2009 Tax Talk 2009 What you need to

2009 Tax Talk 2009年報税須知 What you need to know to file your tax returns. Kenneth Mak, CPA February 28, 2010 Copyright © 2010 by Kenneth Mak. All rights reserved.

Agenda 議程 • • Federal Individual Income Tax 联邦個人入息税 State Income Tax – Massachusetts 麻州入息税 State Income Tax – New Hampshire 新罕什州入息税 New Tax Breaks for 2009年減税條例 Common Non-deductible Expenses 一些不能扣税的開支 Tax Resources 報税資源 Conclusion 總結 2009 Tax Talk 2

Bible Story about Paying Tax 聖經有関納税的故事 Matthew 22: 17 -21 17 Tell us then, what is your opinion? Is it right to pay taxes to Caesar or not? " 18 But Jesus, knowing their evil intent, said, "You hypocrites, why are you trying to trap me? 19 Show me the coin used for paying the tax. " They brought him a denarius, 20 and he asked them, "Whose portrait is this? And whose inscription? " 21"Caesar's, " they replied. Then he said to them, "Give to Caesar what is Caesar's, and to God what is God's. " 馬 太 福 音 22: 17 -21 17 請 告 訴 我 們 ， 你 的 意 見 如 何 ？ 納 稅 給 該 撒 可 以 不 可 以 ？ 18 耶 穌 看 出 他 們 的 惡 意， 就 說 ： 假 冒 為 善 的 人 哪 ，為 甚 麼 試 探 ？ 19 拿 一 個 上 稅 的 錢 給 我 看 ！ 他 們 就 拿 一 個 銀 錢 來 給 他 。 20 耶 穌 說 ： 這 像 和 這 號 是 誰 的 ？ 21 他 們 說 ： 是 該 撒 的 。 耶 穌 說 ： 這 樣 ， 該 撒 的 物 當 歸 給 該 撒 ； 神 的 物 當 歸 給 神 。 2009 Tax Talk 3

Federal Individual Income Tax 联邦個人入息税 1. Filing Status　申報狀况 • • • Single　單身 Married Filing Jointly　已婚共同報税 Married Filing Separately　已婚分别報税 Head of Household　 一家之主 Qualifying Widow(er) with Dependent Child 有子女的鳏寡人士 2009 Tax Talk 4

2. Do you have to File? 你須要報税嗎？ • In general, you must file a return if your gross income exceeded a certain amount depending on your filing status • Filing Requirements for Most Taxpayers: 2009 Tax Talk 5

2. Do you have to File? 你須要報税嗎？ Filing Status Age at the end of 2009 File a return if your gross income was at least Single Under 65 65 or older $9, 350 10, 750 Married filing jointly Under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses) $18, 700 19, 800 20, 900 Married filing separately any age $3, 650 Head of household Under 65 65 or older $12, 000 13, 400 Qualifying widow(er) with dependent child Under 65 65 or older 2009 Tax Talk $15, 050 16, 150 6

3. When should you file? 你何時報税？ • Not later than April 15, 2010. • You can get automatic 6 -month extension by using e-file or by filing Form 4868. • However, you must pay your tax due, if any, on or before April 15, 2010. 2009 Tax Talk 7

4. Which form should you use for filing? 你要用甚麽表格？ • Form 1040 – for most people. • Form 1040 A – usually for people who claim the standard deduction and have income from wages, interest and ordinary dividends. • Form 1040 EZ-for people who meet all the requirements set forth on the Form. Some important requirements are: – – – Filing status is single or married filing jointly Under age 65 and not blind Taxable income is less than $100, 000 You do not claim any dependents and any adjustments to income You had only wages, salaries, tips, etc and your taxable interest was not over $1, 500 2009 Tax Talk 8

5. Some schedules you may need to file 一些應填報的附表 • Schedule A – Itemized Deductions • Schedule B – Interest and Ordinary Dividends, if amount is over $1, 500 • Schedule C. – Profit or Loss From Business, if you are self -employed • Schedule D – Capital Gains and Losses, if you sold or exchanged capital assets such as stocks, bonds or in some cases your home • Schedule E – Supplemental Income & Loss, if you have rental property income and expenses • Schedule SE – Self-Employment Tax, if you had $400 or more of net earnings from self-employment 2009 Tax Talk 9

6. Attachments to Your Tax Return 税單附件 • W-2 • Form 1099 -R • No need to attach any if using e-file 2009 Tax Talk 10

7. Gross Income – (1) 所有收入 • Employee compensation: wages, salaries, bonus, commission, awards (can exclude up to $1, 600 for awards such as employee achievement, length-ofservice awards), tips, nonqualified deferred compensation, certain disability income • Interest Income (except tax-exempt interest) • Dividend Income – ordinary dividends • State tax refunds • Alimony received 2009 Tax Talk 11

