What's New for 2009

• Mileage rate

• Standard Business mileage rate for 2009 is .55 cents/mile   

• Standard Business mileage rate for 2010 is .55 cents/mile

• Unemployment Compensation

  • The first $2,400 (Per worker) of Unemployment compensation is now exempt from tax.

   

• Working Pay Credit

  • For 2009,  each working individual will receive a tax credit of $400. This credit was incorporated into the lower withholding tables implemented in March of 2009. Generally, most workers will not see an impact on the their tax returns.. The credit is limited to income up to $90,000 ($190,000 on joint returns)

   

• Energy Credits

  • The energy credits have been increased to 30% up to a maximum credit of $1,500 for qualified energy expenditures.

• Home Buyer Credit

  • To spur the construction industry, Congress enacted a First Time Home Buyer Credit of $7,500 in 2008. This credit has been extended and increased to $8,000. In addition, the credit has been expanded ($6,500) to include all Home buyers effective November 7, 2009

   

• Hope (Educational) Credit

  • The Hope credit was increased from a maximum of $1,800 to $2,500 for 2009. In addition, the income limitations were increased to $90,000 ($180,000 for joint returns), The credit can be used for all 4 years and now includes books and supplies.

   

• Roth IRA's

  • The income limitation to convert a traditional IRA to a Roth IRA has been eliminated

  • Any tax on the conversion can be spread over 2011 and 2012           

• 401K Limits

• The 401K Contribution Limit increased to $16,500 for those under 50 yrs old and $22,000 (+$5,500 catch-up contributions) for those 50 yrs and older

 

• Mandatory Retirement Distributions - Penalties for not taking the Minimum Retirement distributions after age 70 1/2 have been temporarily suspended due to the downturn in the Stock market in 2009.

• Other Limits

•  Fica – Wages subject to Social Security increases to$106,800 for 2009 and $106,800 for 2010

• Maximum IRA contribution is 5,000 (6,000 if over 50)

           The above is a  brief recap of some the more significant  changes in the 2009 tax law, specific application of these changes may vary dependent upon the the taxpayers individual circumstances