For reasons unfathomable, New Jersey Governor Chris Christie is running for president. Apparently, one loud-mouthed Republican from the tri-state area wasn't enough for this race.
Anyhoo, Greg Kyte pointed us to this video of Jon Stewart welcoming Christie to the race in true Daily Show fashion, noting a strange comment from the Governor around the 5:25 mark:
You heard right! "We need a tax code that's simplified and will put CPAs like my dad out of business."
Alright, so wanting to put your dad and his professional brethren out of business is an odd platform, but something may be amiss, as Greg noticed that the speech transcript doesn't match Christie's words:
We need a tax system. We need a tax system that's simplified and won't put CPA's like my dad out of business.
Despite the confusion, I think we can all agree on a few things: 1) A simplified tax system in our country is about as likely as Chris Christie taking responsibility for the GW Bridge closings;
2) In the highly unlikely event that a simplified tax code is enacted by our government, it won't put CPAs out of business;
For years prior to 2010, only taxpayers with modified AGI of $100,000 or less generally were permitted to convert a traditional IRA into a Roth IRA. For years beginning in 2010 and after, the AGI limitation has been eliminated. Thus, regardless of AGI, all otherwise eligible taxpayers will be allowed to convert an IRA to a Roth IRA. The amount converted is includible in income as if a withdrawal had been made, but no early withdrawal penalties are assessed.
Two-year income spread if conversion done in 2010 – For conversions occurring in 2010, unless a taxpayer elects otherwise, none of the amount is includible in gross income in 2010, with half of the income resulting from the conversion includible in gross income in 2011 and h , income inclusion is accelerated if converted amounts are distributed before 2012. In that case, the amount included in income in the year of the distribution is increased by the amount distributed, and the amount included in income in 2012 (or 2011 and 2012 in the case of a distribution in 2010) is the lesser of: (1) half of the amount includible in income as a result of the conversion; and (2) the remaining portion of such amount not already included in income. The following example illustrates the application of the accelerated inclusion rule.
Example – Betty has a traditional IRA with a value of $100,000 consisting of deductible contributions and earnings. Betty does not have a Roth IRA. She converts the traditional IRA to a Roth IRA in 2010, and as a result of the conversion, $100,000 is includible in gross income. Unless Betty elects otherwise, $50,000 of the income resulting from the conversion is included in income in 2011 and $50,000 in 2012.
Later in 2010, Betty takes a $20,000 distribution, which is not a qualified distribution and all of which, under the ordering rules, is attributable to amounts includible in gross income as a result of the conversion. Under the accelerated inclusion rule, $20,000 is included in income in 2010.
The amount included in income in 2011 is the lesser of (1) $50,000 (half of the income resulting from the conversion); or (2) $80,000 (the remaining income from the conversion). The amount included in income in 2012 is the lesser of (1) $50,000 (half of the income resulting from the conversion), or (2) $30,000 (the remaining income from the conversion, i.e., $100,000 – $70,000 ($20,000 included in income in 2010 and $50,000 included in income in 2011)).
Preparer note – While you cannot elect out of the two year spread on only a portion of the conversion income in 2010 (it’s an all or nothing election), husband and wife may each make separate elections for their individual IRA accounts. For example, a wife could elect to report her conversion income in 2010 and her husband could report his 2010 conversion income in 2011 and 2012. This may result a better spread of the income. The same taxpayer is allowed to make separate elections for separate IRA accounts.
If you need guidance on answering the question, “should my client convert to a Roth?” check out CPE Link’s Federal Tax Update: Part 2 webcast scheduled November-January.. You’ll get a myriad of planning ideas and even access to a simple, but sophisticated, calculator. (Note: The above information was excerpted from Vern Hoven’s manual used in the webcast.) In addition to coverage of the IRA & Individual Retirement area, you’ll get an update on Real Estate & Investment, and Estates, Trusts & Beneficiaries.
Rangs sent a flier in the mail to his 15th District constituents so they could “put money back into your pockets.”
This particular bit of irony was not lost on the voters in the 15th District; the Daily News shared some of their thoughts including the obvious, “It’s probably not the best time to put something like that out,” to the practical, “I’d never take tax advice from that guy,” and those pointing out the chutzpah, “That is amazing. He certainly has gall.”
A spokesman is quoted that this SOP for Charlie during this time of year, “[He] has sent his tax newsletter to constituents for many years in order to assist them in filing their tax returns and ensuring that those who are eligible take advantage of important benefits, including the Earned Income Tax Credit.”
So maybe this is one of those time-honored Congressman Rangel traditions in the 15th District that operates like clockwork. Every tax season, voters can expect to get Chuck’s smiling face in their mailbox sharing tax advice on laws that he has helped write for decades. A little tax-related scandal isn’t going to put a stop to that. Unfortunately, we’re guessing the pamphlet doesn’t discuss how to exclude $75,000 in income from a rental property in the Dominican Republic. That would be taking things a bit too far.
One of the biggest problems with Texas Governor Rick Perry’s optional flat tax may be the choice it gives taxpayers. Perry says you can either pay his new tax or pay under today’s system, whichever results in a lower bill. That sounds great, but it is a policy disaster. This is the tax code we’re talking about, not some TV game show. [TaxVox]