7. Gross Income – (2) 所有收入 • Business Income or (Loss) – from Sch. C • Capital Gain or (Loss) – e. g. gain or (loss) on sale of stocks & mutual funds, capital gain distribution, from Sch. D • Other Gains or (Losses) – sale or exchange of business or trade assets, from Form 4797 2009 Tax Talk 12

7. Gross Income – (3) 所有收入 • IRA Distributions – Reported on Form 1099 -R – Qualified rollover not taxable – Qualified charitable distribution up to $100, 000 not taxable if you are at least 70 ½ • Taxable Pensions and Annuities – reported on Form 1099 -R 2009 Tax Talk 13

7. Gross Income – (4) 所有收入 • Rental real estate, royalties, partnership, etc – Report income and expenses of rental properties on Sch. E – Loss can only offset passive income if renting out a condo or apartment is a passive activity • Unemployment compensation – Reported on Form 1099 -G – In 2009, first $2, 400 is not taxable • Social Security benefits – Reported on Form SSA-1099 – 85% may be taxable 2009 Tax Talk 14

7. Gross Income – (5) 所有收入 • Other income – some examples: – Prizes and awards – Gambling income – Jury duty pay – Rental income from personal properties – Cancelled debts 2009 Tax Talk 15

7. Gross Income – (6) 所有收入 • Foreign Income – U. S. citizens and resident aliens must report income from sources outside the United States unless it is exempt by U. S. law (true whether you reside inside or outside the U. S. ) – This applies to both earned income (e. g. wages, tips) and unearned income (e. g. interest, dividends, capital gains, pensions, rents), even if you don’t receive W-2 and Form 1099 from foreign payers – If you reside outside the U. S. , you may be able to exclude up to $91, 400 of your foreign earnings • Physically present in a foreign country for at least 330 days in a year • Tax home must be in a foreign country • Must have foreign earned income 2009 Tax Talk 16

8. Deductions – (1) 扣税項目 • Educator expense – deduct qualified expenses up to $250 for eligible educator • Health Savings Account (HSA) – deduct qualified contributions • Moving expense – may deduct certain qualified expenses if you move to a new workplace located at least 50 miles away • Self-employment taxes – deduct one-half 2009 Tax Talk 17

8. Deductions – (2) 扣税項目 • IRA Deductions – you may deduct contribution to IRA up to: – $5, 000 if under age 50 – $6, 000 if over age 50 and under 70 ½ • Traditional IRA deduction phase-out if your MAGI is: – More than $55, 000 but less than $65, 000 for single filer – More than $89, 000 but less than $109, 000 for married filing jointly • Roth IRA contribution phase-out if your MAGI is: – More than $105, 000 but less than $120, 000 for single filer – More than $166, 000 but less than $176, 000 for married filing jointly 2009 Tax Talk 18

8. Deductions – (3) 扣税項目 • Student loan interest deduction – you may deduct up to $2, 500 of qualified student loan interest for eligible students if your MAGI is: – Less than $75, 000 for single filer – Less than $150, 000 for married filing jointly • Tuition and fees deduction – you may deduct up to $4, 000 in qualified expenses if your MAGI is: – Less than $80, 000 for single filer – Less than $160, 000 for married filing jointly 2009 Tax Talk 19

9. Tax Credits – (1) 減税項目 • Earned Income Credit (EIC) – Refundable credit for low income working taxpayer (if your EIC is more than income tax you owe, you get a tax refund) – You must have earned income to claim EIC – Income limit and credit amount depend on number of qualifying children – You may claim EIC if your earned income and AGI is less than: • $43, 279 ($48, 279 married filing jointly) with 3 or more qualifying children • $40, 295 ($45, 295 married filing jointly) with 2 qualifying children • $35, 463 ($40, 463 married filing jointly) with 1 qualifying child • $13, 440 ($18, 440 married filing jointly) with no qualifying children – Maximum credit is $5, 657 2009 Tax Talk 20

9. Tax Credits – (2) 減税項目 • Foreign tax credit • Credit for Child & Dependent Care – you may complete Form 2442 to take this credit if you had earned income and paid someone to take care of : – Your qualifying child under 13 – Your disabled spouse or dependents • Child tax credit – up to $1, 000 per qualifying child (under age 17) if your AGI is – $75, 000 for single filer – $150, 000 for married filing jointly • Education credit 2009 Tax Talk 21

