Year End Tax Tips

Get Organized -
If you haven't done it already, start a file for your tax documents. As you receive W-2s, 1099s , 1099bs and 1098s, you will have a place to file them. Do you have kids in college or in child care? Do you have medical bills? Have you kept your receipts for charitable donations? If the donations were non-cash do you have a detailed list attached to your receipt? Are you keeping track of mileage for charitable work or miles driven to medical appointments? For a complete list of items see Tax Preparation Checklist on the Client Forms page of our website www.EvergreenPlanning.org.

Adjustments to state withholding -
If you expect to owe state income taxes when you file your return next year, ask your employer to increase withholding of state and local taxes. This can be done by filing Form G-4, Georgia Employee's Withholding Allowance Certificate.
If you are self-employed or retired and are making quarterly estimated tax payments, be sure to pay the State fourth quarter estimated tax payments before year-end to pull the deduction of those taxes into 2009.

Adjustments to federal withholding -
If you face a penalty for underpayment of federal estimated tax, you may be able to eliminate or reduce it by increasing your withholding. In this connection, it should be stressed that the Making Work Pay Credit, which was enacted earlier this year, automatically lowered tax withholding rates for employees. However, you should especially review your withholding to ensure that enough tax is withheld if you hold multiple jobs, you and your spouse both work, or you can be claimed as dependent by another person.
If not enough tax or too much tax is being withheld, you should give your employer a new Form W-4, IRS Employee's Withholding Allowance Certificate.
If you are receiving a pension, withholding can also be adjusted by sending Form W4-P, Withholding Certificate for Pension or Annuity Payments, to your pension payer.

Fee-Only Financial Planning Blog: Year End Tax Tips

Fee-Only Financial Planning Blog: Year End Tax Tips

Year End Tax Tips for Employees

Employees have some special considerations to take into account that retirees and other nonworking individuals don't face. To help our clients who are employees take advantage of these special tax saving opportunities, we have put together a list of items to consider. Please review the list and contact us if you need additional information on one or more of the items.

Health flexible spending accounts -
Many employees take advantage of the annual opportunity to save taxes by placing funds in their employer's health flexible spending account (health FSA). You save taxes because you use pre-tax dollars to pay for medical expenses that might not be deductible.
If you have set aside funds in your employer's health FSA, check your balance so that you have sufficient time to incur additional reimbursable expenditures to prevent loss of any unused amount under the use-it-lose-it feature of these plans. Don't forget you can get tax-free reimbursements for aspirin, antacids and other over-the-counter items. Your plan should have a listing of qualifying items and any documentation from a medical provider that may be needed to get a reimbursement for any such items.
Examining your year-to-date expenditures now will also help you to determine how much to set aside for next year. Don't forget to reflect any changed circumstances in making your calculation.

Dependent care FSAs -
Some employers also allow employees to set aside funds in dependent care FSAs. They allow employees to use pre-tax dollars to pay for dependent care. In particular cases, participating in a dependent care FSA can yield greater tax savings than foregoing participation and claiming a dependent care credit. Taxpayers who are eligible to participate in a dependent care FSA and are (a) in a high tax bracket and/or (b) have only one dependent and more than $3,000 of employment-related expenses, should use the FSA to pay for child care expenses. For these taxpayers, the FSA almost always provides greater federal tax savings than does the credit.
However, like health FSAs, dependent care FSAs are subject to the use-it-or lose it rule. Thus, now is a good time to review expenditures to date and to project amounts to be set aside for next year.

401(k) contributions -
Review and make appropriate adjustments to your contributions to you employer's 401(k) retirement plan for the remainder of this year. Figure your contribution rate for next year as well.

Year End Tax Tips

Get Organized -
If you haven't done it already, start a file for your tax documents. As you receive W-2s, 1099s , 1099bs and 1098s, you will have a place to file them. Do you have kids in college or in child care? Do you have medical bills? Have you kept your receipts for charitable donations? If the donations were non-cash do you have a detailed list attached to your receipt? Are you keeping track of mileage for charitable work or miles driven to medical appointments? For a complete list of items see Tax Preparation Checklist on the Client Forms page of our website www.EvergreenPlanning.org.

Adjustments to state withholding -
If you expect to owe state income taxes when you file your return next year, ask your employer to increase withholding of state and local taxes. This can be done by filing Form G-4, Georgia Employee's Withholding Allowance Certificate.
If you are self-employed or retired and are making quarterly estimated tax payments, be sure to pay the State fourth quarter estimated tax payments before year-end to pull the deduction of those taxes into 2009.

