Federal Tax Law Changes for 2009-2017

skysidhe · 01-02-2010, 06:05 AM

I do my own taxes so have been curious to know what some of the new tax laws are.

Click link for expanded descriptions.
http://turbotax.intuit.com/tax-tools...turn/5519.html

Tax Credit of Up to $8,000 for First-Time Homebuyers and $6,500 for Existing Homeowners

The Congress and the Obama Administration have extended and expanded the wildly popular 2008 first-time homebuyer tax credit. Now, existing homebuyers are eligible to receive a tax credit of up to $6,500 if they buy a replacement home by June 30, 2010. In addition, the income limits have been increased, making even more people eligible for these credits.
Payroll Tax Credit
For 2009 and 2010, Congress gave workers a credit of 6.2 percent of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, the credit starts phasing out at $75,000 of Adjusted Gross Income and dries up at $95,000. The phaseout zone for couples is $150,000-$190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check.

Sales Tax Deduction for New Vehicles

Buyers of new vehicles can deduct the sales tax paid on the purchase, even if they don’t claim sales taxes as itemized deductions. They can add the tax they pay to their standard deduction. This break applies to new cars, motor homes, light trucks and motorcycles purchased after February 16, 2009 and before January 1, 2010. Sales tax paid on the first $49,500 of cost qualifies. The benefit begins phasing out for married couples with AGI over $250,000 and singles with Adjusted Gross Income over $125,000. It is completely gone for single filers with Adjusted Gross Income of $135,000 or more, or joint filers with AGI of at least $260,000.
Indexed Tax Brackets

Thanks at least in part to the increase in federal spending and the federal budget deficit in the past few years, the 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent tax brackets all kick in at more than 4 percent higher levels of income than in 2008.
Personal Exemptions
For 2009, each personal exemption you can claim is worth $3,650, the same as in 2008.

Higher Standard Deductions
For 2009, the standard deduction for married taxpayers filing a joint return is $11,400, up by $450 from 2008. Joint filers can also add in up to $1,000 of property taxes paid.
For single filers, the amount is $5,700 in 2009, up by $250 over 2008. Singles can also deduct up to $500 of real estate tax payments.
Heads of household can claim $8,350 in 2009, a jump of $350 from 2008.
Non-itemizers who pay real estate taxes can claim even larger standard deductions. Non-itemizers can also add any casualty losses that occurred in presidentially-declared disaster areas.

Reduction in Itemized Deductions and Personal Exemptions for High-Income Taxpayers
Itemized deductions and personal exemptions are phased out as your income rises.

Section 179 Expense Deduction
The maximum amount of equipment placed in service in 2009 that businesses can expense stays at $250,000. And the annual investment limit remains $800,000.

Tax-Free Parking for Employees
Starting in 2009, firms can pay for $230 a month of parking tax-free for employees, up $10 per month from 2008. The cap on tax-free transit passes is now $230 a month as well, the same as for parking. The limit had been $115 a month in 2008.

Tax Credit for College Tuition
For 2009 and 2010, the Hope credit is replaced by a new credit of up to $2,500 per student per year for four years of college. It now also covers the cost of books, and begins to phase out at $80,000 of Adjusted Gross Income for single filers and $160,000 for joint filers. If the credit is more than your income tax liability, 40 percent of it is refundable. Also, the full credit is allowed against the Alternative Minimum Tax.

Educators' Deduction
Educators may deduct up to $250 of classroom supplies that they purchased with their own funds. This deduction is scheduled to end after 2009.

Child Tax Credit
If the credit exceeds the filer’s tax liability, all or part of the credit will be refunded if the filer earns more than $3,000 in 2009 and 2010, down from $12,550 in earnings previously.

Earned Income Tax Credit (EITC)
For families with three or more children, the maximum Earned Income Tax Credit for 2009 and 2010 rises by $628.50. And the phaseout of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of them to claim the credit.

Nontaxable Combat Pay Allowed for Earned Income Tax Credit (EITC)

The election to include nontaxable combat pay in the calculation of earned income for the Earned Income Tax Credit applies for 2009.

Kiddie Tax
In 2009, a child's unearned income over $1,900, such as gains and dividends, is taxed at the parents' marginal rate until the year the child is age 19, or age 24 for full-time students whose earned income is less than half their support.

Direct Donations of IRAs to Charity
Unless Congress acts to extend it, 2009 is the last year that IRA owners age 70 ½ and older can donate up to $100,000 of their IRAs to charity without having to report the withdrawal as income and deduct the donation as a charitable contribution.

