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WHAT'S NEW FOR 2010??
It has certainly been an interesting, and often frustrating year!! We’ve had more short sales and bank foreclosures than ever before, more uncertainty about jobs, and more frustration over the general state of the government. Our preparers have all been busy attending tax update classes to learn about the latest tax law changes, and the intricacies of some of the more complicated ongoing issues so we can help you navigate the murky waters and head for calmer seas.
Many of you have called with your concerns about the expiration of the current Bush tax changes. These changes were due to disappear January 1st. None of them will affect you for tax year 2010. It appears at this time that the administration is poised to continue the rules in their current form through 2012. The one exception is the estate tax, which at this time is scheduled to be reinstated for estates in excess of $5,000,000 ($10,000,000 MFJ). I will discuss the advantage of this to you later!
There are some issues which WILL affect this year. Most notable is the elimination of the deduction for Sales Tax, as well as the additional standard deduction for property tax and sales tax on an automobile. The Tuition deduction that we were able to use for taxpayers with incomes in excess of $150,000 is now gone, as is the above the line deduction for Teachers of up to $250 of classroom supplies. Teachers can still claim their classroom expenses on Schedule A. The Child Tax Credit still reduces tax liability, but only becomes refundable for families with 3 or more qualifying children. The Adoption Credit, which previously only reduced taxes to -0- and could be carried forward, now becomes refundable. This allows taxpayers to take the entire credit in one year. There are a lot of other peripheral issues that we will discuss with you when we meet this year! Do not forget that this is the first year for repayment of $500 against any First Time Homebuyer credits of $7500 claimed in 2008.
If you have been through a short sale or foreclosure this year, there are some tax traps you need to keep in mind. As long as the house you got rid of was your PRINCIPAL RESIDENCE for at least 2 of the previous 5 years, there will be no negative effect IF ALL OF YOUR MORTGAGE WAS ACQUISITION EXPENSE. That means any default on a second mortgage you used to buy something else or pay off credit cards must be included in income. Also there are problems of recapture if the property you sold was EVER depreciated as a rental or business property, including office in home. If you get rid of a rental, second home, or other property you have NOT lived in enough as a principal residence, the difference between the bank sales price and your basis in the property (usually a loss in this case) will show up as an investment loss. HOWEVER, the amount of mortgage debt forgiven will also have to be included as income.
For those of you who are looking at starting new businesses, please keep the following in mind. If you go on-line and register your own business with the State of Florida, it does not give you any Federal status. If you request a Federal ID Number from the IRS you must tell them what kind of entity you are. If you register as an LLC with any more than one person on the paperwork, your business will be required to file an additional tax return. 2 or more people automatically default to a partnership. If you register as a corporation, you must file separate paperwork to become an S-Corp, and you must by law pay yourself as an EMPLOYEE. You may not work for your own corporation for free, as an independent contractor, or repay loans before you are taking a regular paycheck. Before you jump…CALL!! We will be glad to talk to you about this and make sure you are on the right path.
Now is the time to remember all of those CHARITABLE CONTRIBUTIONS you were going to keep track of this year!! Go through your checkbook, credit card statements and receipts and find those things that went to charity. Don’t forget to keep the receipts for the gifts you bought for the Angel Tree or Toys for Tots, or food you bought for the Food Pantry or the Rescue Mission. Also think about the mileage for charitable activities…..projects for schools, churches, charities and sports where you volunteered your time. The IRS doesn’t care about your time. They do care about your car!! Also do not forget to make itemized lists of the items you gave to Salvation Army or Goodwill type services. We can no longer accept receipts that merely say “boxes or bags of clothes” or “misc household”. It will be to your advantage to take the extra few minutes to list the items individually. They may be worth more on the recommended price list than you gave yourself credit for!
If you sold real estate or appreciated stocks or collectibles that you inherited from someone who died during 2010, the rules on step-up basis are changed for this year. The good news is that there is still a deductible on inherited property. The bad news is the property has to be valued at the purchase price of the deceased!! If you are in this situation we will discuss it with you further.
Please note that John retired this year, and Katie is on extended sick leave. Marion, Erik or Silke will be glad to assist you with your continuing needs, and long time preparer and tax expert, Ruth Stewart has also joined our staff. We will all be busier…..make your appointment early!!!
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COMMERCIAL PROPERTIES FOR SALE
We have 2.6 acres of property adjacent to our building at 515 College Dr. This property can be divided into up to 4 parcels.
Property is zoned BB2
Lots are filled and graded and hold concurrency certification.
Property already has St. John's Water Management District and Corps of Army Engineers permits, has been fully mitigated and holds current Phase I Environmental Impact studies.
All retention is off-site allowing 100% property use.
Property off College Dr. will have access to College roadway signage.
a direct left turn lane southbound on College has been approved, and will be installed.
The property is divided into a front acre and rear 1.6 acre parcels priced at $700,000 and $600,000 respectively.
For information call Dan Corritore at Coldwell Banker, 904-421-8544
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