,131. If the taxpayer is in the 15-percent tax rate, the after-tax rate of return on the mortgage increases to 5.1 percent, and the net present value to $2,345. By contrast, if the purchaser is in a low tax bracket in the year of purchase but will be in the 35-percent rate in years thereafter, the after-tax rate of return declines to 3.9 percent and the net present value to $1,902. There are of course many possible combinations of tax rates in future years, and the problem can become much more difficult with variable mortgages.

Now might be the time for clients to facilitate the purchase of a starter home for certain children by funding the down payment by a $12,000 gift shielded by the annual exclusion ($24,000 if gift-splitting is applicable). Alternatively, the client can make a low-interest rate loan of the down payment or the full mortgage amount. Such loans are generally subject to §7872 rules that require a minimum (or will be deemed to have) interest rate at the AFR. This produces taxable interest income to the parent’s tax rate, thereby reducing the amount of the subsidy as calculated above. The child, even if the loan from the parent is collateralized by the residence, may not be able to deduct the interest if the child cannot itemize deductions. Currently – September 2008 – the applicable long-term annual AFR is 4.58 percent (compared to a conventional 6-percent mortgage rate), so the benefit of the credit will be reduced by the additional taxes paid by the parent. However, no interest rate need be (and none will be deemed to be) applicable if the gift loan does not exceed $10,000, and applies to loans in excess of $10,000 but not in excess of $100,000 only to the extent of the child’s net investment income for the year

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