Don’t Be Fooled By Taxes
April 1, 2010
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Welcome
 Why AARP is doing this webinar
 Obtaining Resources
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Today’s Agenda
 Last Minute Tax Tips – AARP Tax-Aide
 Tax Implications in Retirement Planning – AICPA
 Your Questions
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Last Minute Tax Tips
Fred Bates, National Training Chair
AARP Tax-Aide Program
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Don’t Be Fooled By Taxes
Last minute tax tips
What’s new for 2010
Common mistakes taxpayers make
Good choices for saving with your refund
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Last Minute Tax Tips
 Make sure all W-2s and 1099s have been received;
 Receipts, cancelled checks or other documents are in
one file;
 April 15 is last day to contribute to IRA for 2009
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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What’s New for 2010
 Unemployment Compensation
 First $2400 excluded from reported income
 Revised Definition for Qualifying Child
 Must be younger than taxpayer
 Highest Adjusted Gross Income (AGI) - if non-parent
 New rules for children of divorced/separated parents
 Effective 7/2/08
 Release of claim to noncustodial parent required
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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New Vehicle Taxes Deduction
State and Local Sales/ Excise Tax
First $49,500 of purchase price
Purchases between 2/17- 12/31/09
Available to both itemizers and non-itemizers
If no sound dial: 1 ( 877 ) 509 - 0617 code 66710337
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Education Credits
American Opportunity Tax Credit
$2500 per student
1st four years of post-secondary education
Up to 40% of credit is refundable
All course related materials allowed
Expanded 529 expenses
Computers, software, Internet
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Residential Energy Credits
Non-refundable
30% of cost up to $1,500 credit limit
Reduces heat gain or loss
Heating and cooling systems eligible
30% of cost with no limit
Certain renewable energy sources
Solar, geothermal, wind
For systems placed in service before 12/31/16
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Making Work Pay Credit
Refundable Credit
Up to $400, or $800 (married, filing jointly)
Phases out begins for AGI $75,000 or $150,000 joint
Reduced by $250 if receiving certain benefits
Social Security
Veterans Administration
Railroad Benefits
Government Retirees
Not covered by SSA, VA, RRB
Will receive $250
$500 if both not eligible for SSA, VA, RRB
Offset to $400/$800 making work pay credit above
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Increased Credits
Earned Income Tax Credit
Up to $5,657 with 3 or more qualified children
Maximum income $43,279 or $48,279 joint
Additional Child Tax Credit
Earned income of $3,000 or more
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First Time Homebuyer
Credit
First time home purchases
Extended to purchases bought between 1/09 – 4/30/10
 Must have closed by 6/30/10
$8,000 refundable and may not be repaid
Must remain in the home for 36 months
2008 rules unchanged
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Existing Homebuyer
Credit
Applies to homes purchased and closed in 2009
Extended to purchases by 4/30/10; close by 6/30/10
Reside in current residence for over five years
$6,500 is refundable and may not be repaid
Must remain in the new home for 36 months
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Common Taxpayer Mistakes
Missing tax documents
Incorrectly identifying deductible expenditures
Claiming a dependent that someone else has claimed
Incorrectly claiming head of household
Missing out on tax credits
Missing out on key adjustments to income
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U.S. Savings Bonds
Refunds can be used to buy bonds on the tax return
Need direct deposit account and IRS Form 8888
Paper savings bonds mailed out 3+ weeks later
Available for purchase from $50-$5,000
Rate is 3.36% and changes twice a year
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About U.S. Savings Bonds
Protected by “Full faith & credit of U.S. government”
No fees to purchase or redeem bonds
Longer-term saving – bonds earn interest for 30 years
Redeemed before Year 5: Penalty of prior 3 mos. interest
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AARP Tax-Aide
AARP Tax Aide has over 34,000 volunteers serving at
over 6,000 sites;
Last year we served over 2.65 M taxpayers;
We provide free tax service with over 90% e-file rate;
Our volunteers begin training as early as November
thru January
Sites are open February 1 thru April 15;
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Tax Planning In Retirement
Jordan Amin, CPA
Chair, National CPA Financial Literacy Commission
American Institute of Certified Public Accountants
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Retirement Planning Vehicles
IRAs
 Traditional
 Roth
401(k)/403b
Pensions
Annuities
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Taxes and Your Retirement Plan
Traditional IRAs
 Contributions
 Earnings
 Withdrawals
Required minimum distributions
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Taxes and Your Retirement Plan
ROTH IRAs
Contributions
Earnings
Withdrawals
Required minimum distributions
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Taxes and Your Retirement Plan
401(k)/403(b)
Contributions
Earnings
Withdrawals
Required minimum distributions
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Taxes and Your Retirement Plan
Pensions
Withdrawals
Annuities
Purchases
Withdrawals
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Roth IRA Conversions
 What is it?
 Why convert?
 Who should convert?
 Pros and cons
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Roth IRA Conversions
 Tax law changes
 Election to spread tax over two years
 Can you convert back?
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Estate Tax
Estate taxes prior to 12/31/09
 Who was at risk of having to pay?
 Stepped up basis on inherited property
 State death taxes
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Estate Tax
Estate taxes in 2010
 Full repeal of estate tax
 No stepped up basis
 Provision to sunset
Estate tax beyond 2010
 What we know or suspect
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Retirement Tax Planning
Develop a plan for the tax efficient use of
retirement assets now
Are social security benefits taxable?
Taxation of investment income
Coordination between benefits
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Resources
AARP Tax-Aide
 www.aarp.org/taxaide
American Institute of Certified Public
Accountants
 Consumer resources:
www.360financialliteracy.org
Internal Revenue Service
 www.irs.gov
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Questions & Answers
 Question and Answer period
 Type your question into the Q&A box
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Thank you for joining us for:
Don’t Be Fooled by Taxes
For additional comments and questions contact us at
[email protected]
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