Please call to make your tax appointment as early as possible. If you use our Tax Organizer to help organize your information, please call our office and request one when you make your appointment (they will be mailed out at the end of January 2010). If you mail in your tax documents, please do so to our Glastonbury address (25 New London Turnpike). You can also drop off tax information at any of our three offices. The Glastonbury office has a drop-box for your convenience, next to the drive thru. Even if you do not have all of your tax information organized, please call and book your appointment as soon as possible.

 

If you wish to have your taxes prepared by the April 15^th filing date and avoid an extension, please drop-off your information no later than March 15, 2010. With all of your information in by this date, we should be able to complete your return timely.

 

Please read the enclosed Winter Tax Tips! (This article was distributed by: Brian Lichtenstein of Lichtenstein Tax Consultants, LLC. and written by: The National Association of Tax Professionals)

 

We are pleased to announce that Naomi Silbermintz and James Allen have joined our team. Naomi is our operations manager and James is heading up our Mortgage Department. We are also very excited that Anthony Delucia, CPA is sharing office space with us and is strategically allied with Lichtenstein Financial, LLC. Joining Anthony is Sharon Belanger. You can address any topic to our staff and consultants (Jason, Brad, Bill, Leslie, Steve, Annabel, Laurence, Naomi, James and Brian). We will always guide you to the appropriate professional based on your inquiry, whether it be investments, taxes, insurance, mortgages, or business services.

 

Evidence now suggests that the recession ended sometime this past summer. The stock market has grown robustly since the March lows. Two forces have been pushing the recovery- the government’s cash for clunkers program and the tax credit for first-time homebuyers. In addition, the Fed has been purchasing virtually all mortgages being written thereby keeping mortgage rates, as well as the Fed rate, low.

 

The rebuilding of inventory and restocking in manufacturing has helped fuel some of the industrial growth. However, the one area that has not yet responded to the government stimulus is the job market. The average duration of unemployment is currently at twenty-five weeks; an all-time high for the record dating back to 1948. 

 
Also, what is not generally obvious is that many American workers who were laid-off have been re-employed, but at dramatically reduced salaries. This fact will have a lasting impact on the domestic economy which is primarily driven by consumer spending. Additionally, average consumers have started to save more, reducing spending, yet on a positive note, reducing personal debt, as well. If consumer demand continues to be weak, we will continue to have a weak recovery and recent market gains may not hold. The possibility of slipping into another recession still exists.

 

We have spoken to most of you, or met with you, during the last few months. To the extent that no one can definitively determine when any economy or market will hit some bumps, or how big the bumps will be, attempting to time the investment markets generally is not an option. Thus, we always preach a broad portfolio allocation that works within the boundaries of each individual’s risk tolerance.

 

All advisors, including investment banks, mutual fund companies, and brokers have learned time and again during the last decade about the challenges of managing portfolios and client expectations. Today’s investment winner can be tomorrow’s loser, whether referring to a stock, a bond, a region, a theme, or more broadly, any portfolio allocation theory. Determining the right mix of equities and fixed income (generally cash, cash equivalents, and bonds) for your portfolio is an extensive exercise in risk management based on individual risk tolerance. Diversifitcation can be thought of as spreading your investment dollars into various asset classes to add balance to your portfolio.  Although it doesn't guarantee a profit, it may be able to reduce the volatility of your portfolio.

 

 

·         A Roth IRA conversion or re-characterization may save tax dollars if the investment has declined in value.

·         Tax credits for energy efficient home improvements (windows, doors, insulation, HVAC, and non-solar water heaters) that had expired at the end of 2007 will again be available for improvements made during 2009. 

·         Consider using a credit card (that you will pay off in January 2010!) to prepay necessary expenses that can generate deductions for you in 2009.

·         Business clients should consider making expenditures that qualify for the $250,000 business property expensing option.

·         Self-employed individuals should speak with us regarding what retirement plan works best for you (tax savings & retirement savings). Setting up a self-employed retirement plan (SEP) (by return due date including extensions) is easy. There are also many other types of retirement plans to consider.

·         You can save gift and estate taxes by making gifts sheltered by the annual gift tax exclusion before the end of the year. You can give $13,000 in 2009 to an unlimited number of individuals but you can’t carry over unused exclusions from one year to the next.   

·         If you’re thinking of donating a used auto to charity, you may want to inquire whether the charity plans to sell the car or use it in its charitable activities; the latter may yield a bigger deduction for you.

·         Consider extending your subscriptions to professional journals, paying union or professional dues, enrolling in (and paying tuition for) job-related courses, etc., to ‘bunch’ miscellaneous itemized deductions subject to the 2%-of-AGI floor into 2009.

·         Realize capital losses to offset capital gains, and possibly ordinary income.

·         The best kind of money is ‘free’ money, so make sure you take full advantage of matching retirement programs (such as your 401k & 403b) offered by your employer. (Please talk to us if you need advice.)

·         The next best kind of money is ‘tax-free’ money. Make sure you take full advantage of Roth IRAs and 529 College Savings Programs.

·         401(k) and 403(b) plans now can be modified to accept Roth contributions. Check with your employer to determine availability, and then call us to determine if a Roth 401(k) is the right vehicle for you.

·         Individuals can accelerate paying property taxes, state estimates, and making charitable contributions in 2009 to reduce taxable income.

·         IRA contributions can be made up to the 1040 filing deadline, (not including extensions).

·         Pension contributions made up to a 2009 extended due date are deductible in 2009.

·         Donating appreciated assets to charities avoids capital gains and allows for a tax deduction equal to the value of the asset on the date of the transfer.

·         To reduce taxes (with potential market risk), move money from fixed income investments taxed at ordinary rates into qualifying dividend income investments taxed at preferred rates.

·         Qualified mortgage insurance premiums (paid or accrued) may be deductible in 2009.

·         A charitable contribution will be disallowed for any monetary contributions (cash, check, etc.) unless the donor maintains a record of the contribution in the form of a bank record, cancelled checks, or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution. 

·         Qualified plan distributions to non-spouse beneficiaries are not required to be distributed in an immediate lump sum, allowing the beneficiary to defer taxation on the distribution until required to do so under the rules for inherited IRAs.

·         Taxpayers that purchase a new car, light truck, motor home, or motorcycle before January 1, 2010 may qualify for a special deduction of applicable state, local and excise taxes on their 2009 1040.

·         Up to $2,400 of unemployment compensation received in 2009 will be exempt from income taxes.

 

Please contact us immediately with any year-end tax or financial questions. 

 

As always, we thank you for your friendship, loyalty, referrals, and patronage and look forward to working with you during 2010.

 

We’ll see you soon!

 

 

Brian