Higher Income Limits for Deductible IRAs and for Roth IRAs
you can take a full IRA deduction in 2009 if your modified Adjusted Gross Income is less than $89,000 (married filing jointly) ....

Contribution Limit for 401(k) Plans
The maximum employee contribution rises to $16,500 in 2009 from $15,500 for 401(k) and similar workplace retirement plans..

plus more.......

and the part that makes me really happy is :

Partial Exclusion for Unemployment Benefits
For 2009, the first $2,400 of unemployment benefits you receive is tax-free. However, this benefit is scheduled to end in 2010.

I have not been paying taxes on it so it's a relief.

Shawnee123 · 01-02-2010, 07:29 AM

A single woman with no dependents who doesn't own a home = the one who gets to help make up for all the deductions everyone else gets.

skysidhe · 01-02-2010, 07:36 AM

yes

It doesn't seem fair.

Shawnee123 · 01-02-2010, 07:53 AM

My best buddy will be getting the homebuyer's credit, and I'm really glad for her. She works hard and is good with money...she works where I used to work so I know she makes good decisions with the relative pittance they pay her. I'm sure it will help them: her boyfriend is currently a student using his Veteran's benefits (a Marine who served in Iraq and Afghanistan) so they can use the help.

I know WHY people get tax credits I just get bummed when I write the check to the IRS every year...I had them take out a bit extra on my second consulting job, but it's still gonna hurt! Not enough hours worked at a time to have a bunch of taxes out...so my total tax liability will be even bigger than normal.

skysidhe · 01-02-2010, 08:26 AM

If you pay for your health insurance or pay into your retirement you can make it pretax to bring down your gross income which will lower your tax bracket so you pay less taxes.

Just in case you didn't know.

I think medical expenses are tax deductible up to a certain amount. I don't remember the details on that though.

oh yeah I just remembered one more thing.
I think they need to be more than your standard deduction in order for it to be a benefit though.

Shawnee123 · 01-02-2010, 08:28 AM

I have PERS, which is pre-tax.

Yeah, I don't think any legitimate deductions I could scrape up would exceed my standard deduction.

skysidhe · 01-02-2010, 08:30 AM

Quote:

Originally Posted by Shawnee123

I have PERS, which is pre-tax.

I had pers. sniffle

I know but I thought if you were adding any extra dollars it will bring down your tax bracket. You know instead of giving it to the government it is a way to pay yourself instead. You can still lower your tax bracket by paying extra.

Shawnee123 · 01-02-2010, 08:31 AM

Thanks. I will look into that.

skysidhe · 01-02-2010, 08:51 AM

YW

Open enrollment should be happening soon right? PERS should be able to give you more info.Payroll can set it up.

The piece about how much money to save and which tax bracket might be best discussed with a financial adviser. I didn't get to that last piece myself because of the school closing down and me losing my job. I had wanted to make sure there were no hitches and so for your own security sake I mention it to you.

Best of luck to you!

Clodfobble · 01-02-2010, 01:14 PM

Quote:

Originally Posted by skysidhe

I think medical expenses are tax deductible up to a certain amount. I don't remember the details on that though.

Medical expenses are only deductible after they go above a certain threshhold: 7.5% of your adjusted gross income. So if you make $100,000 a year, the first $7,500 is not deductible, only the dollars you spent above that. But if you only make $20,000 a year, you only have to spend $1,500 before your medical expenses start being deductible.

xoxoxoBruce · 01-02-2010, 10:44 PM

Quote:

Originally Posted by Shawnee123

A single woman with no dependents who doesn't own a home = the one who gets to help make up for all the deductions everyone else gets.

Phsaw... a single man with no dependants and owns a home, is not only making up for all those deductions you get, he's paying for your county & local governments AND putting your fucking kids through school. :p

TheMercenary · 01-03-2010, 08:23 AM

Quote:

Originally Posted by skysidhe

I think medical expenses are tax deductible up to a certain amount. I don't remember the details on that though.

I think it depends on your AGI.

eta: Clod answered it.

classicman · 01-03-2010, 12:11 PM

Quote:

Originally Posted by xoxoxoBruce

Phsaw... a single man with no dependants and owns a home, is not only making up for all those deductions you get, he's paying for your county & local governments AND putting your fucking kids through school. :p

Thats pretty much me at this point. I have a couple deductions, but what I pay in taxes is ridiculous relatively speaking.

Clodfobble · 01-03-2010, 11:34 PM

Classic, surely this is the year you would want to try to take medical deductions? It's worth a lot on its own, and if it knocks you down into a lower tax bracket, it's worth even more.

classicman · 01-04-2010, 07:49 AM

Thanks Clod, Its complicated, but yes I am going to look into it moreso now than ever.

