Balancing the Budget

The federal government is spilling red ink to the tune of $1.5+ trillion over the past year. A large part of this is waste. I have a solution to sop up some of the red stuff taxpayers will need to pay for eventually.

Accountants use the Power of Attorney to open communication with Revenue for specific clients. Once the POA is signed and filed, the IRS sends every document to the taxpayer and accountant. When the job is done, we disengage the POA and Revenue should stop sending duplicates to us.

But they don’t. Several days a month the mail doesn’t fit in the mailbox. A thousand letters per month or more from taxpayers no longer clients, grace our shredder. Revenue could save millions in postage and paper costs by honoring our request to withdraw from the POA. Think of all the trees saved. The only loser is the post office.

And I pray they never decide to send it all email. If they do, they will be sent to the spam folder automatically.

Roth IRA Tango

For 2010, regular IRA's can be coverted to a Roth IRA without any income limitation. Currently, taxpayers with an AGI above $100,000 cannot convert to a Roth.

Here are some tax strategies for high incomers to consider:

• You can set up a regular IRA and make nondeductible contributions and converting to a Roth in 2010. Tax is due on the earnings only.
• You have the option to report half the income in 2011 and the remaining half in 2012.
• If you convert to a Roth early in 2010, you start accumulating earnings tax-free sooner.
• Remember, distributions after attaining age 59 1/2 are tax and penalty free.
• Roth IRAs have no required minimum distributions for people age 70 1/2 and over.

Review these options with your tax professional before implementing a tax strategy. Additional advantages may be available to you.