9. Tax Credits – (3) 減税項目 • Other credits – Non business energy property credit – e. g. insulation, furnace and windows for your main home – Residential energy efficient property credit – e. g. solar electricity panels, solar water heater – Alternative motor vehicle credit – for buying certain hybrid vehicles 2009 Tax Talk 22

10. Standard Deductions 一般扣税額 • Basic Standard Deductions: – $5, 700 for single or married filing separately – $8, 300 for head of household – $11, 400 for married filing jointly or qualified widow(er) – Amount is increased for age over 65 and blindness 2009 Tax Talk 23

11. Itemized Deductions 分項扣税額 • You may take the Standard Deduction or itemize you deductions using Schedule A • You should take the Itemized Deductions if you have paid state income tax, property taxes, home mortgage interest, etc more than the Standard Deduction amount 2009 Tax Talk 24

State Income Tax – Massachusetts 麻州入息税 – (1) • Filing Status – Single – Married Filing Jointly – Married Filing Separately – Head of Household 2009 Tax Talk 25

State Income Tax – Massachusetts 麻州入息税 – (2) • Personal Exemption – Single – Married Filing Jointly – Married Filing Separately – Head of Household 2009 Tax Talk $4, 400 $8, 800 $4, 400 $6, 800 26

State Income Tax – Massachusetts 麻州入息税 – (3) • Dependent Exemption – $1, 000 each • Other Exemptions – Age 65 or over $700 – Blindness $2, 200 – Medical/dental – amount reported on U. S. Form 1040 Sch. A Line 4 – Adoption – adoption fee paid to a licensed adoption agency 2009 Tax Talk 27

State Income Tax – Massachusett 麻州入息税 – (4) • 5. 3% Income – in general, this includes income from: – Wages, salaries, tips – Pensions, annuities – Mass bank interest – Unemployment compensation – Business and rental income – Other – e. g. alimony, taxable IRA, gambling winnings • Deductions – Child under age 13, or disabled dependent/spouse care expense – 50% rental deduction – not more than $3, 000 for married filing jointly 2009 Tax Talk 28

State Income Tax – Massachusetts 麻州入息税 – (5) • 12% Income – complete Schedule B to determine your taxable 12% income if you have: – Interest income other than interest from MA banks – Gross dividend income more than $1, 500 – Certain capital gains/lossess 2009 Tax Talk 29

State Income Tax – Massachusetts 麻州入息税 – (6) • No Tax Status – no MA income tax if your MA AGI is – $8, 000 or less if single – $14, 400 or less plus $1, 000 per dependent if head of household – $16, 400 or less plus $1, 000 per dependent if married filing jointly 2009 Tax Talk 30

State Income Tax – Massachusetts 麻州入息税 – (7) • Limited Income Credit – if you do not qualify for No Tax Status, you may be able to take the limited income credit • Limited Income Credit is an alternative tax calculation resulting in a significant tax reduction 2009 Tax Talk 31

State Income Tax – Massachusetts 麻州入息税 – (8) • Health Insurance – starting in 1/1/2009, adults must be enrolled in a health insurance plan that meets Minimum Creditable Coverage reguirement • This is the minimum level of health insurance benefits that adult tax filers need to be considered insured and avoid tax penalties in MA 2009 Tax Talk 32

State Income Tax – New Hampshire 新罕什州入息税 • Interest and Dividend income are taxable, employment income is not taxable • Tax rate at 5% • Exemption amount: – $2, 400 for individual, trust, fiduciary – $4, 800 for joint filer – $1, 200 additional exemption for age 65 or over, blind, or disabled 2009 Tax Talk 33

New Tax Breaks for 2009 – (1) 2009年減税條例 • Home Buyer’s Credit – If you bought first home in 2009, you may able to claim a credit up to $8, 000 – If you didn’t own a home for at least 3 years before purchasing a house in 2009, you are a first-time home buyer – If you purchased it before 11/7/2009, income eligibility limits apply : • Full credit if your income was not over $75, 000 (Single) or $150, 000 (joint filer) • Credit phases out for income up to $95, 000 (single) or $170, 000 (joint filer) 2009 Tax Talk 34

New Tax Breaks for 2009 –(2) 2009年減税條例 • Home Buyer’s Credit (cont’d) – If you purchased it on or before 11/7/2009, income eligibility limits are higher • 10% (of home price) credit, up to $6, 500 • Full credit if your income was not over $125, 000 (Single) or $225, 000 (joint filer) • Credit phases out for income up to $145, 000 (single) or $245, 000 (joint filer) 2009 Tax Talk 35