01-02-2010, 06:05 AM	#1
skysidhe ~~Life is either a daring adventure or nothing.~~ Join Date: Apr 2006 Posts: 6,828	Federal Tax Law Changes for 2009-2017 I do my own taxes so have been curious to know what some of the new tax laws are. Click link for expanded descriptions. http://turbotax.intuit.com/tax-tools...turn/5519.html Tax Credit of Up to $8,000 for First-Time Homebuyers and $6,500 for Existing Homeowners The Congress and the Obama Administration have extended and expanded the wildly popular 2008 first-time homebuyer tax credit. Now, existing homebuyers are eligible to receive a tax credit of up to $6,500 if they buy a replacement home by June 30, 2010. In addition, the income limits have been increased, making even more people eligible for these credits. Payroll Tax Credit For 2009 and 2010, Congress gave workers a credit of 6.2 percent of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, the credit starts phasing out at $75,000 of Adjusted Gross Income and dries up at $95,000. The phaseout zone for couples is $150,000-$190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check. Sales Tax Deduction for New Vehicles Buyers of new vehicles can deduct the sales tax paid on the purchase, even if they don’t claim sales taxes as itemized deductions. They can add the tax they pay to their standard deduction. This break applies to new cars, motor homes, light trucks and motorcycles purchased after February 16, 2009 and before January 1, 2010. Sales tax paid on the first $49,500 of cost qualifies. The benefit begins phasing out for married couples with AGI over $250,000 and singles with Adjusted Gross Income over $125,000. It is completely gone for single filers with Adjusted Gross Income of $135,000 or more, or joint filers with AGI of at least $260,000. Indexed Tax Brackets Thanks at least in part to the increase in federal spending and the federal budget deficit in the past few years, the 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent tax brackets all kick in at more than 4 percent higher levels of income than in 2008. Personal Exemptions For 2009, each personal exemption you can claim is worth $3,650, the same as in 2008. Higher Standard Deductions For 2009, the standard deduction for married taxpayers filing a joint return is $11,400, up by $450 from 2008. Joint filers can also add in up to $1,000 of property taxes paid. For single filers, the amount is $5,700 in 2009, up by $250 over 2008. Singles can also deduct up to $500 of real estate tax payments. Heads of household can claim $8,350 in 2009, a jump of $350 from 2008. Non-itemizers who pay real estate taxes can claim even larger standard deductions. Non-itemizers can also add any casualty losses that occurred in presidentially-declared disaster areas. Reduction in Itemized Deductions and Personal Exemptions for High-Income Taxpayers Itemized deductions and personal exemptions are phased out as your income rises. Section 179 Expense Deduction The maximum amount of equipment placed in service in 2009 that businesses can expense stays at $250,000. And the annual investment limit remains $800,000. Tax-Free Parking for Employees Starting in 2009, firms can pay for $230 a month of parking tax-free for employees, up $10 per month from 2008. The cap on tax-free transit passes is now $230 a month as well, the same as for parking. The limit had been $115 a month in 2008. Tax Credit for College Tuition For 2009 and 2010, the Hope credit is replaced by a new credit of up to $2,500 per student per year for four years of college. It now also covers the cost of books, and begins to phase out at $80,000 of Adjusted Gross Income for single filers and $160,000 for joint filers. If the credit is more than your income tax liability, 40 percent of it is refundable. Also, the full credit is allowed against the Alternative Minimum Tax. Educators' Deduction Educators may deduct up to $250 of classroom supplies that they purchased with their own funds. This deduction is scheduled to end after 2009. Child Tax Credit If the credit exceeds the filer’s tax liability, all or part of the credit will be refunded if the filer earns more than $3,000 in 2009 and 2010, down from $12,550 in earnings previously. Earned Income Tax Credit (EITC) For families with three or more children, the maximum Earned Income Tax Credit for 2009 and 2010 rises by $628.50. And the phaseout of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of them to claim the credit. Nontaxable Combat Pay Allowed for Earned Income Tax Credit (EITC) The election to include nontaxable combat pay in the calculation of earned income for the Earned Income Tax Credit applies for 2009. Kiddie Tax In 2009, a child's unearned income over $1,900, such as gains and dividends, is taxed at the parents' marginal rate until the year the child is age 19, or age 24 for full-time students whose earned income is less than half their support. Direct Donations of IRAs to Charity Unless Congress acts to extend it, 2009 is the last year that IRA owners age 70 ½ and older can donate up to $100,000 of their IRAs to charity without having to report the withdrawal as income and deduct the donation as a charitable contribution. Higher Income Limits for Deductible IRAs and for Roth IRAs you can take a full IRA deduction in 2009 if your modified Adjusted Gross Income is less than $89,000 (married filing jointly) .... Contribution Limit for 401(k) Plans The maximum employee contribution rises to $16,500 in 2009 from $15,500 for 401(k) and similar workplace retirement plans.. plus more....... and the part that makes me really happy is : Partial Exclusion for Unemployment Benefits For 2009, the first $2,400 of unemployment benefits you receive is tax-free. However, this benefit is scheduled to end in 2010. I have not been paying taxes on it so it's a relief.

