Tax Tips
New economic relief act benefits seniors and employers
The economic downturn and mounting stock market losses are shrinking retirement accounts and impeding employers’ ability to meet pension funding requirements. The Worker, Retiree and Employer Recovery Act of 2008 (WRERA) is designed to help seniors recover some of the value their retirement accounts have lost this year and ease employer pension funding requirements that could have forced businesses to make large pension fund contributions at a time when cash is in short supply. In addition, the act “corrects” several technical provisions of the Pension Protection Act of 2006 (PPA).
Excise tax affecting seniors suspended
Due to the steep drop in the stock market during the past several months, you likely have found that the value of your retirement plan has plummeted, too. Many seniors have been particularly hard hit because of rules stipulating that those age 70½ or over generally must take required minimum distributions (RMDs) from their IRAs, 401(k)s or other tax-deferred retirement plans each year. Failure to withdraw the RMD in any year could result in a 50% excise tax on the shortfall. The RMD for a given year is the balance as of Dec. 31 of the prior year divided by a factor based on age.
As a result, those having to take RMDs in 2008 have had to base their withdrawals on Dec. 31, 2007, values — which in many cases were considerably higher than current ones. This requirement has caused them to take larger RMDs than they would have based on current values. These relatively larger withdrawals, combined with the drop in market value of the assets remaining in their accounts, have left many seniors with significantly reduced retirement funds.
WRERA temporarily suspends the RMD excise tax for 2009 for IRAs as well as all defined contribution plans, including 401(k), 403(b) and 457 plans. This gives seniors the option to keep remaining funds in their plans for another year without incurring a tax penalty — providing time for their investments to perhaps recoup recent losses. This provision applies to all individuals age 70½ or older, regardless of their retirement plan’s account balance or whether the plan has incurred any losses.
Seniors, of course, still have the option of withdrawing funds from their plans if they need the money. But even before the recent stock market volatility, many have preferred to withdraw only the RMD to maximize continued tax-deferred growth. And now, thanks to WRERA, they can choose not to withdraw at all — at least in 2009.
Employer pension funding requirements eased
The economic downturn has also greatly affected employers’ ability to fund pension plans. WRERA eases the pension funding requirements enacted in PPA. Here are some of the key changes for:
Single-employer plans. Under PPA, employers were required to increase funding for single-employer pension plans to 100%, from 90%, over a seven-year period. The target funding level is 92% in 2008 and 94% in 2009. The penalty if employers didn’t reach those benchmarks had been that they must immediately fund the plan 100%. Under WRERA, employers who can’t meet these requirements must make subsequent contributions only up to the target for that year, rather than hit the 100% target.
Multiemployer plans. WRERA offers relief for multiemployer pension plans that are “endangered” or in “critical status.” PPA provided funding restrictions for these plan types, and the new law eases those restrictions. Specifically, the act allows plan sponsors to elect to temporarily freeze the status of certain multiemployer plans at the funding status held during the previous plan year. This covers plan years beginning on or after Oct. 1, 2008, and before Oct. 1, 2009. Also, if the plan was “endangered” or in “critical status” the preceding plan year, it isn’t required to revise its funding improvement plan or schedules until the following plan year.
Allowing nonspouse beneficiary rollovers now mandatory
WRERA makes it mandatory that, beginning after 2009, qualified retirement plans, 403(b) plans or 457 plans allow nonspouse beneficiaries of a deceased participant to roll over their balance directly to an “inherited IRA.” PPA had made this a permissible option, but not a requirement.
Know how WRERA affects you
Even though WRERA’s main provisions are relatively simple, knowing exactly how they affect you and what to do about them is a more complicated matter. To find out, please give us a call. We would be glad to answer any questions you have and help you take advantage of this legislation to mitigate the impacts of the current recession.
Rescue act includes tax breaks for individuals and businesses
The Emergency Economic Stabilization Act of 2008 (EESA) is designed to address the current U.S. credit crisis. But this "rescue" act also extends and expands a multitude of tax breaks for individuals and businesses that had already expired or were set to expire after this year, including many energy-related incentives. In addition, it provides relief for natural disaster victims in the Midwest, Louisiana and Texas.
AMT relief for individuals
Perhaps the most significant tax provision affecting individuals is the extension of alternative minimum tax (AMT) relief. The AMT is a separate tax system that limits some deductions and doesn't permit others — you must pay the AMT if your AMT liability exceeds your regular tax liability. Unlike the regular tax system, the AMT system isn't regularly adjusted for inflation. So if Congress hadn't acted, many middle class taxpayers would have had to pay AMT for 2008.