New Tax Breaks for 2009 – (3) 2009年減税條例 • Education Credit: American Opportunity Credit– you may be able to take this credit up to $2, 500 if you paid at least $4, 000 in qualified college expenses (first 4 years) – Full credit if your income was not over $80, 000 (Single) or $160, 000 (joint filer) – Credit phases out for income up to $90, 000 (single) or $180, 000 (joint filer) – Higher income limit than existing Hope and Lifetime Learning credits – Refundable credit 2009 Tax Talk 36

New Tax Breaks for 2009 – (4) 2009年減税條例 • Home Energy Credits – No income limit – Credit worth 30% of the cost of eligible home improvements on your principal residence (e. g. high-efficiency heating or a/c systems water heaters and stoves, plus installation labor costs, energy-efficient windows, doors, insulation), up to $1, 500; total spending at least $5, 000 – Credit worth 30% of cost, including installation of alternative-energy equipment (e. g. solar electric systems, solar water heaters, geothermal heat pumps, wind turbines); no cap on amount of this credit 2009 Tax Talk 37

New Tax Breaks for 2009 – (5) 2009年減税條例 • Making Work Pay Credit – Refundable tax credit, calculated at 6. 2% earned income – Maximum credit $400 for single or $800 for married filing joint return – Credit starts phasing out for single with MAGI exceeding $75, 000 ($150, 000 for married filing jointly) 2009 Tax Talk 38

New Tax Breaks for 2009 – (6) 2009年減税條例 • New Vehicle Purchases – State or local sales tax or excise tax on new vehicles purchased on or after 2/16/2009 can be deducted – Limited to the tax you paid on up to $49, 500 of the purchase price of the vehicle • Unemployment benefits – $2, 400 of unemployment compensation can be excluded from income 2009 Tax Talk 39

Common Non-deductible Expenses 一些不能扣税的開支 • Unreimbursed Work Expenses – only amount in excess of 2% of your AGI is deductible • Roth IRA Contributions • 529 Plan Contribution – no federal deduction; deduction up to certain limit of state sponsored 529 plan may be allowed on state return • Political Contribution • Passive Losses • Capital Losses – maximum loss deduction is $3, 000 of other income each year 2009 Tax Talk 40

Tax Resources – (1) 報税資源 • You can usually get the federal and state tax forms in your local libraries and post offices • IRS Taxpayer Assistance – Web site: www. irs. gov – Phone: 1 -800 -829 -1040 – Local Offices • Boston: JFK Federal Building, 15 New Sudbury St, Boston, MA 02203; Tel: 617 -316 -2850 • Fitchburg: 881 Main St, Fitchburg MA 01420; Tel: 978 -3420016 • Nashua: 410 Amherst St, Nashua NH 03063: Tel 603 -5948370 2009 Tax Talk 41

Tax Resources – (2) 報税資源 • Massachusetts Department of Revenue – Web: www. mass. gov/dor – Phone: 800 -392 -6089 • New Hampshire Dept of Revenue Admin. – Web: www. revenue. nh. gov – Phone: 603 -271 -2191 2009 Tax Talk 42

Tax Resources – (3) 報税資源 • Volunteer Income Tax Assistance Program VITA – Call IRS at 1 -800 -829 -1040 for local VITA sites – Local VITA site in Chelmsford, MA Chelmsford Library (AARP) 25 Boston Road Chelmsford, MA 01824 Phone: 978 -256 -5521 for appointment 2009 Tax Talk 43

What the Bible says about paying taxes… 聖經告訴我們為甚麽納税… • Romans 13: 6 -7 6 This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. 7 Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor. • 羅 馬 書 13: 6 -7 6 你 們 納 糧 ， 也 為 這 個 緣 故 ； 因 他 們 是 神 的 差 役 ， 常 常 特 管 這 事 。 7 凡 人 所 當 得 的 ， 就 給 他 。 當 得 糧 的 ， 給 他 納 糧 ； 當 得 稅 的 ， 給 他 上 稅 ； 當 懼 怕 的 ， 懼 怕 他 ； 當 恭 敬 的 ， 恭 敬 他 。 2009 Tax Talk 44

Conclusion 總結 • Questions? 　問題? • Disclaimer: 　 The tax information in this presentation is intended for general reference only. No guaranty is given for its accuracy. Due to individual circumstances, the information cannot be relied upon solely for the preparation of your tax return. You should consult your own tax advisor for advice. 請注意：　以上税務資料衹能作一般參考用。有関 個人情况填報税務問題，請向你的税務顧問查詢。 2009 Tax Talk 45