The Error-Proof Portfolio: What Not to Put in Your IRA

As of today, you have exactly one month to file your tax return. And April 15 is also the deadline for contributing to an IRA for the 2009 tax year. The former deadline no doubt feels more pressing than the latter, particularly because funding an IRA won’t necessarily help lower your tax bill for 2009.

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Only individuals with income below certain thresholds–$66,000 for individuals who can contribute to a company retirement plan and $109,000 for married couples filing jointly–can deduct at least a portion of their traditional IRA contributions.

But even though making an IRA contribution may not reduce your tax levy this year, funding an IRA now can deliver important tax-saving benefits down the line. Individuals who contribute to Roth IRAs will be able to enjoy tax-free withdrawals from those accounts in retirement–an important benefit if you think income tax rates are likely to be higher in retirement than they are now. [Read the full article]

South Dakota is trying to streamline its complex maze of tax incentives for small renewable energy projects.

A bill that passed the Legislature last week rewrites state law to make the first $50,000 of the assessed value of a small to medium renewable energy property, or 70 percent of the assessed value if that figure is greater, exempt from real property tax.

That means residents won’t have to do anything to get the tax benefit, and assessors won’t have revisit properties to and change their numbers because of a few rooftop solar panels or a small wind turbine, said Public Utilities Commissioner Dusty Johnson.

“We’re not going to penalize you for investing in renewable energy,” he said. [Read the full article]

The one new law, signed by Gov. Linda Lingle last week, eases the tax burden on businesses by saving them an average of $440 per employee in annual unemployment taxes.

The proposed tax hikes aim to close the state’s projected budget deficit by eliminating tax exemptions, raising liquor taxes, deferring credits, boosting rental car fees and increasing businesses’ permitting fees.

Other measures still alive would create medical marijuana dispensaries and allow counties to ban fireworks. [Read the full article]

A group of municipal leaders is calling on Connecticut legislators to allow them to impose local and regional taxes.

Members of the Connecticut Conference of Municipalities on Monday urged the General Assembly’s tax-writing committee to pass bills allowing regional planning agencies to levy regional sales or hotel taxes.

CCM’s public policy director, Gian-Carl (JON’-Carl) Casa, says municipalities need more ways to raise revenues. He says Connecticut is in the minority of states that restrict its cities and towns to a single revenue source — the local property tax.

Some lawmakers, however, said they’re worried the legislation could create a patchwork of tax policy across Connecticut.

Copyright © 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press. [Read the full article]

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