First-time and Existing homeowners TAX CREDITS

The Senate approved a measure on Wednesday to extend the current first-time homebuyers tax credit to 2010.  The bill also included expanding the credit to some existing homebuyers...
The House approved the bill the following date and the president is to sign the bill today into law.

If you were in no rush to buy your first home, or sell your existing one to expand or downsize, pay attention this tax credit.

First-time Homebuyers credit is $8,000 on purchases under contract by contract by April 30, 2010 as long as the contract closes by June 2010.  It applies to first homes only and not to second or vacation homes.

Certain existing homebuyers qualify for a tax credit up to $6,500 if buying a new home.  These homebuyers have to have owned and lived in their current main homes for five consecutives years out of the past eight. 

Income limitations are also expanded under this bill to individuals earning up to $125,000 or couples with income of $250,000, which increased from $75,000 and $150,000.

The credit will apply to all contracts for homes up to $800,000 by April 30, 2010 and closed on by June 30, 2010.  Uncle Sam also is requiring homebuyers claiming this credit to attach the purchase documents to their tax returns.

These credits coupled with a significant inventory and low mortgage rates, should motivate buyers to go out and find their new homes.  It will also boost home prices over the next few months as well.

If you are already in a deal at the moment, like one of my friends, pause and make sure that you meet the above requirements and good luck.....

It has been more than 3 weeks since I posted anything.  Not that news worthy of posting about is scarce, but few other reasons.  The 2008 official Federal and States Income Tax was 10/15, and since I am a tax professional, I had to take a week long vacation to recover.

Now, expect me to post again during the next few days about the latest and greatest personal financial and tax updates....

The Tax Chick

IRA Required Minimum Distributions NOT REQUIRED for 2009

In light of the turbulent stock market and its impact on most baby boomers's retirement accounts, the IRS announced that individuals are not required to take out their IRA Required Minimum Distributions in 2009.

The announcement came after some individuals had already taken out their distributions for the year, so in order to provide these individuals with the same benefits.  The IRS announced in Notice 2009-82
http://www.irs.gov/pub/irs-drop/n-09-82.pdf relief for these individuals.  The 2009 IRA RMD distributed can be rolled over to an IRA or even a Roth IRA as long as it meets these requirements:

Individuals have until Novermber 30, 2009 or 60 days from the date of the distributions from the IRA, whichever date comes later. 

Also qualified plan participants and beneficiaries have the same RMD waiver as with IRA's, so these plans can adopt amendments to allow for the suspension of the 2009 RMD distributions if elected.

Please note that the IRS did not waive the one-rollover-per year rule.  As a result, some taxpayers and clients might not qualify for this rule assuming they had a rollover during the year. 
The one rollover per year rule by the way doesn't apply to ROTH IRA conversions.  So since you have already taken out the distribution and will pay the tax on it, why not roll it over into a ROTH IRA in 2009. 
Next year you can convert more of your retirement account into the Roth and hopefully take advantage of this great vehicle...

One Year after Lehman Brothers’s collapse lessons learned:

Today marked the one-year anniversary of the collapse of Lehman Brothers and the collapse of the financial markets. Lehman Brothers was a company that the Federal Government allowed to fail without leaping to their rescue (as opposed to AIG and Citigroup). This is a decision that many historians will go back and review the ramifications of for a long period.

So much happened during this one year, the financial crisis was exacerbated by the collapse of Lehman Brothers, unemployment numbers went up to numbers we have not seen for years, home values continued their decline, credit and financing froze. Many Americans lost their confidence in the financial systems.

www.Smartmoney.com put a list of major key factors and measures of our economy today vs. a year ago. These factors highlight the impact of the financial crisis:

Unemployment rate
Aug. 2008: 6.1%
Aug. 2009: 9.7%
Source: Labor Department

People working part-time for economic reasons
Aug. 2008: 5.7 million
Aug. 2009: 9.1 million
Source: Labor Department

Dow Jones Industrial Average close
Sept. 12, 2008: 11,422
Sept. 11, 2009: 9,605

Price of gold
Sept. 12, 2008: $750.25 per ounce
Sept. 11, 2009: $1,006.40 per ounce

Consumer Confidence Index
Aug. 2008: 58.5
Aug. 2009: 54.1
Source: The Conference Board

President’s approval rating
Sept. 8-11, 2008: 31%
Sept. 5-8, 2009: 51%
Source: Gallup

Price of a gallon of gasoline
Sept. 15, 2008: $3.867
Sept. 7, 2009: $2.519
Source: Energy Department

Price of a gallon of milk
July 2008: $3.96
July 2009: $2.99
Source: Labor Department

Average price of a SanDisk 2-Gigabyte Secure Digital Card
Sept. 9, 2008: $13.10
Sept. 9, 2009: $11.38
Source: PriceGrabber.com

Manufacturer’s suggested retail price of a new Ford Focus
2009 model: $15,520 (up 7.8% from 2008 model)
2010 model: $15,995 (up 3.1% from 2009 model)
Source: Consumer Guide Automotive

S&P/Case-Shiller home price index for 20 U.S. metropolitan regions
June 2008: 167.69
June 2009: 141.31
Source: Standard & Poor’s

President Obama marked the anniversary by appearing in Wall Street touting today the lessons to be learned from Lehman and its aftermath. The President was reminding us that the measures taken by the Federal Government and Federal Reserve led to the stabilization of our economy. However, beware of the illusion and false sense of security. Let us not forget how we got here, and learn from our mistakes. These mistakes cost us as American Taxpayers billions of dollars.



The Fear and Greed are two emotions that drive most investors. A year ago, you could not get most sophisticated investors to stay in the stock market and invest in equities. Today with the stock markets at year to date highs, we should be careful from our greed sweeping us back in our old habits.