Making Dollars & Sense - 12 Things You Need to Know
There's nothing terribly inspiring or entertaining about tax laws but, because we also promised to inform, read on for some 'need to know' info for the 2009 tax year.
12 Things You Need to Know About the 2009 Tax Laws
1. The "Making Wor k Pay" tax credit will help individuals and families This economic stimulus benefit amounts to: o A refundable tax credit of up to $400 for individuals o A refundable tax credit of up to $800 for couples and families Don't expect a check in the mailbox. For roughly 95% of Americans, this tax break comes in the form of reduced withholding tax (although certain veterans or retirees may receive checks for $250 instead.)
2. Retirement plan contribution limits rise
3. The estate tax exempt ion rises to $3.5 million for 2009
4. The gift tax exclusion increases. It is now $13,000
5. Each personal and dependency exemption you claim will be worth $3,650
6. Standard deduction amounts rise by $250-500 depending on your filing status o Married Filing Jointly or Qualifying Widow: $11,400 o Single or Head of Household: $8,350 o Single or Married Filing Separately - $5,700
7. Mileage deduction rates increase Business miles can be deducted at $0.55 per mile. Miles accumulated for medical travel or moving can be deducted at the rate of $0.24 a mile. Miles driven while performing charitable services can be deducted at $0.14 per mile.
8. A $8,000 tax break for first-time home-buyers If you bought your first home during 2009, you could be eligible for an $8,000 refundable tax credit. The really great news: if you live in that home for three years or more, you don't have to pay it back. You only have to pay it back under two conditions: 1) you sell the home within 36 months of buying it, or 2), if it is no longer your principal residence within 36 months of purchase.
9. The Hope Credit has morphed into the American Opportunity Tax Credit Parents have used the Hope Credit to claim a tax break on a child's college education expenses. It has been enhanced for 2009 and 2010 and renamed the American Opportunity Tax Credit. o The AOTC gives you a tax credit for 100% of the first $2,000 of qualified education expenses paid during the tax year and 25% of the next $2,000 paid ($500). o The AOTC applies to the first four years of a college education, whereas the Hope Credit applied to just the first two.
10. New energy credits you may be able to take A tax credit of at least $2,500 is now available for those who drove plug-in electric vehicles in 2009 and those who put "qualifying energy savings items" in service in their homes in 2009. There is now a 30% tax credit that can be used to offset the total cost of adding a solar power system into your home. And, your employer can now reimburse you up to $20 per month if you commute to work on a bicycle.
11. A sales tax deduction on new car purchases If you bought a new car, light truck, RV or motorcycle in 2009 (and after February 17, 2009), you can claim a sales tax deduction limited to the first $49,500 of purchase price on your federal return. This is an itemized deduction or an additional standard deduction.
12. New uses for 529 plan money Money from a 529 plan is generally used to pay for college tuition, college housing costs, or material costs linked to classes. Thanks to passage of the stimulus plan, you may now withdraw money from a 529 plan to pay for qualified computers and computer technology for students living at home.
Friday, February 19th, 2010 | Rochester Woman Magazine
by Adelina RanalettaThere's nothing terribly inspiring or entertaining about tax laws but, because we also promised to inform, read on for some 'need to know' info for the 2009 tax year.
12 Things You Need to Know About the 2009 Tax Laws
1. The "Making Wor k Pay" tax credit will help individuals and families This economic stimulus benefit amounts to: o A refundable tax credit of up to $400 for individuals o A refundable tax credit of up to $800 for couples and families Don't expect a check in the mailbox. For roughly 95% of Americans, this tax break comes in the form of reduced withholding tax (although certain veterans or retirees may receive checks for $250 instead.)
2. Retirement plan contribution limits rise
3. The estate tax exempt ion rises to $3.5 million for 2009
4. The gift tax exclusion increases. It is now $13,000
5. Each personal and dependency exemption you claim will be worth $3,650
6. Standard deduction amounts rise by $250-500 depending on your filing status o Married Filing Jointly or Qualifying Widow: $11,400 o Single or Head of Household: $8,350 o Single or Married Filing Separately - $5,700
7. Mileage deduction rates increase Business miles can be deducted at $0.55 per mile. Miles accumulated for medical travel or moving can be deducted at the rate of $0.24 a mile. Miles driven while performing charitable services can be deducted at $0.14 per mile.
8. A $8,000 tax break for first-time home-buyers If you bought your first home during 2009, you could be eligible for an $8,000 refundable tax credit. The really great news: if you live in that home for three years or more, you don't have to pay it back. You only have to pay it back under two conditions: 1) you sell the home within 36 months of buying it, or 2), if it is no longer your principal residence within 36 months of purchase.
9. The Hope Credit has morphed into the American Opportunity Tax Credit Parents have used the Hope Credit to claim a tax break on a child's college education expenses. It has been enhanced for 2009 and 2010 and renamed the American Opportunity Tax Credit. o The AOTC gives you a tax credit for 100% of the first $2,000 of qualified education expenses paid during the tax year and 25% of the next $2,000 paid ($500). o The AOTC applies to the first four years of a college education, whereas the Hope Credit applied to just the first two.
10. New energy credits you may be able to take A tax credit of at least $2,500 is now available for those who drove plug-in electric vehicles in 2009 and those who put "qualifying energy savings items" in service in their homes in 2009. There is now a 30% tax credit that can be used to offset the total cost of adding a solar power system into your home. And, your employer can now reimburse you up to $20 per month if you commute to work on a bicycle.
11. A sales tax deduction on new car purchases If you bought a new car, light truck, RV or motorcycle in 2009 (and after February 17, 2009), you can claim a sales tax deduction limited to the first $49,500 of purchase price on your federal return. This is an itemized deduction or an additional standard deduction.
12. New uses for 529 plan money Money from a 529 plan is generally used to pay for college tuition, college housing costs, or material costs linked to classes. Thanks to passage of the stimulus plan, you may now withdraw money from a 529 plan to pay for qualified computers and computer technology for students living at home.
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