Hey gang, we’re about 15 minutes away from the start of our live chat with Steve Albert, a tax partner with Glass Jacobson in Owings Mills.  Albert has represented clients before state and federal officials, so if you need to make right with the IRS, he’s the guy to talk to.   But Albert can tackle any other tax question you might have, too.   Meanwhile, take the poll below while we wait to start.

Let’s get started. Our guest today is tax guru Steve Albert.  Steve, welcome and thanks for joining us today.

Eileen,

In order to reduce tax for 2009, if you have the ability to contribute to a pension plan, that would reduce taxes.

Dear Fred,

I am the bearer of bad news.

The first-time homebuyer credit of $8,000 is available for purchased between January 1, 2009 and before December 1, 2009.   The first-time homebuyer credit is reduced for modified AGI between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).  Neither the individual nor the spouse could have any interest in a primary residence within a 36 month period prior to the purchase.

Dear WD,

The Internal Revenue Service has issued procedures to follow to be a “Whistleblower”.   You should contact the IRS Whistleblower office.   There can be rewards of as high as 30%. This is according to IR-2007-201.   This is filed on Form 211, Application for Award for Original Information.   The Internal Revenue Service keeps your identify private.    

Dear Earl,

Your estimates can be calculated based on the safe harbor prior year tax liability (100% of prior year liability, if adjusted gross income is at last $150,000, you must pay in 110% of last year’s liability) or if lower, using the “annualized income installment method”.

The required quarterly estimates can be calculated based on actual income and deductions in each quarter.   There is a presumption that the withholding of taxes are evenly paid throughout the year.   However, you can use the actual withholdings by quarter.   In annualizing, use the withholding for the entire year so the extra estimates should only be on the extra earnings. Form 2210 and its instructions walk you through how to do the calculation.   Basically, you annualize your income for the first three, five and eight months and calculate the tax liability. Then you take 22.5%, 45%, and 67.5% respectively. Make sure your calculation considers the self-employment tax (social security tax). Make sure you also do estimates for Maryland.   Their penalty rate is 13% annualized.   The Federal rate is approximately 6%.  

Dear Beabill,

Sales tax on a qualified motor vehicle can be deducted as an itemized deduction or added to the standard deduction.   A qualified motor vehicle includes new: cars, light trucks, motor homes and motorcycles.   The deduction is limited to the tax on the first $49,500 of each vehicle.   The vehicle must have been purchased after February 16, 2009 and before January 1, 2010.   It is a deduction on the 2009 income tax return.   The deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.  

Dear Karen,

There is nothing in the Maryland Code that defines whether to use Baltimore City or Baltimore County.   Prior discussions with the State representatives suggest to use the location of your property tax assessment.   The IRS does not care what county you are in since it is a Federal tax.   This is only for Maryland taxes

Steve, if someone is, say, in their 20s or 30s,   would you recommend that they invest in a 401(k) or a Roth IRA? And does it matter if there's an employer match?