updated on: January 28, 2010

Hopefully, we are all on the way to recovery, and 2010 will be a year of world re-growth and prosperity.

Review your investments
This is a good time to review and rebalance your investment portfolio. Remember that any sales made in a retirement account are tax free. Remember to include reinvested dividends when you calculate your cost basis. When selling mutual funds, take into consideration any year-end distributions.

Do your homework
Schedule energy saving home improvements before the new year. The tax credit for qualified first time home buyers has been extended through April, 2010.

Signs of the times
The American Recovery and Reinvestment Act of 2009 provides some lessening of tax liabilities. There will be a deduction for sales taxes paid on a new vehicle purchase. The alternative minimum tax exemption has increased for 2009 tax returns. The first $2,400.00 of unemployment benefits will not be taxable. There will be a 65% subsidy for COBRA health insurance premiums.

The American Opportunity Tax Credit expands – and renames – the Hope Credit. There is now a maximum of $2,500.00 that can be credited, and up to $1,000.00 can be refunded.

Your home office
Many companies are allowing – and encouraging – working from home. Most people who are self-employed have an office in the home. Generally, to deduct an office in your home you must use the area exclusively and regularly for business purposes. Whether you rent or own, a percentage of home expenses can be deducted.

Please download any and all helpful worksheets from the links on our home page.

Important reminders:
Please remember

We must have all your tax information by March 20th, in order to guarantee an April 15th filing.

The IRS encourages:
Electronic filing of tax returns, direct deposit of refunds, and direct withdrawals of amounts owed. This eliminates lost returns, reduces errors, and speeds up refunds. To have your return E-filed and your refunds direct deposited into your bank account we'll need the following information:

• (1) name of bank
• (2) routing number of bank
• (3) your account number

from John Galego, Financial Planning Services
Shielding Your Estate From the Government

What do Elvis Presley and you have in common? Absolutely nothing, you're probably thinking. But if your estate plan isn't in order, you may have the same problem he had before he died in 1977 at the age of 42. At his death, his estate was valued at over $10 million, but federal estate taxes and other estate settlement costs of more than $7 million reduced its net value to under $3 million. With a more carefully prepared estate plan, Elvis might have been able to leave more to his daughter and other family members, and less to the federal government.

When Jessica Savitch, the NBC news anchor, died in a car accident in 1983, her gross estate was just over $2 million. Had she done some basic estate planning, however, she might have escaped estate taxes that diminished her estate by 51 percent.

Whether you are a celebrity or just an ordinary, hard-working entrepreneur, the lesson is the same: careful estate planning can make a big difference in how much you leave to your future heirs. Estate planning techniques range from the straightforward to the complex, but you don't have to be a millionaire to take advantage of them.

For more information, contact John Galego.

Have a Beautiful 2009!