EESA provides a one-year "patch" that increases the AMT exemption. For married couples filing jointly, the 2008 exemption is $69,950. For singles and heads of households, it's $46,200, and for married filing separately, it's $34,975. These amounts are up slightly from 2007, but significantly higher than what they would have been for 2008 without the patch — $45,000, $33,750 and $22,500, respectively.
The patch also expands the AMT income ranges over which the exemptions phase out and only partial exemptions are available. The 2008 phaseout ranges are now $150,000 to $429,800 for married filing jointly, $112,500 to $297,300 for singles and heads of households, and $75,000 to $214,900 for married filing separately. The exemption is completely phased out if AMT income exceeds the top of the applicable range.
Additionally, the act extends a provision through 2008 that allows certain nonrefundable personal tax credits to provide a benefit against the AMT, such as the dependent care credit, the Hope credit and the Lifetime Learning credit. (The child credit and the adoption credit are already allowed for AMT purposes under previous law.)
EESA also provides more relief to many taxpayers whose incentive stock option (ISO) exercises have made them subject to the AMT. It abates unpaid AMT liability, as well as interest and penalties, generated by ISO exercises before 2008. It also increases the amount of refundable long-term AMT credit for AMT paid in past years. For calendar years 2008 through 2012, eligible taxpayers can now claim 50% — up from 20% — of their unused credit.
Despite these AMT-related provisions, many taxpayers will continue to be subject to this additional tax until more substantial changes are made.
Extensions benefiting individuals
Some other important tax breaks for individuals that expired in 2007 have now been extended through 2009:
The state and local sales tax deduction. It allows you to deduct state and local sales taxes rather than state and local income taxes. It primarily benefits those living in states with no income tax but may also benefit taxpayers who live in low-income-tax states or who purchase major items during the year, such as cars or boats.
The qualified tuition deduction. It allows eligible taxpayers to deduct up to $4,000 of qualified higher education tuition and fees "above the line," which means, unlike an itemized deduction, it reduces your adjusted gross income (AGI). But this deduction is limited to $2,000 for joint filers with AGIs of $130,000 to $160,000 ($65,000 to $80,000 for single filers) and is unavailable to taxpayers with higher AGIs. Taxpayers ineligible for education credits may be eligible for this deduction.
Additional breaks that have been extended through 2009 include:
- The provision allowing taxpayers age 70½ or older to make tax-free distributions from their IRAs (up to $100,000 annually) to tax-exempt charities,
- The above-the-line deduction for certain out-of-pocket expenses (up to $250) of elementary and secondary school teachers, and
- The additional standard deduction for real property taxes for nonitemizers (up to $1,000 for joint filers, $500 for single filers) that was provided earlier this year under the Housing and Economic Recovery Act.
Plus, EESA extends through 2012 a provision that generally allows homeowners to avoid paying federal income taxes on debt forgiveness received in connection with a foreclosure or a mortgage workout on a principal residence.
Extensions benefiting businesses
Here are some of the more significant breaks for businesses that EESA has extended through 2009 and, in some cases, expanded:
The research and development (R&D) credit. Generally, it's equal to 20% of qualified research expenses in excess of a certain amount based on the company's historical activity. But businesses can instead take the alternative simplified credit (ASC), equal to 12% (14% for 2009) of qualified research expenses exceeding 50% of the previous three tax years' average expenses.
Accelerated depreciation for leasehold and restaurant improvements. This provision allows a shortened recovery period of 15 years — rather than 39 years — for qualified leasehold and restaurant improvements (generally those made by the lessor or the lessee to the interior of a nonresidential building more than three years after the building was placed in service).
EESA also expands the provision to cover certain:
- New construction for qualified restaurant property, and
- Improvements to retail space.
These expansions apply only to property placed in service after Dec. 31, 2008, and before Jan. 1, 2010.
The enhanced deduction for food, book and computer donations.
Businesses can take a deduction for more than their cost of certain contributions of food to charity and of books and computer equipment to qualifying schools. The deduction is equal to cost plus one-half of any increase in value, not to exceed double the cost. The items contributed must be used by the charity for its exempt purpose.
