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Old 10-09-2009, 01:04 AM
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What Are Some Of Highlights of the 2009 Tax Law Changes?

There are some very important tax law changes in 2009 that would impact many taxpayers in all income tax brackets. Some of the most significant changes are highlighted below.

1. Change in Personal Exemptions
For 2009, each personal exemption you can claim is worth $3,650, up by $150 from 2008.

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

3. Change in Tax Rate
Because of the high inflation in 2008, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets all kick in at approximately 5% higher levels of income than in 2008.

4. First Time Homebuyer Credit
Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit. Here are ten things taxpayers need to be aware regarding the first-time homebuyer credit:

(i)To be considered a first-time homebuyer, you – and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.

(ii)You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.

(iii)To qualify for the credit, the completed purchase must occur before December 1, 2009.

(iv)The home must be located in the United States.

(v)The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.

(vi)The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.

(vii)The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

(ix)The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.

(ix)Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.

(x)The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.

5.Increase in Adoption Tax Credit
For the Tax year 2009, the adoption credit will to rise $12,150 (an increase from $11,650 in 2008) for standard adoptions plus $12,150 for children with special needs ((an increase from $11,650 in 2008). Also, the maximum exclusion from gross income for amounts paid or expenses incurred under an employer's adoption-assistance program will increase to $12,150 (an increase from $11,650 in 2008).

6.Reduction in Itemized Deductions and Personal Exemptions for High-Income Taxpayers
Itemized deductions and personal exemptions are phased out as your income rises. The cutback in itemized deductions occurs once your adjusted gross income exceeds $166,800, regardless of your filing status. Your itemized deductions are reduced by 1% of the amount by which your AGI exceeds $166,800, but you can never lose more than 80 percent of your itemized deductions. Also, your medical expenses, investment interest deduction, deductible gambling losses and any casualty and theft losses are not subject to the cut.

Personal exemptions are reduced by 2% for each $2,500 of adjusted gross income over $250,200 for married filing jointly, $208,500 for heads of households and $166,800 for singles, but the reduction cannot exceed $1,217per exemption.

7.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.

8.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 a year for four years of college, not just the first two years. 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% of it is refundable. Also, the full credit is allowed against the alternative minimum,

9.Earned Income Tax Credit
For families with three or more children, the maximum earned income tax credit for 2009 and 2010 rises by $628.50.

10.Increased Contribution Limit for 401K Plan

The maximum employee contribution rises to $16,500 from $15,500 in 2009. Workers age 50 and older in 2009 can put in an additional $5,500 this year and also a $500 increase from 2007. Thus maximum contribution is $22,000.

11.Higher Annual Gift Tax Exemption
For 2009, Taxpayer can give any individual up to $13,000 without owing any gift tax. This is a $1,000 increase over 2008

12.What Every Parent Should Know about Child’s Investment Income
Children with investment income may have part or all of this income taxed at their parent’s tax rate rather than at the child’s rate. Investment income includes interest, dividends, capital gains and other unearned income. This rule applies to children who have investment income of more than $1800 and meet one of three age requirements for 2008. The child is younger than 18.
The child is 18 and has earned income that does not exceed one-half of their own support for the year. The child is older than 18 and younger than 24 and a full-time student with earned income that does not exceed one-half of the child’s support for the year.

The credit will start to be phased out when adjusted gross income hits $182,180 (an increase from $174,730 in 2008) and will be phased out completely when it exceeds $222,180 (an increase from $214,730 in 2008). The phase out of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of the families to claim the credit.

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Old 11-21-2011, 01:07 AM
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it was the great changes in 2009. Tax Credit of Up to $8,000 for First-time Home Buyers. If you purchased a primary residence in 2009 before December 1, 2009 and are a "first-time" home buyer, you can qualify for a tax credit equal to 10% of up to $80,000 of the purchase price. To be eligible, you must not have owned a residence in the U.S. in the previous three years. The credit phases out between $150,000 and $170,000 of adjusted gross income for joint filers and $75,000 to $95,000 for single filers. The credit is refundable to the extent it exceeds your regular tax liability -- which means that if it more than offsets your tax liability, you'll get a refund check -- but it does not offset the alternative minimum tax.
You can even elect to claim the credit for a 2009 home purchase on your 2008 tax return. (If you filed for 2008 before buying -- but before the November 30 deadline – you can claim your credit by filing an amended return using Form 1040-X. Doing so will guarantee you a refund check.) Unlike the credit for 2008 purchases, the credit for 2009 purchases doesn’t have to be paid back ratably over 15 years. But you will have to repay the credit if you sell the house within three years of the date you bought it.



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Old 11-25-2011, 07:00 AM
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Quote:
Originally Posted by Skyler9 View Post
it was the great changes in 2009. Tax Credit of Up to $8,000 for First-time Home Buyers. If you purchased a primary residence in 2009 before December 1, 2009 and are a "first-time" home buyer, you can qualify for a tax credit equal to 10% of up to $80,000 of the purchase price. To be eligible, you must not have owned a residence in the U.S. in the previous three years. The credit phases out between $150,000 and $170,000 of adjusted gross income for joint filers and $75,000 to $95,000 for single filers. The credit is refundable to the extent it exceeds your regular tax liability -- which means that if it more than offsets your tax liability, you'll get a refund check -- but it does not offset the alternative minimum tax.
You can even elect to claim the credit for a 2009 home purchase on your 2008 tax return. (If you filed for 2008 before buying -- but before the November 30 deadline – you can claim your credit by filing an amended return using Form 1040-X. Doing so will guarantee you a refund check.) Unlike the credit for 2008 purchases, the credit for 2009 purchases doesn’t have to be paid back ratably over 15 years. But you will have to repay the credit if you sell the house within three years of the date you bought it.
hi skyler09, these changes was also there. Here are some of the changes that could impact you:

401K contributions
Limit raised to $16,500 (up from $15,500)
Standard deductions
Raised to $11,400 for couples (up from $10,900), and $5,700 for singles (up from $5,450)
Social Security taxes
The amount of income subject to SS tax rose to $106,800 (up from $102,000)
Mileage rates
Did you use your car for work? Reimbursement rates dropped to $.55 a mile
Did you use your car to move or for medical purposes? Rates dropped to $.27 a mile
Casualty and Theft deductions
You can deduct losses from casualty and theft, but only after paying a $500 deductible. This is up significantly from 2008, when it was $100.
The most important change is the increase in 401K contributions limits. If you maxed out your 401K in 2008, make sure to increase your contributions to take advantage of it.

Changes were also made to areas like estate taxes, minimum retirement distributions, nanny taxes, stealth taxes, and employees working overseas, but I’m not going to go into those here as they won’t affect most readers.



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