Is your tax filing giving you a hard time?
If you have any questions, or would like guidance on tax issues or tax filing alternatives, please contact me now Allow me to put my many years of experience as a professional CPA to serve you!
Standard Deductions
The basic standard deduction for joint filers for the 2009 tax year will be $11,400, up from $10,900 for 2008. For singles, the amount for 2009 will be $5,700, up from $5,450. For the 2009 tax year, most taxpayers will lose part of their itemized deductions if their adjusted gross income exceeds $166,800, up from $159,950 in 2008.
Retirement savings
The maximum amount that someone under age 50 can contribute to a 401(k) plan for 2009 rose to $16,500 from $15,500. Those 50 or older can put away an additional $5,500 this year, for a total of $22,000, up from $20,500.
Minimum distributions
President Bush has signed The Worker, Retiree, and Employer Recovery Act (H.R. 7327) that suspends the need to take required minimum distribution (RMD) payments from defined contribution retirement plans and IRAs for the 2009 tax year. The President signed the measure on December 23, 2008. RMD payments will not be required from IRA accounts and defined contribution plans, such as 401(a), 401(k), 403(b) and governmental 457(b) plans, for 2009. Participants who attain age 70½ in 2009 (who would have previously been required to take a 2009 RMD payment by April 1, 2010) are not required to receive an RMD payment for 2009. However, the law does not eliminate the RMD requirements for 2008. Accordingly, participants who attained age 70½ in 2008 are still required to receive an RMD payment by April 1, 2009. These individuals will not be required to receive an RMD payment for the 2009 tax year.
Starting Jan. 1, the basic federal estate-tax exemption jumped to $3.5 million from $2 million in 2008. This large increase is expected to result in a major decline in the number of estates subject to the tax for 2009.
Estate and gift taxes
The basic estate-tax exemption amount rises to $3.5 million for 2009. The top federal estate-tax rate for 2009 remains unchanged at 45%. In 2010, the estate tax disappear entirely for one year only. The annual gift-tax exclusion rose to $13,000 for 2009, up $1,000 from 2008.
Social Security taxes
The maximum amount of earnings subject to Social Security taxes rose to $106,800, up from $102,000 in 2008.
Mileage rates
Taxpayers who use their vehicles for work can deduct their actual costs or rely on the IRS's optional standard mileage rate of 55 cents a mile for 2009. The rate was 58.5 cents in the second half of 2008 and 50.5 cents in the first half.