Make your checklist for 2009 year-end tax planning

With only a couple of weeks left in 2009, I think it's still not too late to review your year-end tax planning checklist and discuss planning strategies with your financial advisor and tax professional before year end. Here are a few ideas I recommend you discuss and review:


• Find out if you carried over any losses from the sale of investments last year. Use this information to determine if you want to use these losses to offset any investment gains from 2009.

• When selling securities, ask your financial advisor how to comply with wash sale rules that govern the purchase and sale of similar investments within a 30-day period.

• Have your tax advisor estimate your adjusted gross income and tax rate and determine now if you have any Alternative Minimum Tax (AMT) liability for 2009. If so, you may consider deferring taxable income to 2010 or accelerating or deferring deductions in 2009 to minimize AMT.

• Tell your tax advisor if you purchased any big-ticket items this year or are intending to by year-end. You may qualify for valuable tax credits or deductions if you bought a car, made energy-saving home improvements, purchased a first home, or paid for a college education.


• Fully fund your IRA and company retirement accounts as soon as possible. You should consult your tax advisor to determine the deadline for contributing to your company retirement plan and you have until April 15, 2010, to fund your IRA for 2009.

• Explore the benefits of a Roth IRA. Tax law changes in 2010 will enable all investors to convert to a Roth IRA, which not only provides tax-deferred growth, but also tax-free income in retirement. Your financial advisor can provide a complimentary analysis and provide a copy of our special report, The Roth Conversion Opportunity.

• If you are age 701⁄2 or older and have a Traditional, SEP or SIMPLE IRA, you don't have to take Required Minimum Distributions (RMDs) for 2009 including the initial RMD, which is due April 1, 2010. Be sure to consider how skipping a distribution this year may impact your 2010 distribution.

• If you own a business that has a calendar tax year, you have until Dec. 31 to adopt a qualified plan in order to deduct contributions for 2009. If you miss this deadline, a SEP plan can be established and funded by the due date for filing the plan sponsor's 2009 tax return (with extensions) - which, if you are a sole proprietor, could be as late as Oct.15, 2010.


• If you are age 701⁄2 or older and considering a charitable gift, look to your IRA: you can make a tax-free donation of up to $100,000 from your traditional or Roth IRA to a qualified charity. This opportunity expires at the end of the year, so act now so the transfer can be completed before year-end.

• If you plan to gift shares of stock to charity, you must act by year end. By gifting appreciated stock, you can qualify for a potential income tax deduction, or by selling stock that has lost value and donating the proceeds, you can realize a loss to offset other gains.

• Complete any gift transfers to individuals by year-end. Not only will this make you feel good, but you will help reduce the value of your estate and future estate taxes. You can transfer up to $13,000 per recipient in 2009 without incurring any federal gift tax. Spouses together may gift up to $26,000 per recipient.

Talk with your financial advisor about how gifting through a 529 Plan can help reduce income or estate taxes. By making an accelerated gift through a 529 Plan, you can gift up to $65,000 ($130,000 for couples) per beneficiary.

Don't forget to ask your Financial Advisor for help rebalancing your portfolio to remain in line with your goals, time horizon and risk tolerance. Discuss any new opportunities for investing that might be appropriate for you. Don't delay; we only have a couple of weeks left in 2009!

• William Creekbaum, MBA, CFP, is senior investment management consultant of Morgan Stanley Smith Barney LLC. A Washoe Valley resident, he has been writing this column since 1995. He can be reached at or 689-8704.


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