Tax TipsHomebuyer Credit Closing ExtendedJuly 2010Before the July 4 holiday, President Obama signed the Homebuyer Assistance and Improvement Act of 2010 into law. The new law extends the June 30, 2010 closing deadline to September 30, 2010 for the homebuyer tax credit claims on purchases under contract by April 30, 2010. The House Ways and Means Committee estimated that approximately 180,000 new homeowners would benefit from the extension. Congressional leaders pointed out that the extension was only fair to prospective homeowners meeting the qualifying April 30, 2010 deadline for a binding sales contract only to be stymied, through no fault of their own, by financial red tape from mortgage lenders and guarantors from meeting what initially appeared to be a more-than-generous June 30 closing deadline. The new law only changes the closing deadline --from June 30, 2010 to September 30, 2010-- on binding contracts executed on or before April 30, 2010. All other requirements for the homebuyer tax credit remain unchanged. There is no extension of the April 30, 2010 contract deadline. The level of the credit also remains the same, at 10 percent of the purchase price, with a maximum credit of $8,000 for first-time buyers and $6,500 for long-time buyers. The credit is also unavailable for purchases at or above the $800,000 level, and begins to phase-out for single taxpayers with adjusted gross income (AGI) above $125,000 ($225,000 for joint filers). The IRS also reminded homeowners of three options for claiming the credit on qualifying 2010 purchases: on a 2009 Form 1040 return if one has not yet been filed, on a 2009 Form 1040-X amended return, or waiting and claiming it on a 2010 Form 1040. » Back to Top «
Residential Energy Property CreditJuly 2010There is a 30% credit for 2009 and 2010 for the amount paid or incurred by an individual for qualified enery efficiency improvements (building envelope components) and residential energy property expenditures such as furnaces, certain fans, central air conditioners, water heaters, certain heat pumps, and biomass stoves. The credit limit is $1,500 over both years. The 10% energy credits allowed for windows and doors in 2007 and 2008 have expired and do not affect the new credit. » Back to Top «
IRS Urges Cell Phone Substantiation ReliefJune 2009IRS Commissioner Douglas Shulman announced that Treasury and the agency support the removal of cell phones from the category of listed property under Code Sec. 280F. Shulman emphasized that the IRS is not "cracking down" on employee use of employer-provided cell phones. Rather, the agency's recent announcement that it is revisiting the substantiation rules for employer-provided cell phones aims to eliminate uncertainty for businesses and individuals, Shulman said in a statement. Cell phones were added to the category of listed property under Code Sec. 280F in 1989. "The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently," Shulman said. Shulman urged Congress to ease the substantiation rules for employer-provided cell phones. "Treasury Secretary Timothy Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers." » Back to Top «
Income Limitations on Roth IRA Conversions Eliminated in 2010May 2006Currently, individuals with adjusted gross income (AGI) below certain levels may make contributions to a Roth IRA (up to the maximum IRA contribution limit). A taxpayer with AGI of $100,000 or less may convert all or a portion of a traditional IRA to a Roth IRA. The amount converted is treated as a distribution from the traditional IRA for income tax purposes, except that the 10-percent additional tax on early withdrawals does not apply. The Bill eliminates the income limits on conversions of traditional IRAs to Roth IRAs for years beginning after 2009. Thus, taxpayers may make such conversions without regard to their AGI. For conversions occuring in 2010, unless a taxpayer elects otherwise, the amount includible in gross income as a result of the conversion is included ratably in 2011 and 2012. That is, unless a taxpayer elects otherwise, none of the amount includible in gross income as a result of a conversion occuring in 2010 is included in income in 2010, and half of the income resulting from the conversion in includible in gross income in 2011 and half in 2012. However, income inclusion is accelerated if converted amounts are distributed before 2012. In that case, the amount included in income in the year of distribution is increased by the amount distribued, and the amount included in income in 2012 (or 2011 and 2012 in the case of a distribuion of 2010) is the lesser of: (1) half of the amount includible in income as a result of the conversion; and (2) the remaining portion of such amount not already included in income. » Back to Top «
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