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2009
Tax Law Changes
Many of the changes
to the tax code in 2009 can be traced to the sweeping
tax cuts approved by Congress back in 2002. However, some changes were directly impacted by the dramatic rise in energy costs, as well as the economic downturn that started back in 2008.
Below is a summary
of the major 2009 tax law changes:
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Mileage
Rates Dropping
When energy costs skyrocketed in 2008, the IRS adjusted mileage rates in the middle of the year to reflect those increased costs. Those adjustments determined what taxpayers would be reimbursed for mileage in both 2008 and 2009 calendar years.
For miles driven for business use between January 1st and December 31st, the IRS provides a standard mileage rate of 55 cents per mile. If
you used your car to get medical care or to move in 2009, you can deduct
24 cents per mile.
Taxpayers who used their car to provide charitable services to a qualified charitable organization can still receive credit for their mileage. That rate is 14 cents per mile, and remained unchanged from 2007 and 2009.
It's
important to keep proper documentation to support your deductions.
Ensure that you record begin and end odometer readings, the date
that you made the travel, and the specific reason for claiming the
mileage rate deduction. Common financial software like Quicken can help keep track of these.
The IRS has already announced mileage rates for 2010. Beginning January 1, 2010, the standard mileage rate will drop to 50 cents per mile for business miles driven. Also, miles driven for medical or moving purposes will drop to 16.5 cents per mile. The charitable mileage deduction will remain unchanged at 14 cents per mile. |
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Alternative Minimum Tax Changes
The AMT exemption amount for individuals has increased to $46,700. If married filing joining or a qualifying widow or widower, the AMT exemption rises to $70,950. If married but filing separately, that amount rises to $35,475.
The AMT exemption amount for children has also increased. Kids whose unearned income is taxed at their parent's tax bracket will receive an AMT exemption of $6,700.
New in 2009, qualified motor vehicle tax is allowed against AMT. If you purchase a new motor vehicle and claim a regular deduction for any sales or excise taxes, whether they are state or local, that tax is also allowed as a deduction against the AMT.
For more information, download Form 6251. |
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Standard
Deduction Increased
For
most people who don't itemize deductions, the basic standard deduction
increased in 2009 to:
- $8,350
for head of household (up from $8,000 in 2008)
- $11,400
for Married taxpayers filing jointly and qualifying widows or
widowers (up from $10,900 in 2008)
- $5,700
for married taxpayers filing separately (up from $5,450 in 2008)
- $5,700
for single individuals (up from $5,450 in 2008)
These
deducations will not apply if someone can claim you as a dependant. |
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Exemptions
Increased in 2009
The
amount you can deduct for each exemption has increased $150 to $3,650
in 2009.
You
lose all or part of the exemptions if your Adjusted Gross Income
is above a certain amount. For tax year 2009, the phaseout begins
at:
- $125,100 - Married persons filing separately (up from $119,975 in 2008).
- $166,800 - Single individuals (up from $159,950 in 2008).
- $208,500 - Heads of households (up from $199,500 in 2008).
- $250,200 - Married persons filing jointly, or qualifying widows and widowers (up from $239,950 in 20089).
Download Form 1040 for more details. |
Want to see all the
changes spelled out? Additional 2009 changes are outlined in IRS Publication
553.
All
information is believed accurate at time of transmission, and no tax advice
is implied. Always consult your tax professional if you have questions.
For
more legal information, please click
here.
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