01-02-2010, 07:29 AM	#2
Shawnee123 Why, you're a regular Alfred E Einstein, ain't ya? Join Date: Jun 2006 Posts: 21,206	A single woman with no dependents who doesn't own a home = the one who gets to help make up for all the deductions everyone else gets. __________________ A word to the wise ain't necessary - it's the stupid ones who need the advice. --Bill Cosby

01-02-2010, 07:53 AM	#4
Shawnee123 Why, you're a regular Alfred E Einstein, ain't ya? Join Date: Jun 2006 Posts: 21,206	My best buddy will be getting the homebuyer's credit, and I'm really glad for her. She works hard and is good with money...she works where I used to work so I know she makes good decisions with the relative pittance they pay her. I'm sure it will help them: her boyfriend is currently a student using his Veteran's benefits (a Marine who served in Iraq and Afghanistan) so they can use the help. I know WHY people get tax credits I just get bummed when I write the check to the IRS every year...I had them take out a bit extra on my second consulting job, but it's still gonna hurt! Not enough hours worked at a time to have a bunch of taxes out...so my total tax liability will be even bigger than normal. __________________ A word to the wise ain't necessary - it's the stupid ones who need the advice. --Bill Cosby

01-02-2010, 08:26 AM	#5
skysidhe ~~Life is either a daring adventure or nothing.~~ Join Date: Apr 2006 Posts: 6,828	something for you If you pay for your health insurance or pay into your retirement you can make it pretax to bring down your gross income which will lower your tax bracket so you pay less taxes. Just in case you didn't know. I think medical expenses are tax deductible up to a certain amount. I don't remember the details on that though. oh yeah I just remembered one more thing. I think they need to be more than your standard deduction in order for it to be a benefit though.

01-02-2010, 08:28 AM	#6
Shawnee123 Why, you're a regular Alfred E Einstein, ain't ya? Join Date: Jun 2006 Posts: 21,206	I have PERS, which is pre-tax. Yeah, I don't think any legitimate deductions I could scrape up would exceed my standard deduction. __________________ A word to the wise ain't necessary - it's the stupid ones who need the advice. --Bill Cosby

01-02-2010, 07:36 AM	#3
skysidhe ~~Life is either a daring adventure or nothing.~~ Join Date: Apr 2006 Posts: 6,828	yes It doesn't seem fair.

01-02-2010, 08:31 AM	#8
Shawnee123 Why, you're a regular Alfred E Einstein, ain't ya? Join Date: Jun 2006 Posts: 21,206	Thanks. I will look into that. __________________ A word to the wise ain't necessary - it's the stupid ones who need the advice. --Bill Cosby

01-02-2010, 08:51 AM	#9
skysidhe ~~Life is either a daring adventure or nothing.~~ Join Date: Apr 2006 Posts: 6,828	YW Open enrollment should be happening soon right? PERS should be able to give you more info.Payroll can set it up. The piece about how much money to save and which tax bracket might be best discussed with a financial adviser. I didn't get to that last piece myself because of the school closing down and me losing my job. I had wanted to make sure there were no hitches and so for your own security sake I mention it to you. Best of luck to you!

01-03-2010, 11:34 PM	#14
Clodfobble UNDER CONDITIONAL MITIGATION Join Date: Mar 2004 Location: Austin, TX Posts: 20,012	Classic, surely this is the year you would want to try to take medical deductions? It's worth a lot on its own, and if it knocks you down into a lower tax bracket, it's worth even more. __________________ My book My other book My spirit animal

01-04-2010, 07:49 AM	#15
classicman barely disguised asshole, keeper of all that is holy. Join Date: Nov 2007 Posts: 23,401	Thanks Clod, Its complicated, but yes I am going to look into it moreso now than ever. __________________ "like strapping a pillow on a bull in a china shop" Bullitt

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)