2009 PERSONAL YEAR-END TAX PLANNING

Dear friends of RC Jones & Associates

With the end of the year fast approaching, you can often cash in on unique tax-saving opportunities that won’t be available once Jan. 1 rolls around. Be aware that certain new tax developments may also have an impact on year-end planning in 2009.

With that in mind, following are several strategies you might use to cut your personal tax bill at the end of the year.

• Use capital gains and capital losses to offset each other. Depending on your situation, you may realize gains or losses at year-end. Any excess loss can offset up to $3,000 of ordinary income. Key point: For 2009, the maximum tax rate on long-term capital gain is 0% for certain taxpayers (e.g., your children) in the regular 10% or 15% tax brackets.

• Try to minimize the “kiddie tax.” For 2009, the kiddie tax generally applies to a child under age 19 or a full-time student under age 24 receiving more than $1,900 of unearned income. This may eliminate or reduce the benefit of the 0% capital gains rate.

• Have an estimate made of your alternative minimum tax (AMT) liability. It may be possible to avoid or reduce the AMT by postponing certain “tax preference” items to 2010. Note: The new economic stimulus law provides slightly higher AMT exemption amounts for 2009.

• Contribute to your favorite charities. But know that the IRS recently toughened the substantiation rules for monetary gifts. In general, you are required to obtain a written confirmation of your gift.

• Avoid estimated tax penalties. No penalty is imposed if your tax payments for 2009, including withholding, equals at least 90% of this year’s tax liability or 100% of last year’s liability (110% if your 2008 AGI was $150,000 or over).

• Bunch medical expenses in the year you may qualify for a deduction. Your unreimbursed expenses can be deducted only to the extent the total exceeds 7.5% of your adjusted gross income (AGI).

Of course, other year-end planning techniques may be appropriate or preferable for certain taxpayers. Call us to arrange a meeting to discuss your situation at (816) 792-9966.

Very truly yours,

Robert C. Jones

www.rcjonesinc.com