Looking for something specific? Enter one or more keywords and search our entire site.	900 N. Kings Highway, Cherry Hill, New Jersey 08034 856.667.4100 · 215.563.0276 · Fax: 856.667.3652 Weekly Tax Tips 2006 Tax Tips Archive December 25th - College savings plans are now permanent One of the most popular ways to save for college is with a Section 529 plan. These plans offer a great combination of flexibility and tax benefits. Until recently, the tax benefits were scheduled to expire after 2010. But this year’s Pension Protection Act made the benefits permanent, removing some concerns. December 18th - There's more than one way to be charitable During the holiday season, many of us want to support our favorite charities. Your first thought might be to write a check, but there are other ways to give. You might even receive a tax break in the process. December 11th - Consider bunching your itemized deductions We all face one question at tax time: to itemize deductions or take the standard deduction? For 2006, the standard deduction is $10,300 for married couples and $5,150 for single filers. If you’re on the borderline, consider a “bunching” strategy. December 4th - Are you ready for 2006 mutual fund distributions? If you’re a mutual fund investor, you’ll almost certainly receive a distribution this month. And in many cases you’ll owe taxes on the distribution. November 27th - Know the tax rules when disaster strikes Hurricanes, tornadoes, earthquakes, wildfires, floods, storms. Few parts of the country escape the risk of natural disaster. If you’re an unlucky victim, you may receive help from insurance and federal disaster aid. But the tax code also offers some relief. You may be able to take an itemized deduction for part of your loss. In tax terms, it’s a “casualty loss,” and it can also apply to events such as a car crash, a house fire, or theft. Here are the basics: November 20th - New law creates a charitable donation opportunity The Pension Protection Act recently passed by Congress has an interesting tax break for older taxpayers. It offers the chance to donate to charity and reduce taxes at the same time. But like many good deals, it’s a limited time offer. You have only this year and next to take advantage of it. November 13th - Save on taxes while you save for retirement Don’t rule out saving for retirement just because your income is low. We all need to save as much as possible for our later years. And now Congress has extended a tax break that rewards your saving with a lower tax bill. November 6th - The HERO Act gives a tax break to the military There’s welcome news for military personnel serving in combat areas, such as Iraq and Afghanistan. Congress has passed the HERO Act, allowing them to count tax-free combat pay as “compensation” when making IRA contributions. October 30th - Not all capital gains are created equal If you sell shares of stock, your house, or other items you own, you’ll probably have a capital gain or loss. Generally, that’s the difference between what you paid and what you receive. Most capital gains are taxable and some capital losses are deductible. But did you know that not all capital gains are taxed equally? Ocotber 23rd - Save on energy; save on taxes Winter is approaching, energy costs are high, and you’re thinking about conservation. Don’t forget that cutting your energy use can cut your tax bill, too. Make the right energy-saving improvements and you can earn tax credits. These directly offset the taxes you owe. But remember, most credits are available only for 2006 and 2007. October 16th - Do you face this IRA deadline? Did you reach age 70½ this year? If so, you may have a decision to make before year-end. That’s because if you have a traditional IRA, you must start taking required distributions each year once you reach that age. But a special rule allows you to postpone making your first withdrawal. That’s where the decision comes in. October 9th - Do an investment review as part of your tax planning This is a good time of year to review your investments. If you’re not meeting your financial goals for the year, there’s still time to make changes. Make sure your portfolio is appropriately balanced among stocks, bonds, and other investments. October 2nd - It's time for a fall tax tune-up Fall is a great time for a tax review, while there’s still time to make changes. Look at these five areas to see how your tax situation is shaping up for the year. September 25th - Recent pension law included some retirement tax breaks On August 17, 2006, President Bush signed a major new law on pension plans. The law includes some provisions that will affect the rules for retirement savings. You may feel the impact of these changes in the months and years ahead. September 18th - You may receive a bonus refund with your 2006 tax filing Did you know that you may qualify for an extra refund when you file your 2006 taxes? And if you qualify, you can claim the refund by filling out just one extra line on your 2006 tax return. September 11th - The new pension law changes charitable donation rules In early August, Congress passed a major new law on pension plans. Buried in the fine print were some unexpected tax provisions. These could affect your ability to claim a deduction for certain kinds of charitable contributions. September 4th - No change in the estate tax, but don't postpone your planning Last month Congress failed to pass a major tax bill that would have changed the rules on estate taxes. To encourage passage, the bill included a raise in the minimum wage and extension of a number of expired tax breaks for businesses and individuals. But