Energy incentives
EESA extends many energy-related tax provisions and adds some new tax incentives. There are breaks for both individuals and businesses, including:
- An extended credit for nonbusiness energy property,
- A modified energy-efficient appliance credit,
- A new credit for qualified plug-in electric drive motor vehicles,
- A new transportation fringe benefit for bicycle commuters,
- An extended energy-efficient commercial buildings deduction,
- An accelerated recovery period for depreciation of smart meters and smart grid systems, and
- A special depreciation allowance for certain reuse and recycling property.
Contractors may benefit from breaks for qualified green building and sustainable design projects.
Natural disaster relief
For certain areas in the Midwest damaged by floods, tornadoes and severe storms earlier this year, EESA provides many tax incentives that are similar to the relief provided in the Gulf Opportunity (GO) Zone after Hurricanes Katrina, Rita and Wilma. It also extends certain GO Zone relief provisions.
EESA provides more limited relief for the Hurricane Ike disaster area, but it expands national disaster relief overall, generally for natural disasters occurring after Dec. 31, 2007, and before Jan. 1, 2010.
How will EESA affect you?
EESA is one of the largest tax acts in recent years and may significantly affect your tax liability in a variety of ways. So please let us know if you have any questions about this or other tax laws, as well as strategies you might implement to minimize your taxes for 2008 and beyond.
New tax laws provide mortgage & AMT relief
After a fairly
lackluster year on Capitol Hill, Congress rushed to pass several
highly anticipated tax bills before recessing for the holiday break.
Here’s a look at the key laws and how they may affect you:
Mortgage relief
Congress spent much of 2007 trying to hammer out legislation that
would offer help to homeowners caught in the subprime mortgage
crisis. The Mortgage Forgiveness Debt Relief Act of 2007, signed
into law by President Bush on Dec. 20, 2007, creates a three-year
exception (from Jan. 1, 2007, through Dec. 31, 2009) to current law
so that affected homeowners won’t have to pay federal income taxes
for debt forgiveness on their troubled loans. This provides relief
to homeowners who receive debt forgiveness in a foreclosure or in a
mortgage workout, under which the terms of the mortgage are changed,
resulting in a lower mortgage balance.
The law specifically
applies to mortgages on a principal residence, and not to vacation
or secondary homes. The law also doesn’t apply to taxpayers in
Chapter 11 bankruptcy.
Moreover, the new law
extends through Dec. 31, 2010, a provision enacted in 2006 that
allows taxpayers to take an itemized deduction for premiums paid or
accrued on qualified mortgage insurance. The law applies only to
contracts entered into after Dec. 31, 2006, and before Jan. 1, 2011.
Another provision of the mortgage act extends the time period that a
recently widowed person can use the joint-return filers’ $500,000
home sale gain exclusion to cover sales occurring up to two years
after the spouse’s death. Plus, the act clarifies the low-income
housing credit and the definition of a cooperative housing
corporation.
AMT patch
The alternative minimum tax (AMT) continues to be a bugaboo for
Congress. They understand the need to overhaul the system, but can’t
seem to find the key to simplifying it. With time running out,
Congress finally approved a “patch” that includes 2007 AMT exemption
amounts that are significantly higher than they would have been
without the act but only slightly higher than the 2006 amounts.
Under the Tax Increase Prevention Act of 2007, signed into law by
President Bush on Dec. 26, 2007, the 2007 amounts are:
- $44,350 for
singles and heads of households,
- $66,250 for
married filing jointly, and
- $33,125 for
married filing separately.
The IRS and Treasury
Department estimated that, without the patch, roughly 25 million
taxpayers would have paid on average $2,000 more in taxes for 2007.
Once again, this issue will need to be addressed for 2008 because
the increased exemption is only for 2007.
The new law provides
additional AMT relief by allowing more nonrefundable personal
credits, such as the dependent care, Hope and Lifetime Learning
credits, to be used to reduce AMT liability. (Many other popular
credits, such as the child and adoption credits, were already
eligible.)
As a result of the
changes, the IRS is asking taxpayers filing certain forms to wait to
file until Feb. 11, 2008. Affected forms include Form 8863,
Education Credits; Form 5695, Residential Energy Credits; and Form
8396, Mortgage Interest Credit. Several other AMT-related forms,
however, aren’t affected.
It’s also important to note that the 2007 tax materials that you’ll
likely receive from the IRS in early January were printed before the
new tax laws were passed.
Energy issues
On Dec. 19, 2007, the president signed into law a new energy bill.
