Tax TipsFirst-Time Homebuyer Tax CreditJune 2009The new law raises the current maximum $7,500 first-time homebuyer tax credit to $8,000, and extends it at that level through November 30, 2009. It also eliminates any required repayment to the IRS after 36 months in the home. These enhancements apply to purchases of a principal residence by a first-time homebuyer after December 31, 2008. Purchases on or after April 9, 2008, and before January 1, 2009, continue to be governed by the original first-time homebuyer credit enacted last year. The credit phase-outs that start for taxpayers with AGI in excess of $75,000 ($150,000 for joint filers) continue to apply to both years. The effective date for the new law's no pay-back is keyed to "residences purchased after December 31, 2008." A purchase takes place when title closes rather than when a contract of sale is executed. » 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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