If you are a rental owner and during 2011 make payments of $600 or more to a service provider (such as a plumber, painter, or accountant) in the course of earning rental income, the 2010 Small Business Jobs Act says that you are required to provide an information return (typically Form 1099-MISC) to IRS and to the service provider.  In order to do that, you must obtain the payee’s name, SSN and contact information before making payment.  The IRS provides Form W-9 for that purpose. (more…)

As the end of the year approaches, it’s a good time to review your potential tax deductions and develop a strategy that maximizes the benefits.  Most taxpayers may deduct the higher of two amounts from adjusted gross income when figuring their taxable income.  These amounts are either a fixed amount set by law (the “standard deduction”) or a listing of the expenses the taxpayer paid during the year that the government allows (known as “itemized deductions”). (more…)

December 31, 2010 is an important deadline for individuals who inherited an IRA from an IRA owner who died in 2009.  Where there are multiple beneficiaries for the IRA, splitting up the account into several accounts can yield important tax and other benefits for each beneficiary.

When an inherited IRA has several beneficiaries and is left in one account, the required minimum annual distributions are based on the age of the oldest beneficiary (shortest life expectancy) rather than the life expectancy of each beneficiary.  This can be a disadvantage for younger beneficiaries by making them withdraw from the IRA in a shorter period of time than would be required based on their own age. (more…)

The year-end brings the holidays and a barrage of charitable solicitations.  It is also your last chance to make a charitable contribution and obtain a deduction for 2010.

Over the past few years, the IRS has tightened the recordkeeping rules for charitable contributions.  Therefore, it might be appropriate to review the recordkeeping requirements before making your year-end donations to your favorite charities. (more…)

The stock market has performed very well since its 2009 low.  As a result, many individuals may be sitting on large gains in stocks, bonds, mutual fund shares and other investment assets.  If you are in this situation, you might consider the extent to which you can sell appreciated assets this year to make use of available carryover and current year losses and/or to lock in this year’s maximum long-capital gains tax rate, which may be lower than next year’s maximum capital gains rate. (more…)

There are a number of credits that can help reduce your tax bite for 2010.  Unlike a deduction (which reduces your taxable income and thus provides a benefit equal only to the deduction amount times your tax rate), a tax credit is a dollar-for-dollar reduction of your tax.  For some credits―such as the Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit, and others―there’s not much you can do to change the outcome. However, there are some credits, described below, that offer year-end tax planning opportunities. (more…)