Presented By: Walter Deyhle, CPA, CFP, ABV, CM&AA Where Personal Attention Will Never Become Obsolete! 1

2 Rules No throwing things! No question is unimportant! Do not hold questions! Try not to be political! Turn off phones, etc.

3 Our Process Tax organizers E-filing Copies of returns Portal (coming soon)

4 News Affecting Taxes Deficit > $1.4 trillion Bush tax cuts expire 12/31/2010 Funding for War in Iraq & Afghanistan Funding for Health Care reform

5 Federal Expiring Provisions

Federal Expiring Provisions (cont’d) 12/31/2009IRC Section Waiver of minimum required distribution rules for certain retirement plans 401(a) 6

Federal Expiring Provisions (cont’d) 12/31/2010IRC Section Reduced capital gain and qualifying dividend rates 1(h) 7 Lowest tax rate to increase from 10% to 15% Top tax rate to increase from 35% to 39.6%

Federal Expiring Provisions (cont’d) 12/31/2010IRC Section Personal energy property credit 25C(g) 8

Estate & Gift Tax 9

10 Estate Tax Basics Unified gift & tax system Current exclusion $3.5M per person Annual gifting of $13,000 Exclusion for education and medical payments Step–Up Basis Top tax rate 35%

11 Roth IRA

Convert to a ROTH IRA? TRADITIONALROTH Tax DeductibleNo Tax Deduction Qualified Distributions TaxableQualified Distributions Tax Free Tax Deferred GrowthTax Free Growth Required Minimum Distribution No Required Minimum Distribution Most Effective When Tax Rate Lower at Retirement Most Effective When Tax Rate Higher at Retirement 12

Do not need IRA to pay tax Expect to be in a higher tax bracket in retirement Do not need IRA in retirement Expect to pay estate taxes When To Convert 13

No required minimum distributions Pass to heirs Heirs have required RMD When To Convert (cont’d) 14

Housing Credit 15

Housing Credit Worker, Homeownership, and Business Assistance Act of 2009 Income limit increased $125,000 / $225,000 P&S by 4/30/10 – close before 7/1/10 16

Housing Credit (cont’d) Long-time resident 5 consecutive years / last 8 lesser of 10% or $6,500 Homes up to $800,000 17

Residential Energy Credit 18

Residential Energy Credit Removes individual item caps Increases limit to $1,500 Increases from 10% to 30% Prior $500 not counted For 2009 & 2010 installations Required energy efficiency increased 19

House Health Act 20

House Health Act Employers with over $750,000 of payroll must provide 72.5% single or 65% family Individual required to get insurance, if not 2.5% tax 21

House Health Act (cont’d) 5.4% surtax $500,000/$1,000,000 effective

Rates for the “Rich” Rich is: $250,000 MFJ $200,000 Single 35% to 39.5% 33% to 36% Capital gains & qualified dividends to 20% Possible top marginal rate 45% 24

Other Items Aimed At “Rich” Reinstate 3% phase-out of itemized deductions Reinstate 3% phase-out of exemptions 25

26 Kiddie Tax $950 allowance Earned income taxed at child’s rate $1,900 of investment income taxed at child’s rate Excess investment income taxed at parent’s rate

27 Kiddie Tax (cont’d) Applies to children age 18 and younger and “children” age 23 and younger who are full-time students

28 Other Items of Interest Sale of residence rules Capital gain/loss rules Mortgage interest rules Life settlements

29 Alternative Minimum Tax

4550 Montgomery Avenue, Suite 650 N Bethesda, MD Walter Deyhle, CPA, CFP, ABV, CM&AA Gelman, Rosenberg & Freedman, CPAs Where Personal Attention Will Never Become Obsolete! 30 Questions?