2009-02-13T09:40:00.000-08:00

Here are some changes you may not have known about for 2009!

Also, check out my other blog "Savvy $uccess Steps" at http://successsavvysteps.blogspot.com/ for more money related topics!

Five Important Changes for Taxpayers

1. Expiring Tax Breaks Renewed

The following popular tax breaks were renewed for tax-years 2008 and 2009:
Deduction for state and local sales taxes on Form 1040 Schedule A, Line 5
Educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
Tuition and fees deduction on Form 8917
In addition, the residential energy-efficient property credit is extended through 2016. In general, solar electric, solar water heating and fuel cell property qualify for this credit. Starting in 2008, small wind energy and geothermal heat pump property also qualify.

2. Standard Deduction Increased for Most Taxpayers

The 2008 basic standard deductions all increased. They are:
$10,900 for married couples filing a joint return and qualifying widows and widowers
$5,450 for singles and married individuals filing separate returns
$8,000 for heads of household
Beginning this year, taxpayers can claim an additional standard deduction based on the state or local real-estate taxes paid in 2008. Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster.

3. Contribution Limits Rise for IRAs and Other Retirement Plans

This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $53,000 and $63,000. For married couples filing jointly, the income phase-out range is $85,000 to $105,000.

4. Standard Mileage Rates Adjusted for 2008

The standard mileage rates for business use of a vehicle:
50.5 cents per mile from Jan. 1 to June 30, 2008
58.5 cents per mile driven during the rest of 2008
The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:
19 cents per mile Jan. 1 to June 30, 2008
27 cents from July 1 to Dec. 31, 2008
The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents a mile. Special rates apply to the Midwest disaster area.

5. Kiddie Tax Revised

The tax on a child's investment income previously only applied to children younger than age 18. It now applies if the child has investment income greater than $1,800 and is:
Younger than 18
18 years of age and had earned income that was equal to or less than half of his or her total support in 2008
Older than 18 and younger than 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

Information for this post was retrieved and adapted from www.irs.gov

2009-02-02T04:55:00.000-08:00

Ten Things You May Not Know About the Earned Income Tax Credit

The Earned Income Tax Credit is for people who work, but have lower incomes. Here are some things you may not know about the EITC.

1. A quarter of all taxpayers that qualify don’t claim the credit.

2. If you qualify, it could be worth up to $4,800 this year. (For the EITC calculator follow this link http://apps.irs.gov/app/eitc2008/Forward_2008_Calc.do)

3. Your filing status cannot be Married Filing Separately. Your filing status must be married filing jointly, head of household, qualifying widow or single.

4. You must have a valid Social Security Number. You, your spouse (if filing a joint return) and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.

5. You must have earned income.

6. Married couples and single people without kids may qualify.

7. Special rules apply to members of the U.S. Armed Forces in combat zones.

8. You can visit the IRS Web site to estimate your credit online. You will see the results of your responses right away.

9. E-file programs will figure the credit for you.

10. Advanced Earned Income Tax Credit. You don’t have to wait until you file your tax return to receive your EITC. Advance EITC is a portion of the EITC that qualified workers may be able to receive in advance payments, added to their wages throughout the year.

Interested in finding out more? This tax tip was retrieved and abbreviated from http://www.irs.gov/newsroom/article/0,,id=106429,00.html

Tax Tips