The Alternative Minimum Tax (AMT) is an additional tax that some taxpayers have to pay on top of their regular income tax.  Furthermore, AMT was originally designed to make sure that high income individuals did not evade taxation.  For awhile, the AMT worked as intended.  However, AMT was not indexed for inflation, which has seemingly “trapped” middle income taxpayers in recent years.
Currently, Congress has no plans to repeal the AMT because of the economic impact that would result.  Rather than repealing the AMT act, Congress has annually created a "patch" to AMT, which partially alleviates this increased tax burden.  The patch increases exemption amounts and provides other means of relief.  However, The American Recovery and Reinvestment Tax Act of 2009 provided a patch for 2009 only.  The Taxpayer Certainty and Relief Act of 2009 is a proposal floating around Congress to extend the AMT patch annually over the next 10 years at the 2009 levels and index it for inflation.  However, until a decision is made, almost any taxpayer is a potential target for AMT.

Below is a list of the Top 10 Things that Cause AMT Liability

Does Your Non-Profit Organization Need to Adopt New Policies?

The Form 990 contains new sections that ask extensive questions about organizations’ governance practices and policies.  The Internal Revenue Code has no specific governance requirements, but the IRS believes good governance ensures better compliance with tax laws and more effective safeguarding of assets.  To encourage organizations to adopt policies the IRS feels are beneficial, they have required that organizations disclose whether or not they have certain written policies and in some cases the organization is asked to describe the policy and how it is enforced.  We have outlined the policies mentioned on the Form 990 and the specific disclosures required related to each policy.

Conflict of Interest Policy
A conflict of interest policy is implemented to monitor how people who have influence over the resources of the organization might benefit from this influence.  The IRS has several questions regarding

Once December 31st has come and gone, your tax liability for the 2009 tax year will be set in stone. Until then, and especially now that your final tax picture for 2009 is becoming more clear, year-end tax planning presents a unique last chance to lower your tax bill. It is an investment in time well worth considering.  Year-end tax planning is made more urgent in 2009 because of some significant tax law changes.  We have highlighted many of these changes, as well as, some areas of law where the IRS may be increasing their scrutiny.

2009 Year-end Tax Planning

Homebuyer Credit. Congress extended the homebuyer tax credit, which allows a refundable credit for up to $8,000 ($4,000 for married filing separately) for qualifying first time homebuyers. Eligible taxpayers who enter a binding contract to purchase by April 30, 2010 and close on the purchase by June 30, 2010 may receive the credit. Congress also established a credit up to $6,500 ($3,250 for married filing separately) for homes purchased after November 6, 2009 by taxpayers who have owned and used the same residence as their principal residence for any five consecutive year period during the previous eight year period.

5-year NOL carryback. For businesses, the Worker, Homeownership and Business Assistance Act enhances the ability to carry back Net Operating Losses. All businesses may be eligible to elect to

Governmental Auditing Standards Board (GASB) has issued Statement No. 54, which changes the manner in which fund balances are reported by governments.  It is effective for financial statements for periods beginning after June 15, 2010 though, as is usually the case, GASB encourages early implementation.

Fund balance information is one of the most widely used segments in a government’s financial report.  Therefore, GASB’s Statement  No. 54 seeks to improve the fund balance classifications and focuses on the extent to which governments are bound by constraints on resources reported in their governmental funds.

Currently, fund balances are reported as:

• Reserved (for legal restricted funds)
• Unresered, Designated (for self imposed fund limitations)
• Unreserved, Undesignated

Under the standards set by GASB No. 54, fund balances will be reported as:

• Nonspendable
• Restricted
• Committed
• Assigned
• Unassigned

These new classifications are broadly defined as follows:

There are many misconceptions, criticisms, and contradictory information pieces among the public, the media, and in politics as relates to the American Recovery and Reinvestment Act of 2009.  The Act, passed in February of 2009, is the largest "stimulus" or "recovery" package in the history of the United States.  At a cost of over $1.1 trillion, the Act dwarfs all prior stimulus plans such as the Economic Stimulus Act of 2008 at $152 billion or even President Roosevelt's ENTIRE "New Deal" with a total cost, in today's dollars, of about $500 billion.  