Adjustments to federal withholding -
If you face a penalty for underpayment of federal estimated tax, you may be able to eliminate or reduce it by increasing your withholding. In this connection, it should be stressed that the Making Work Pay Credit, which was enacted earlier this year, automatically lowered tax withholding rates for employees. However, you should especially review your withholding to ensure that enough tax is withheld if you hold multiple jobs, you and your spouse both work, or you can be claimed as dependent by another person.
If not enough tax or too much tax is being withheld, you should give your employer a new Form W-4, IRS Employee's Withholding Allowance Certificate.
If you are receiving a pension, withholding can also be adjusted by sending Form W4-P, Withholding Certificate for Pension or Annuity Payments, to your pension payer.

Beware fraudulent email from FDIC

Subject: E-mail Claiming to Be From the FDIC ("check your Bank Deposit Insurance Coverage")

At the request of the U.S. Treasury, we are distributing the following information. Please distribute this information throughout your organizations and communication channels. Thank you.

The FDIC issued Special Alert (SA-183-2009 ) today regarding a fraudulent e-mail claiming to be from the FDIC. We have received hundreds of reports of this e-mail. We are told by researchers that it is being very widely distributed. See:

http://garwarner.blogspot.com/2009/10/fake-fdic-spam-campaign-spreads-ze

us.html for samples.

*****************

If you receive an email that claims to be from the FDIC or asks you to “check your Bank Deposit Insurance Coverage” - delete it and do not respond to it.

Free NAPFA Webinar Nov 6

NAPFA's Consumer Webinar Series, a year-long initiative for NAPFA-Registered Financial Advisors to provide information on a wide range of issues, is gaining steam. There are recordings of the first three sessions archived on the NAPFA website, so anyone can listen to the audio synchronized with the PowerPoint slides.

Each month a new session will be conducted live online. Consumers can attend the live session after registering for free, or listen/view the archived programs.

November 6, 2009
1:00 pm - 2:00 pm ET
"Protecting What You Have"
Instructor Roseann Bove, CFP, CLU
NAPFA-Registered Financial Advisor

Your health, family, and home are important and need to be kept safe. Roseann will provide information on how you can portect the things you have through life, health and medical insurance.

Free SSA Webinar for Wounded Warriers Nov 4

The Social Security Administration is offering a free webinar "Social Security for Wounded Warriors" on November 4. During the webinar, you can learn more about benefit programs and the expedited processing of disability claims available to our nation's Wounded Warriors. The expedited process is used for military service members who become disabled while on active military service on or after October 1, 2001, regardless of where the disability occurs.

The Social Security Administration welcome service members, their families and friends, and those that advocate on their behalf to participate in this seminar for the web as they discuss:
Who is eligible?
When to apply?
How to apply?
The webinar will be hosted via www.socialsecurity.gov on November 4, 2009, at 2:00 p.m. EST.

To RSVP, visit: http://www.socialsecurity.gov/survey/woundedwarriorsrsvp.htm. You will have the option of submitting questions in advance of the webinar with your RSVP.

Federal Tax Credits for Energy Efficiency

Tax Credits for Consumers:

Home Improvements

Tax credits are now available for home improvements:

• must be "placed in service" from January 1, 2009 through December 31, 2010
• must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
• $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
• must have a Manufacturer Certification Statement to qualify
• for record keeping, save your receipts and the Manufacturer Certification Statement
• improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
• If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.More.

