Per IRS Publication 583, you must keep your records that support an item of income or deduction on a tax return until the period of limitation runs out. The period of limitations is generally 3 years from the later of the due date of the return or the date you filed, whichever is later. There is a 6 year period of limitation if you do not report income that you should have reported and it is more than 25% of the gross income shown on the return. There is no period of limitations on an unfiled return or a fraudulent return.

Employment Taxes – If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later.

Assets-You must keep your records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. If you receive property in a nontaxable exchange, you must keep the records on the old property , as well as on the new property, until the period of limitation expires for the year in which you dispose of the new property in a taxable disposition.

A reverse mortgage, per IRS Publication 17, is a loan where a lender pays you, in a lump sum , monthly advance, a line of credit, or a combination of all, while you continue to live in your home and retain title to your home. It is considered a loan advance, not income, and the amount you receive is not taxable. Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full (subject to limits discussed in IRS Publication 936).

Based on your plan, your reverse mortgage becomes due when you move, sell your home, reach the end of a pre-selected loan period, or die.

A CPA is a Certified Public Accountant who has a license issued by the State. A CPA designation is awarded based on meeting education requirements, passing a rigorous uniform examination, and meeting experience and ethics requirements. CPAs must maintain high ethical standards and must meet a high level of continuing education. A CPA can also represent a client before the IRS. An “accountant is not licensed by the State and is not required to meet any continuing education requirements and cannot practice before the IRS without becoming an “Enrolled Agent.”

CFP® is a certification mark owned by the Certified Financial Planner Board of Standards Inc. (CFP Board), which can help you identify financial planners who are committed to competent and ethical behavior when providing financial planning. Individuals certified by the CFP Board have gone through the rigorous CFP® certification process that includes education, examination, experience and ethical requirements. Anyone can call themselves a financial planner, but only those that have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. Through the Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first.

There is a lot of information floating around about converting a Traditional IRA to a ROTH IRA in 2010. Is this something everyone should do? What are the tax consequences?

For 2010 only, the IRS will allow conversion of funds in Traditional IRAs, SIMPLE and SEP accounts to a ROTH IRA. The benefit of a ROTH IRA is simply that you will never pay tax on funds withdrawn from a ROTH account after a 5 year waiting period and you are over age 59-1/2. Normally, the conversion cannot be done if modified adjusted gross income exceeds $100,000 for the year of conversion or if you file married filing separate. For 2010 only, these exclutions do not apply.

The COST for the conversion is that the amount converted is includible in income in the year converted, or, if elected, the income can be deferred to 2011 and 2012, with one-half the income added to your other income in both 2011 and 2012.

Remember, tax rates are expected to go up in 2011. You could trigger a 10% penalty if you are under age 59-1/2 at date of conversion and use some of the Traditional IRA funds to pay the tax, rather than rolling over all the money moved out of the Traditional IRA. IS THIS IRA CONVERSION GOOD FOR EVERYONE? Absolutely not! There are many factors to consider, such as your tax bracket and the length of time your funds will remain in the ROTH IRA. Please call to discuss your situation before making this decision.

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