Tarpley & Underwood
Financial Advisors, LLC
Roth IRAs: Roth IRA contribution limit phase-outs are as follows.
•
Married Filing Jointly or Qualifying Widow: $166,000-$176,000
Married Filing Jointly or Qualifying Widow: $166,000-$176,000•Single or Head of Household: $105,000-$120,000
Single or Head of Household: $105,000-$120,000•Married Filing Separately and living with your spouse at any time in 2009: $0–$10,000 (no change from 2008).7
Married Filing Separately and living with your spouse at any time in 2009: $0–$10,000 (no change from 2008).74) The estate tax exemption rises dramatically.
The estate tax exemption is $3.5 million for 2009, as opposed to $2 million in 2008. The estate tax rate is still 45% for 2009.8
5) The gift tax exclusion increases.
For 2009, it is $1,000 higher – rising to $13,000.8
6) Personal exemption values rise by $150.
In 2009, each personal and dependency exemption you claim will be worth $3,650, up from $3,500 in 2008.8
7) Standard deductions increase.
For Tax Year 2009, standard deduction amounts rise by $250-500, depending on your filing status.
•Married Filing Jointly or Qualifying Widow: $11,400
Married Filing Jointly or Qualifying Widow: $11,400•Single or Head of Household: $8,350
Single or Head of Household: $8,350•Single or Married Filing Separately - $5,7008
Single or Married Filing Separately - $5,70088) Tax bracket thresholds have been adjusted for inflation.
Here’s where the brackets kick in for 2009.
•Single Taxpayers: Married Filing Jointly or Qualifying Widow:
Single Taxpayers: Married Filing Jointly or Qualifying Widow:o25% bracket @ $33,950 o 25% bracket @ $67,900
25% bracket @ $33,950 o 25% bracket @ $67,900o28% bracket @ $82,250 o 28% bracket @ $137,050
28% bracket @ $82,250 o 28% bracket @ $137,050o33% bracket @ $171,550 o 33% bracket @ $208,850
33% bracket @ $171,550 o 33% bracket @ $208,850o35% bracket @ $372,950 o 35% bracket @ $372,950
35% bracket @ $372,950 o 35% bracket @ $372,950•Married Filing Separately: Head of Household:
Married Filing Separately: Head of Household: o25% bracket @ $33,950 o 25% bracket @ $45,500
25% bracket @ $33,950 o 25% bracket @ $45,500o28% bracket @ $68,525 o 28% bracket @ $117,450
28% bracket @ $68,525 o 28% bracket @ $117,450o33% bracket @ $104,425 o 33% bracket @ $190,200
33% bracket @ $104,425 o 33% bracket @ $190,200o35% bracket @ $186,475 o 35% bracket @ $372,9509
35% bracket @ $186,475 o 35% bracket @ $372,95099) AMT exemption amounts go way down.
Congress will likely intervene at the end of 2009 to counter this, but if they don’t come up with an AMT patch, AMT exemption amounts will be really low.
•Single or Head of Household: $33,750
Single or Head of Household: $33,750•Married Filing Jointly or Qualifying Widow: $45,000
Married Filing Jointly or Qualifying Widow: $45,000•Married Filing Separately: $22,5009
Married Filing Separately: $22,500910) Mileage deduction rates increase.
In Tax Year 2009, business miles can be deducted at $0.55 per mile. Miles accumulated for medical travel or for purposes of moving can be deducted at the rate of $0.24 a mile. Lastly, miles driven while performing charitable services can be deducted at $0.14 per mile.10 (A 2008 note: business miles driven from July 1, 2008 through the end of 2008 can be deducted at a rate of $0.585 per mile; before June 30, the deduction was $0.505 cents per mile.11)
11) A higher tax exclusion for taxpayers working outside the U.S.
The exclusion is $91,400 for 2009.12
12) Less of a capital gains tax break when it comes to the sale of vacation homes, second homes and certain rental properties.
Say goodbye to a great tax loophole. In years past, the IRS allowed owners of principal residences to take advantage of a $250,000 capital gains tax exemption when they sold or exchanged said residences (the exemption was $500,000 for those married and filing jointly). To qualify, a home had to be the owner’s principal residence for just two of the five years ending on the date of the sale or exchange.
21 Things You Need to Know
About the 2009 Tax Laws