SUMMARY OF TAX CREDITS FOR HOMEOWNERS

Product Category	Product Type	Tax Credit Specification	Tax Credit	Notes
Insulation	Insulation	Meets 2009 IECC & Amendments	30% of cost, up to $1,5001	FAQ on Insulation. Check to see if you have Home Performance with ENERGY STAR in your areas. Adding insulation to your home is covered.
Windows & Doors	Windows, Doors, and Skylights	Before June 1, 2009: Must meet ENERGY STAR criteria After June 1, 2009: U factor <= 0.30 SHGC <= 0.30	30% of cost, up to $1,5001	Not all ENERGY STAR labeled windows, doors, and skylightsqualify for tax credit. More information
	Storm Windows & Storm Doors	In combination with the exterior window over which it is installed: has a U-factor and SHGC of 0.30 or below Meets the IECC	30% of cost, up to $1,5001	FAQ on Storm Doors and Storm Windows.
Roofing	Metal Roofs, Asphalt Roofs	All ENERGY STAR qualified metal and reflective asphalt shingles	30% of cost, up to $1,5001	FAQ on Roofs.
HVAC	Central A/C	Split Systems: SEER >= 16, EER >=13 Package systems: SEER >= 14, EER >= 12	30% of cost, up to $1,5001	FAQ on Central ACs. FAQ on Air Source Heat Pumps. Note — not all ENERGY STAR products will qualify for the tax credit.
	Air Source Heat Pumps	Split Systems: HSPF >= 8.5, EER >= 12.5, SEER >= 15 Package systems: HSPF >= 8, EER >= 12, SEER >= 14	30% of cost, up to $1,5001
	Natural Gas or Propane Furnace	AFUE >= 95	30% of cost, up to $1,5001	FAQ on Furnaces and Boilers. Note — not all ENERGY STAR products will qualify for the tax credit.
	Oil Furnace	AFUE >= 90	30% of cost, up to $1,5001
	Gas, Propane, or Oil Hot Water Boiler	AFUE >= 90	30% of cost, up to $1,5001
	Advanced Main Air Circulating Fan	No more than 2% of furnace total energy use.	30% of cost, up to $1,5001	FAQ: What if the fan qualifies, but the furnace does not?
Water Heaters	Gas, Oil, Propane Water Heater	Energy Factor >= 0.82 or a thermal efficiency of at least 90%.	30% of cost, up to $1,5001	FAQ on Water Heaters.
	Electric Heat Pump Water Heater	Same criteria as ENERGY STAR: Energy Factor >= 2.0	30% of cost, up to $1,5001
Biomass Stove	Biomass Stove	Stove which burns biomass fuel to heat a home or heat water. Thermal efficiency rating of at least 75% as measured using a lower heating value.	30% of cost, up to $1,5001	FAQ on Biomass Stoves.
Geo-Thermal Heat Pump	Geo-Thermal Heat Pump	Same criteria as ENERGY STAR: Closed Loop: EER >= 14.1, COP >= 3.3 Open Loop: EER >= 16.2, COP >= 3.6 Direct Expansion: EER >= 15, COP >= 3.5	30% of the cost	All ENERGY STAR geo-thermal heat pumps qualify for the tax credit. What about water-to-water geothermal heat pumps? Must be “placed into service” before December 31, 2016.
Solar Energy Systems	Solar Water Heating	At least half of the energy generated by the “qualifying property” must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. The system must be certified by the Solar Rating and Certification Corporation (SRCC).	30% of cost	All ENERGY STAR solar water heaters qualify for the tax credit. Must be placed in service before December 31, 2016.
	Photovoltaic Systems	Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.	30% of cost	Must be placed in service before December 31, 2016.
Small Wind Energy Systems	Residential Small Wind Turbines	Has nameplate capacity of not more than 100 kilowatts.	30% of cost	Must be placed in service before December 31, 2016.
Fuel Cells	Residential Fuel Cell and microturbine system	Efficiency of at least 30% and must have a capacity of at least 0.5 kW.	30% of the cost, up to $500 per .5 kW of power capacity	Must be placed in service before December 31, 2016.
Cars	Hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles		Based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models	There is a 60,000 vehicle limit per manufacturer before a phase-out period begins. Toyota and Honda have already been phased out. Credit is still available for Ford, GM and Nissan. For more information visit:Fueleconomy.gov Use IRS Form 8910 for hybrid vehicles purchased for personal use. Use IRS Form 3800 for hybrid vehicles purchased for business purposes.
	Plug-in hybrid electric vehicles		$2,500–$7,500	The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits). Effective January 1, 2009.

¹Subject to a $1,500 maximum per homeowner for all improvements combined.

Efficient Cars

Starting January 1, 2009, there is a new tax credit for Plug-in hybrid electric vehicles, starting at $2,500 and capped at $7,500 for cars and trucks (the credit is based on the capacity of the battery system). The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits).

Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010. See the IRS Website for updated information .

IRS Guidance:

• IRS Notice 2009-53 (6/22/2009) Interim guidance for Section 25C
• IRS Notice 2009-41 (5/11/2009) Interim guidance for Section 25D

For More Information:

• Tax Incentives Assistance Project (TIAP)
• Brochure: Residential Energy Efficiency Incentives (TIAP — May 2009, 2 pages)

For Help with your Tax Planning call Teri at 678-763-1372 or visit www.EvergreenPlanning.org