Feb 10
22
- Unemployment Compensation
- First $2,400 is tax free
- Above $2,400 taxable
- Required Minimum Distribution (RMD)
- To avoid forcing retirees to tap their shrunken nest eggs, requirement for Required Minimum Distributions is waived for 2009 only.
- The waiver applies to IRA, 401(k), 403(b), SEP-IRA, SIMPLE IRA, Thrift Savings Plans and other defined contribution plans.
- Added benefit of not taking RMD – not only will you defer paying taxes on the distribution, but you’ll lower your adjusted gross income. This may affect your eligibility for tax credits and deductions (avoiding “cliffs”).
- If you’ve already received a distribution, you may be able to reverse it by treating it as a rollover and depositing it into an IRA within 60 days of receiving it.
- Increased standard deduction
- all expected to be extended to 2010
- use Schedule L
- Blind or elderly – additional standard deduction for yourself and/or your spouse
- Not unique to 2009 and will not need to be extended
- Eligible if (a) age 65 or older on last day of tax year OR (b) Blind
- $1,100 if Married filing Jointly, Married filing Separately, or Qualified Widow/Widower
- $1,400 for Single or Head of Household
- State and local taxes paid on purchase of vehicle (2/17/09-12/31/09) ?
- State and local taxes paid on the purchase of a new car, light truck, sport utility, recreational vehicle or motorcycle
- For purchases made after Feb. 17, 2009 and ending Dec 31, 2009 ? Applies ONLY to the first $49,500 of the purchase price, starts to shrink for singles with income over $125,000 and married couples with income over $250,000.
- Not available to Single filers with income over $135,000 or Married couples with income over $260,000.
- State and local taxes paid on real property (for 2008 and 2009)
- Personal Disaster/Casualty loss
- Attributable to federally declared disaster areas before Jan 1, 2010
- Deduct to the extent that losses exceed gains (i.e. insurance recovery)
- Deduct before Adjusted Gross Income (AGI)
- Qualified Tuition & Fees (use Form 8917) ?
- First-Time Homebuyer Credit – extended and expanded into 2010
- Still a Buyer’s market
- Interest rates in December 2009 are below 5.5% for those with best credit
- Officially called the First-Time Homebuyer Credit, expanded version is available to anyone who hasn’t owned a home in the three years before the purchase.
- Limited to 10% of the purchase price
- Maximum of $8,000 for first time homebuyers
- Maximum of $6,500 for long term homebuyer ($3,250 if MS)
- No credit if purchase price exceeds $800,000
- Must be 18 years old or older to claim credit
- Dependents are not eligible for credit
- Reduced when income hits $75,000 for singles and $150,000 for married couples
- Disappears completely when income reaches $95,000 for singles and $170,000 for married couples.
- To qualify, enter into contract by April 30 and close by June 30
- Can deduct on either 2009 or 2010 return
- For married couples to claim the credit, neither spouse may have owned a home within the last three years.
- Lower Long Term (LT) capital gain rates.
- Available in 2008 and 2009, taxpayers in the 10% and 15% tax brackets will pay no tax on LT capital gains.
- In 2009, the 10% bracket and 15% bracket include a married couple with taxable income below $67,901 or single below $35,951.
- If you qualify, this may be a great time to balance your investments. For example, if you have gains in a stock or mutual fund that’s come to dominate your portfolio, this tax holiday may give you a chance to sell shares and redeploy the proceeds without owing federal income tax.
- Keep this tax twist in mind: Your capital gains are included when determining your tax bracket. If you realize enough gains, you might bump into the next bracket and pay taxes on a portion of your gains after all.
- Energy Efficient Home Improvement credit (and lower your energy bills)
- Credit = 30% of cost of improvement, up to a maximum credit of $1,500
- Install energy-saving improvements to your home in 2009 or 2010, e.g. new water heaters, air conditioners, heat pumps, doors, windows and skylights.
- Similar credit, with no limit on the dollar value, gives a 30% credit for alternative energy equipment such as geothermal heat pumps, solar water heaters and wind turbines.
- Charitable Contributions if you’re over 70½ and want to contribute to charities during these tough times.
- In 2009, you can direct your IRA custodian to distribute up to $100,000 from your IRA directly to a qualified tax-exempt charity of your choosing, without paying taxes on the withdrawal. This move will satisfy the IRS’ minimum withdrawal requirement (RMD = required minimum distribution).
- Since the rule is set to expire on Dec. 31, 2009, you may want to consider making your planned 2010 contributions this year as well.
- Your charitable beneficiaries will appreciate earlier access to your money and you’ll take fuller advantage of this rare opportunity for tax-free access to your IRA.
- Can’t double dip by claiming a charitable deduction too.