However, with the U.S. having lost over

There is good news for first-time homebuyers and buyers who have lived in their current homes for more than 5 years.  President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 into law on November 6, 2009.  The legislation allows a tax credit of 10% of the purchase price of a home up to $8,000 for taxpayers, with incomes under $125,000 for single filers or $225,000 for joint filers, that have not owned a home in three years prior to the purchase.  A reduced credit is available for

Did you know that taxpayers turning 70 ½ may be subject to the Required Minimum Distribution rules regarding certain retirement plans?  However, minimum distributions are suspended for 2009.

What is RMD?
A required minimum distribution is the amount a plan participant must withdraw from his or her retirement plan account each year after the participant retires or reaches age 70 1/2 (depending on the type of plan).  The rules apply to IRAs, SIMPLE IRAs, and SEPs.  The rules do not apply to ROTH IRAs.

There are many definitions of "Gold Standard" though it is commonly referred to has a "representative currency".  This is where the amount of currency in circulation by a government is equal to amount of gold it possesses at its current price.   This effectively limits the amount of government spending to only the value of the gold supply it owns.  Governments will "suspend" the Gold Standard at times when it must incur abnormally large expenditures, such as in a time of war.  This usually results in currency inflation followed by a deflation once the suspension is lifted. 

The United States adopted the Gold Standard in 1834 and stayed on it, with various suspensions, until 1974 when the Richard Nixon permantly suspended the U.S. Gold Standard.  Click on the graph to the right to see how drastically inflation takes over.  Do you think we should get back on the Gold Standard?  Well, given the total of all gold ever known to be mined, the current per ounce trading price of around $1,000, and the total of all U.S. dollars in circulation of over $4.3 trillion, you would have to more than double the price of gold to more than $2,000 per ounce to get back on the Gold Standard.  Hmmm, now what would that do to world markets?

If you are a owner of an interest partnership, LLP, LLC, or S-Corporation, you should have heard the term "outside basis".  It is an important calculation and it is your responsibility to track it, not the business.  It is important because if in the future you sell your interest in the business, your gain or loss will be computed based on the sale price less your "outside basis".  Also, depending on the business organization type (LLC, S-Corp, etc.), your ability to take losses from the business as deductions on your individual tax return is affected by your "outside basis".   Here is what "outside basis" consists of at any given time which, by the way, almost never equals your "capital account":

Section 179 Deduction:

Maximum deduction .......... $133,000

Qualifying property limit .... $530,000

SUV deduction limit ............$25,000

SIMPLE IRA plan contributions limits:

Under age 50 ........ $11,500

Age 50 or older ..... $14,000

401(k), 403(b), 457 and SARSEP elective deferral limits:

Under age 50 ........ $16,500

Age 50 or older ..... $22,000

Other Retirement limits:

Profit-sharing plan / SEP contribution limit:  $49,000

Compensation limit (for employer contributions to profit sharing plans):  $245,000

Defined benefit plans (annual benefit limit):  $195,000

"Key employee" compensation threshold:  $160,000

"Highly compensated" employee threshold:  $110,000

No one can really say, but the IRS does report on the number of returns that it examines.  For 2008, of the 138 million tax returns filed by individuals, the IRS examined 1,391,581.   This implies that you have about a 1% chance of being audited.  The most highly examined returns were those with more than a million dollars of income of which 5.6% were audited (down from 9.3% in 2007).

You can check out more of this information in the IRS Data Book, FY 2008, Publication 55b.

Many are curious to know what the overall tax rate is for our national government.  You can compute this in any given year by dividing the total of all taxes collected in the U.S. by the total of all the income earned in the country.  This percentage can be used to determine the day of the year when your earnings are entirely your own.  This is referred to as Tax Freedom Day (TFD). 

Since 1920, the earliest day in the year for TFD was February 12, 1930 (11.7%) and the latest was May 3, 2000 (33.6%).  For 2008, our TFD was April 23rd with an overall tax rate of 30.8%. 

Personal Exemptions:  $3,650

Basic Standard Deductions:

Married Filing Jointly = $11,400

Single = $5,700

Income Tax Rates applied to Taxable Income

Married Filing Jointly

10% on first $16,700

15% on the next $51,200

25% on the next $69,150

28% on the next $71,800

33% on the next $164,100

35% on all additional income

The Internal Revenue Service has changed the extended due dates for certain tax form types.  If you are a partnership, LLC, LLP, Family Limited Partnership, or any other kind of pass-through organization that files a Form 1065, you must file your tax return by April 15 of each year.  The change is with the extended due date which had previously been a filing by October 15, but beginning with tax years ending in 2008, the final extended due date for Form 1065 is now September 15.