in an election year, the bill proved too controversial and did not pass. So where does that leave estate taxes and your tax planning? August 28th - Consider this retirement planning opportunity Usually tax planning aims to reduce next April’s tax bill. But if you’re willing to look ahead to 2010, the recently enacted tax law introduced a new tax-saving opportunity. The new provision removes the income limit on converting a traditional IRA to a Roth IRA, starting in year 2010. Also, if you convert in 2010, you’ll be able to spread the tax over two years. August 21st - Manage your AGI to save your tax breaks One number on your tax return has special importance. You’ll find it at the bottom of the first page. It’s called “adjusted gross income” or AGI for short. Why is it important? Because your AGI controls your qualification for numerous deductions and credits. It can even affect your eligibility for retirement plans. August 14th - To deduct business driving costs, keep good records If you use your car or truck for business, you’ll want to deduct your business driving costs. Generally you’ll have a choice of two methods. August 7th - Did you make a mistake? When to amend your tax return You’ve filed your return, you’ve received your refund check, and you don’t want to think about last year’s taxes again. Oops! You discover you made a mistake on your return. You might have overlooked a big deduction, you might find a missing receipt, or come across a dividend check that you didn’t report. Don’t worry. You can correct the mistake by filing an amended return. July 31st - The alternative minimum tax: Don’t relax yet Are you at risk for the alternative minimum tax (AMT) in 2006? This “parallel” tax system has caught more and more middle-income taxpayers in recent years, often showing up as a nasty, last-minute tax surprise. The recently signed Tax Act provided some relief, but only for this year. And the relief provisions won’t help everyone escape the tax. That’s why it pays to plan ahead and see whether you might be liable this year or next. July 24th - New “kiddie tax” covers more kids Do your children have savings accounts or other investments held in their own name? If so, the tax on those investments could change. That’s because of a change in recent tax legislation, which expanded the “kiddie tax” to cover children up to age 18. July 17th - Work a summer job — start an IRA Are your children working at summer jobs this year? Many high school and college students take a summer job to earn pocket money or save for next year’s college costs. July 10th - Plan your annual tax-free giving It’s not too early to plan your tax-free gift program for 2006. Each year, you can make gifts of up to $12,000 each to as many people as you want, free of any gift tax liability. Your spouse has a similar limit, so as a couple you can give up to $24,000 to each person each year. July 3rd - Vacation home planning can save your tax deduction You can enjoy a vacation home and cut your taxes — with some careful planning and a little discipline. June 26th - Hybrid Update: Don’t miss out on your tax credit Is your next auto purchase going to be a hybrid? If so, you might want to put your order in soon. That’s because the tax credit you’ll receive for buying a hybrid phases out after each manufacturer sells a certain number of vehicles. Based on recent sales figures, the tax credit for at least one popular model could be cut in half later this year. June 19th - What you need to know about taxes and your child’s summer job Your daughter Sally, a junior in high school, announces that she’s found herself a job for the summer. How will that affect her tax situation and yours? June 12th - Prepaid college tuition plans just became a little more favorable If you’re wondering how best to save for your child’s future education costs, prepaid tuition plans just became a little more attractive. That’s because the Deficit Reduction Act, signed in February, removed one of the drawbacks of these plans. June 5th - New tax bill extends existing tax breaks You might owe a little less tax next April, thanks to the tax bill recently passed by Congress. And you’ll also benefit from other existing tax breaks for a few years longer. May 29th - Marriage calls for a tax review Are wedding bells in your future this summer? If so, add tax updates to the long list of things to do. It's not very exciting, but you should at least take care of some paperwork to keep your tax situation in order. May 22nd - Know the tax impacts of remodeling Walk around your neighborhood and you're likely to see homes being remodeled. Perhaps you, too, are considering a new deck, kitchen or bathroom this spring. If so, understand the tax consequences. May 15th - Are you eligible for the child care tax credit? Do you pay for child care so you can go to work? If so, you might be eligible for a tax credit based on the amount you pay. It’s called the "child and dependent care credit," and it doesn’t just apply to costs for child care. It can apply to the cost of caring for an elderly parent or a disabled spouse, among others. May 8th - Don't overlook tax benefits when you buy a house If you buy a house this year, you’ll close the deal by signing a mind-numbing stack of papers. When that’s finished, don’t just file the documents away in a drawer. Hidden in there are some deductions you might be able to take this year, and others that could increase your profit when you sell. May 1st - The kiddie tax threshold goes up for 2006 Beginning this year, your young children can earn more investment income before the "kiddie tax" kicks in. The kiddie tax