Should you convert your IRA to a Roth IRA

June 28, 2010

What’s New? Effective January 1, 2010 conversions from a traditional IRA to a Roth IRA are no longer limited to the taxpayers with a modified adjusted gross income of $100,000 or less. Married couples who file separately can have a conversion as well.

What are the tax consequences of converting? You may owe income taxes on all or a portion of the amount converted depending on whether or not you made deductible or nondeductible contributions from your traditional IRA. However, you may select to include the conversion on your 2010 tax return or split it equally between 2011 and 2012.

What are potential advantages? Distributions from a Roth IRA are tax-free if you are age 591/2 or older and have held the account at least five years. You are not required to take minimum distributions at age 70 1/2. Beneficiaries can receive the assets tax-free.

What are potential disadvantages? Tax bracket now versus tax bracket later. Younger than 59 1/2 could pay a 10% penalty.

Be sure to consult with your Financial Advisor and your Tax Professional as to how a conversion may benefit your personal situation.


Why you should hire a “Licensed” Tax Professional

June 15, 2010


U.S. tax law is an ever-changing set of rules and regulations with varying implications depending on the individual or business tax situation.  Regardless of tax law complexity, YOU as a taxpayer, are ultimately responsible for accurate reporting and payment of your tax obligation.  Things to consider in hiring a tax professional:

  • Did you know that only an Enrolled Agent, CPA or Attorney can represent you before the IRS ?  (these are all Federally or State licensed professionals)
  • Did you know that an unlicensed tax preparer has little or no regulatory requirements regarding ethics or education?
  • Did you know that self-prepared returns through tax software programs or online services do not protect you if there were errors due to incorrect input of information – intentional or not?
  • Would you know who to call if you receive ANY type of State or Federal tax notice?

Linda D. Smith is an Enrolled Agent & Licensed Tax Professional

What is an Enrolled Agent?

May 13, 2010

National Association of Enrolled Agents

Enrolled Agents are tax practitioners licensed by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service (IRS).  Like attorneys and certified public accountants (CPAs), EAs are governed by Treasury Circular 230 in their practice before the IRS.       

Education – The requirement for an Enrolled Agent is 30 hours of CPE (continuing professional education) annually.  Linda averages 150 hours of CPE per year.       

Ethics – In accordance with IRS requirements, Enrolled Agents must earn at least 2 hours of CPEs in Ethics during each calendar year.       

Experience – Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all EAs specialize in taxation and can represent taxpayers from any state.  Linda has over 30 years in taxation study and practice.       

Linda D. Smith is an Enrolled Agent & Licensed Tax Professional