NEW YORK, Dec. 8, 2010 /PRNewswire/ -- Recently enacted federal tax laws, credits and new compliance requirements coupled with the announcement of a likely extension of the Bush-era tax cuts creates new tax saving opportunities for individuals and businesses at year-end, according to Marcum LLP's annual Year-End Tax Guide, www.marcumllp.com/taxguide, issued today.
Marcum's counsel comes on the heels of President Obama's announced compromise with Congressional Republicans to extend the Bush-era tax cuts for another two years in exchange for an extension of unemployment benefits and payroll tax cuts. "It appears the uncertainty related to taxes might be coming to an end. Not only will this be positive for the economy, the clarity surrounding tax and estate planning creates opportunities to take advantage of the lower rates for the next two years," said Joseph Perry, Firm-Wide Partner-in-Charge of Marcum LLP's Tax Services practice.
"We are facing one of the most uncertain and therefore challenging tax environments we've had in decades. While tax rates for most Americans may remain the same next year, we cannot afford to become complacent about year-end tax planning," said Perry. "It is critical that businesses and individuals are educated about the changing environment and are vigilant about implementing tax saving techniques today that will best position them to capitalize on emerging tax and financial opportunities in the years ahead."
The Marcum Year-End Tax Guide provides tax planning ideas for businesses and individuals for the rest of 2010. A sampling from the Guide includes:
2010 Year-End Tax Planning Ideas for Businesses:
- Section 179 deductions – Small businesses considering large equipment purchases should act now as the Section 179 deduction for equipment purchases has increased to $500,000 for purchases made in 2010 and 2011 and the maximum deduction phase-out threshold has increased to $2 million. Also, for the first time since Section 179 has been introduced, leasehold improvements are now eligible to take advantage of this code section. Businesses can now expense up to $250,000 of leaseholds using this provision.
- Bonus depreciations – All businesses may act now to take advantage of bonus depreciation rules that have been extended through 2010 for the immediate expensing of 50% of the cost of a qualified property placed in service during the 2010 tax year.
- Prepay expenses – Cash basis taxpayers should consider accelerating deductions by prepaying certain expenses (e.g., charging on a credit card this year which is paid off in the following year) or by shifting income to the following year. ** This only applies if the income is not actually or constructively received in the current year.
2010 Year-End Tax Planning Ideas for Individuals:
- Capital gains – If the reduced tax rates on capital gains set to expire in 2011 are not extended by Congress, they will revert back to their pre-2001 level or up to a maximum of 20% for all taxpayers. High earners should consider rebalancing a taxable portfolio this year, keeping in mind that the decision to sell an asset should be weighed against the potential for significant future appreciation versus a 5% lower rate.
- Qualified dividends – If Congress does not act to extend the reduced dividend rates, the rates will revert back to pre-2001 levels that are taxed at a taxpayer's ordinary income rate, up to a maximum of 39.6%. The President has proposed to keep qualifying dividend income taxed at the same rate as capital gains, which could increase to 20% in 2011. Based on these expected changes, owners of closely-held corporations may find it beneficial to pay out taxable dividends in 2010 as opposed to 2011.
- Deductions – Deduction timing is also an important element of year-end tax planning. An expense is only deductible in the year in which it is actually paid. If tax rates do increase next year, it may be a smart strategy to postpone deductions until 2011. In addition, certain deductions may be claimed only if they exceed a percentage of AGI: 7.5% for medical expenses, 2% for miscellaneous itemized deductions, and 10% for casualty losses.
In addition to tax planning strategies, the Marcum Year-End Tax Guide includes the following:
- Year-end estate tax and gift tax planning ideas;
- A discussion of the new Health Care Reform Bill, signed into law on March 23, 2010, and its projected impact on businesses' health care plans and payroll;
- New or extended energy efficiency and property provisions and how homeowners and businesses can take advantage of these measures to "go green";
- Recent changes in international taxation;
- The IRS's final Form 1120 Schedule UTP for Uncertain Tax Positions and what businesses should know;
- Highlights of significant state law changes in 2010;
- A discussion and instructions on how to convert from a traditional IRA to a Roth IRA; and
- Tuition planning ideas.
A free copy of the Marcum 2010 Year-End Tax Guide can be downloaded at www.marcumllp.com/taxguide.
About Marcum LLP
Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation. Ranked 15th among the "Top 100 Firms" by Inside Public Accounting, Marcum offers the resources of more than 1100 professionals, including 150 partners, in 21 offices throughout New York, New Jersey, Connecticut, Pennsylvania, Florida, Massachusetts, California, Hong Kong and Grand Cayman. Marcum is a member of the Marcum Group, the gateway to a group of organizations that provide a variety of professional services including accounting and advisory, technology solutions, recruiting, and wealth management. These organizations include Marcum LLP; MarcumRachlin, a division of Marcum LLP; MarcumStonefield, a division of Marcum LLP; Marcum Technology LLP; MarcumBuchanan Associates LLC; Marcum Search LLC and Marcum Financial Services LLC. For more about Marcum LLP, visit www.marcumllp.com.
SOURCE Marcum LLP