rule applies to the investment earnings of a child under age 14. It says that income above a certain threshold amount will be taxed at the parents' top marginal tax rate. April 24th - Buy early to maximize hybrid tax credit Last year’s Energy Bill had some good news for those planning to buy a hybrid car in 2006 – a new tax credit of up to $3,400. But there’s a catch. The credit begins to phase out after the number of hybrid vehicles sold by a manufacturer reaches a certain limit. April 17th - GO zones mean business tax opportunities Last December, Congress established “GO zones” – short for Gulf Opportunity Zones. It was part of an effort to boost the economy of the Gulf Coast areas devastated by hurricanes Katrina, Rita, and Wilma. April 10th - Estate taxes fall – but you still need a plan There’s good news if you’re concerned about estate taxes. Beginning this year, the value of your estate that’s excluded from tax increased from $1.5 million to $2 million. And the top rate on taxable estates fell to 46%. Generally, you won’t start paying at that rate until your estate tops $4 million. (Note that lifetime gifts above the annual exclusion amount count as part of your estate, and the exclusion for them remains at $1 million.) April 3rd - Tax filing: Don’t procrastinate – but if you do, it just got easier! It’s usually better to file your personal tax return earlier rather than later. You’ll get your hands on your refund sooner, you’ll have less time to misplace your tax records, and it’s one more job out of the way. But sometimes it’s just not possible to be ready by April 15 (April 17 this year because April 15 is a Saturday). And in those cases, the IRS just made it easier to obtain a six-month extension. March 27th - Special offer: Get double tax breaks for education expenses Are you a college student, or do you have one in your family? If so, you should know about a one-time opportunity to receive double the normal tax credits for education expenses. March 20th - Don't overlook these miscellaneous tax deductions When you itemize deductions, it’s easy to remember the big three — mortgage interest, state and local taxes, and charitable contributions. You might also be able to deduct medical expenses, but only when they exceed 7.5% of your adjusted gross income (AGI). And if you’re unlucky enough to have casualty or theft losses, you can deduct those too. March 13th - Don’t miss this April 3 deadline April 3, 2006, could be an important date for some retirees. If you reached age 70½ last year, it’s the last day to take your first required minimum distribution (RMD) from your traditional IRAs. Miss the deadline and you could face a 50% excise tax on the amount you should have withdrawn. March 6th - You still have time to contribute to last year’s IRA Don’t forget you still have time to make a 2005 contribution to an IRA. If you didn’t reach the maximum for last year, you have until April 17 this year to make up the difference. It’s a great opportunity to boost your tax-advantaged retirement savings and possibly save on your 2005 taxes at the same time. Then you can make another contribution for 2006! February 27th - Will you have to pay the alternative minimum tax for 2005? You might have an unexpected tax liability for 2005, especially if you’re a middle- or high-income taxpayer. It’s called the alternative minimum tax, or AMT. It’s estimated that over three million people paid AMT in 2003, and that number is rising fast. February 20th - Investigate the new energy tax breaks for business The tax breaks in last year’s Energy Bill weren’t just for consumers and big oil companies. A surprising variety of other businesses can benefit too. February 13th - What you need to know if you donate a vehicle to charity Did you donate your car or truck to charity last year? If so, be careful how you claim the deduction on your tax return. February 6th - The IRS takes one small step for tax simplification Tax reporting just became a little simpler for some small business owners. Thanks to a recent change by the IRS, some businesses will now be able to file a single annual employment tax return instead of four quarterly reports. January 30th - Improve your home’s energy efficiency and earn a tax break Starting this month, you can improve your home’s energy efficiency and reap a double reward. You can trim your energy bills and your tax bill at the same time. During 2006 and 2007, you’ll receive tax credits if you make specified energy-saving improvements in your home. Remember that tax credits offset your tax liability dollar for dollar. January 23rd - Standard or itemized: Know the difference "I can't itemize any more." It sounds like a refrain from a country music ballad. But it’s a statement made by more and more taxpayers every year. In fact the IRS estimates that nearly two out of three filers now take the standard deduction. January 16th - Make some New Year tax resolutions Expand your list of New Year resolutions to include the following: January 9th - What’s new for 2006? Expect a number of tax changes for 2006. You’ll have the chance to claim new tax credits, but some old deductions have disappeared. There are also the usual inflation adjustments in retirement contributions, tax brackets, and other amounts. January 2nd - Check out the new Roth 401(k) If you participate in a 401(k) plan, you may now have a new investment option to consider. Starting this year, 401(k) plans may include a Roth account. Here are the key features. [Business Information] [Home] "Tax Tips" are published weekly to provide useful tax information. 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