The Energy Independence and Security Act of 2007 raises fuel economy
standards for automobiles and sets standards for improving the
efficiency of home appliances. Provisions that were NOT included in
the bill, but which may be resurrected in 2008, include extensions
of the residential energy efficiency credits and research credit. In
addition, future legislation may extend and enhance the alternative
motor vehicle credit.
Other items of
note
Technical corrections were also made to nine major tax laws dating
back to 1998. Perhaps the most notable is a clarification of the
definition of the AMT refundable credit. The change allows taxpayers
to better take advantage of long-term unused credits.
Moreover, under a
special tax law signed by President Bush on Dec. 19, victims and
family members affected by the April 2007 Virginia Tech massacre may
exclude from their gross income any payments they receive from a
special memorial fund set up on their behalf after the tragedy.
Important change
in IRS Section 409A compliance deadline for nonqualified
deferred compensation plans
On Sept. 10, 2007,
the Treasury Department and the IRS announced, in IRS Notice
2007-78, that companies will have until Dec. 31, 2008, to bring
documents into compliance with the final nonqualified deferred
compensation regulations under Section 409A of the Internal
Revenue Code. Previously, the deadline was Dec. 31, 2007.
Sec. 409A applies to a broad variety of deferred compensation
arrangements and sets forth requirements that affected plans
must satisfy. Any company with a nonqualified deferred
compensation plan — a deferred compensation plan that is
generally designed to favor only certain individuals or groups
of individuals — should be certain that the plan is in
compliance with the law. The penalties for noncompliance can be
severe: Plan participants will be taxed on plan benefits at the
time of vesting, and a 20% penalty tax and potential interest
charges also will apply.
It’s important to note that the notice extends only the time
for bringing plan documents into conformity with Sec. 409A. It
does not extend the effective date of the final regulations,
which remains Jan. 1, 2008.
This means that, although plan sponsors now have until Dec. 31,
2008, to conform their plan documents to Sec. 409A, they must
operate and administer their plans in compliance with the final
Sec. 409A regulations by Jan. 1, 2008. (They must also have
operated their plans in “good faith” compliance with Sec. 409A
retroactive to 2005, when the requirements first went into
effect.)
Plan sponsors should identify all plans or arrangements that may
be subject to Sec. 409A and have them reviewed to ensure that
they’re operationally and administratively Sec. 409A compliant.
If they have plans that aren’t compliant, they should bring the
plans — and plan documents — into conformity with Sec. 409A as
soon as possible but no later than the applicable deadlines.
The Treasury Department and the IRS expect to issue further
guidance regarding a limited voluntary compliance program that
will help companies correct specific unintentional operational
violations of Sec. 409A. But no date has been set for issuing
that guidance.
Please consult us to find out exactly how this IRS notice
affects your nonqualified deferred compensation plan.
On May 25, the
President signed the Small Business and Work Opportunity Tax Act
of 2007 (SBWOTA). Passed in conjunction with legislation to
continue funding the war in Iraq and to raise the minimum hourly
wage, the tax-related provisions are designed in part to provide
benefits to small businesses likely to be hit hard by the
minimum wage increase.
Following are highlights of key provisions affecting businesses
and individuals, as well as GO Zone incentives and other areas
of tax law.
Businesses
The Section 179 election to expense property in its initial year
(rather than depreciate it) is extended through 2010 and
increased from $100,000 to $125,000, effective for years
beginning after 2006. The expense deduction begins to phase out
if more than $500,000 of eligible property is placed in service
during the year (up from $400,000). These amounts will be
adjusted for inflation annually.
The Work Opportunity tax credit, which had been set to expire
Dec. 31, 2007, is extended until September 30, 2011. This credit
is available to businesses that hire employees from targeted
groups of individuals, such as veterans, ex-felons, high-risk
youth, and food stamp and supplemental security income
recipients. The new law expands this list to include disabled
veterans and individuals in counties that have suffered
significant population losses. If you hire a target employee,
your business can receive a 40% tax credit for the first $6,000
paid to that worker.
The individual and corporate alternative minimum tax (AMT)
limits on the use of certain credits are waived, effective for
years after 2006 as well as for carryback of these credits. This
applies to the Work Opportunity credit and the credit for taxes
paid on employee tips. Employers are also now eligible for the
full tip credit despite the increase in the minimum wage.
SBWOTA includes certain S corporation and pension provisions,
but they are generally too obscure and technical to cover in
this Alert. Contact your tax advisor to ascertain whether any of
these changes affect your tax planning strategies.
Individuals
The new law also affects some individual taxpayers. The “kiddie
tax,” which subjects children (and now young adults) to tax on
most unearned income at their parents’ marginal tax bracket, had
recently been expanded to include those under age 18 (up from
age 14). Now, SBWOTA broadens that rule to include those who
qualify as dependents because they are either under age 19, or
under age 24 and a full-time student, if their earned income
doesn’t exceed one half of the amount needed for their support.
GO Zone incentives
In addition, SBWOTA extends several tax incentives designated
for the Gulf Opportunity Zone (GO Zone):
-
The increased Sec. 179 expense election, which is generally
doubled for qualifying
property, is extended through 2008.
-
The low-income housing tax credit for GO Zone housing is
extended through 2010.
-
Tax-exempt bond financing for GO Zone property is expanded
to include expenses for all repairs and reconstruction. The
provision applies to owner financing provided after May 25,
2007, and before 2011.
Other changes
Finally, the act subjects tax return preparers to increased
levels of penalty for the redefined category of “unreasonable
positions” taken on a tax return, as well as for the category of
“willful and reckless” tax positions. The legislation also makes
changes in the pension area, as well as numerous other minor
changes and technical corrections.
Tax Relief and Health Care Act of 2006
On Dec. 20, 2006,
President Bush signed into law the Tax Relief and Health Care
Act of 2006. In addition to extending certain tax provisions
that had expired at the end of 2005 or that had been set to
expire soon, the act introduces some new rules and important tax
breaks we think you’ll want to know about.
Extensions benefiting individuals
Some of the extended provisions are specific to individuals. Two
of the more significant — both extended through 2007 — are:
1. The state and local sales tax itemized deduction.
This deduction, which had expired at the end of 2005, allows you
to deduct either state and local income taxes or state and local
sales taxes. It primarily benefits those living in states with
no income tax but may also benefit taxpayers who live in
low-income-tax states or who purchase major items, such as cars
or boats. Referring to the Optional State Sales Tax Tables in
IRS Publication 600 is the easiest way to calculate the
deduction. But if you spend more than average for your income
level, you may enjoy a larger deduction by saving your receipts
and totaling up the actual sales tax paid.
2. The above-the-line deduction for college tuition payments.
This deduction also had expired after 2005. It allows you to
deduct “above the line” a portion of qualified higher education
tuition and fees. Taxpayers with adjusted gross incomes (AGIs)
not exceeding $65,000 for singles and $130,000 for joint filers
are eligible for a maximum annual deduction of $4,000. Those
with AGIs up to $80,000 for singles and $160,000 for joint
filers can deduct up to $2,000.
Note that you can’t
claim this deduction if you claim the Hope or Lifetime Learning
credit for the same student. But the AGI phase out ranges for
the credits are lower ($45,000 – $55,000 for singles and $90,000
– $110,000 for joint filers). So the deduction may benefit you
if you don’t qualify for the credits.
Other extensions
that benefit individuals include the deduction for up to $250 of
qualified out-of-pocket teacher expenses (through 2007), the
availability of Archer Medical Savings Accounts (through 2007),
and the credit for certain residential alternative energy
expenditures (through 2008).
Extensions benefiting businesses
Several provisions geared more toward businesses have also been
extended, including:
The research and development (R&D) credit.
This credit, which had expired at the end of 2005, has been
extended through 2007. Generally, it is equal to 20% of
qualified research expenses in excess of a certain amount based
on the company’s historical activity. But businesses can instead
take the alternative incremental credit (AIC), based on a stated
percentage of qualified expenses in excess of average expenses
over four years.
For 2007 the new
law enhances the R&D credit in two ways. First, it increases the
stated percentage for the AIC. Second, it offers the alternative
simplified credit (ASC), equal to 12% of qualified research
expenses exceeding 50% of the previous three tax years’ average
expenses. If there were no qualified expenses in any of those
years, the ASC equals 6% of the current year’s expenses.
Combined with
previous rule changes that have liberalized the requirements for
taking this credit in recent years, the new law makes the credit
a powerful tax-saving tool for many businesses.
Employment credits for hiring low-income workers.
The new law not only extends the previously expired
Welfare-to-Work and Work Opportunity credits through 2006 but
also combines and enhances them for 2007. These credits benefit
businesses hiring employees from certain economically
disadvantaged groups, such as ex-felons and food stamp
recipients. The credits generally equal 40% of qualified
first-year wages or 25% of such wages if employment is more than
120 hours but less than 400. “Qualified” wages cannot exceed
$6,000. This means that, depending on whether the 40% or 25%
amount applies, the credit cannot exceed either $2,400 or $1,500
per eligible employee. Combining the two credits should make
calculations easier.
The other 2007
enhancements include an extension of the time employers have to
file certification documents and elimination of the requirement
that ex-felons be from an economically disadvantaged family.
Accelerated depreciation for leasehold and restaurant
improvements.
The extension of this provision through 2007 allows a shortened
recovery period of 15 years (rather than 39 years) for qualified
leasehold and qualified restaurant improvements. Those made to
the interior of a nonresidential building more than three years
after the building was placed in service generally qualify. And
the improvements can be made by either the lessor or the lessee.
Energy-related tax breaks.
Many provisions have been extended through 2008, including:
-
The credit
for energy efficient new homes,
-
The deduction
for energy efficient commercial buildings,
-
The renewable
electrical energy production credit, and
-
The authority
to issue clean renewable energy bonds.
Other extensions
that benefit businesses include Gulf Opportunity Zone bonus
depreciation (through 2010), the ability to deduct rather than
capitalize certain environmental remediation costs (through
2007), and the deduction for corporate donations of certain
computer and scientific equipment to schools and public
libraries (through 2007).
HSA enhancements
As the act’s name suggests, it also addresses health care,
specifically Health Savings Accounts (HSAs). The new law makes
notable and permanent changes to the HSA rules. HSAs allow you
to contribute pretax income to an account that bears interest or
is invested in mutual funds, and withdrawals for health care
expenses are tax free. The maximum HSA contribution previously
was limited to the lesser of the policy’s deductible or the
IRS-sanctioned maximum allowable amount. Now, starting in 2007,
the policy’s deductible does not factor into the contribution
limit. Thus, regardless of the policy’s deductible, for 2007 the
contribution limit is $2,850 for a policy with individual-only
coverage and $5,650 for a policy that covers the participant’s
family.
Other important
changes with respect to HSAs include the following:
-
Annual
contribution limits are no longer pro-rated for participants
who become eligible during the year, so long as they are
eligible at the end of the year. One caveat is that
participants who later become ineligible may be subject to a
recapture of prior deductions.
-
Participants can make a
one-time transfer to their HSAs from flexible spending
accounts (FSAs) and health reimbursement accounts (HRAs).
The maximum transfer is the account balance on the day of
the transfer or on Sept. 21, 2006, whichever is less.
Transfers can be made on or after the date of enactment
through Dec. 31, 2011.
And, in an effort
to allow quicker access to retirement savings to pay medical
expenses, the new law allows participants to make a one-time,
irrevocable rollover of funds from an IRA into an HSA after Dec.
31, 2006. The rollover, which is neither taxable as an IRA
distribution nor deductible as an HSA contribution, is limited
to the maximum allowable HSA contribution for the year.
Expanded AMT credit
In an effort to help taxpayers who were stung by the AMT when
they exercised qualified stock options and who haven’t been able
to use the resulting AMT credit in subsequent years, the new law
allows for a refundable credit starting in 2007 and ending in
2012. The refundable amount each year depends on your long-term
unused minimum tax credits and AGI. You may be able to claim as
much as 20% of the unused AMT credit each year as a refundable
credit if the unused amount is significant. Otherwise, you may
be eligible to use the lesser of $5,000 or the entire unused
amount.
More tax breaks, technical corrections and obsolete tax forms
Also included in the law is a new provision that permits you to
deduct amounts paid for private mortgage insurance premiums —
but only for amounts paid during 2007 and only in certain
situations. Further, there are various miscellaneous provisions
in the law that range from breaks with narrow applicability,
such as permanent capital gains treatment for self-created
musical works, to items as innocuous as technical corrections.
One interesting
impact of changes being passed so late in the year is that the
2006 tax forms have already been printed and will have to be
updated.
The bottom line
There are many tax saving opportunities within the Tax Relief
and Health Care Act of 2006 — some that may greatly benefit you.
Please call us for more information about this important tax law
and to see how you might take full advantage of it to reduce
your tax liability for 2006, 2007 and beyond.
