1 / 13

Tax Law Changes for 2009

Tax Law Changes for 2009. AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009. Signed into law 2-17-2009 INDIVIDUAL CHANGES Making Work Pay Credit Lower of 6.2% of earned income or $400 ($800 for MFJ) Phases out for Single Taxpayers at AGI $75,000 ($150,000 MFJ)

lawrence-sanders
Download Presentation

Tax Law Changes for 2009

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Tax Law Changes for 2009

  2. AMERICAN RECOVERY AND REINVESTMENTACT OF 2009 • Signed into law 2-17-2009 • INDIVIDUAL CHANGES • Making Work Pay Credit • Lower of 6.2% of earned income or $400 ($800 for MFJ) • Phases out for Single Taxpayers at AGI $75,000 ($150,000 MFJ) • Seniors on Social Security, Disabled Vets, and others on Fixed Income got $250 • If they are eligible for the MWPC then it is reduced by the $250 • FIRST TIME HOMEBUYER CREDIT • Changed from 2008 Credit • Available for Homes purchased between 01/01/2009 & 12/01/2009 • No longer required to repay the credit • Still up to 10% of the sales price of the home but max increased to $8,000 ($4,000 for MFS) • Phases out for Single Taxpayers at MAGI $95,000 ($170,000 MFJ)

  3. AMERICAN RECOVERY AND REINVESTMENTACT OF 2009 • NEW CAR SALES TAX DEDUCTION • Sales tax on a motor vehicle with the original use beginning with the purchaser • Purchase must have been on or after 02/17/2009 and on or before 12/31/2009 • Used to increase the amount of standard deduction or as an itemized deduction • Vehicle has to weigh 8,500 lbs or less and imposed on first $49,500 of sales price • Phased out from $125,000-$135,000 for Single ($250,000-$260,000 for MFJ) • UNEMPLOYMENT COMPENSATION • The first $2,400.00 of unemployment compensation received for 2009 is not taxable • EDUCATION • Hope credit has been renamed the American Opportunity Tax Credit with temporary changes made for the 2009 and 2010 tax years • It has been extended to 4 years of post-secondary education • Only for amounts paid in 2009 and 2010 • Increased the amount of the credit to $2,500 • Calculated by 100% of the first $2,000 and 25% of the next $2,000 • Up to 40% of the credit is refundable • The definition of qualified tuition and related materials has been expanded to include books, supplies, and equipment needed for a course of study • Phase-out begins for Single Filers with an AGI of $80,000 ($160,000 MFJ) • and totally phases out at an AGI of $90,000 for Single Filers ($180,000 MFJ)

  4. AMERICAN RECOVERY AND REINVESTMENTACT OF 2009 • CHILD TAX CREDIT • Child tax credit is still $1,000 • The refundable portion has been changed to 15% of earned income in excess of $3,000 • NON-BUSINESS ENERGY PROPERTY CREDIT • 30% of what a homeowner spends on eligible energy improvements • Improvements include adding insulation, energy efficient exterior windows, and energy efficient heating and air conditioning systems • Similar to the 2007 credit but the standards that qualify as “energy efficient” are higher • Not all Energy Star products are eligible for the credit, for details visit http://www.energystar.gov/index.cfm?c=tax_credits.tx_index • Maximum credit of $1,500 for the combined 2009 & 2010 tax years • Must be done to an existing residence, not to new construction • RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT • 30% of what a homeowner spends on qualified purchases such as solar electric and hot water systems, geothermal heat pumps, wind turbines, etc. • For new construction or existing homes

  5. AMERICAN RECOVERY AND REINVESTMENTACT OF 2009 • BUSINESS CHANGES • BONUS DEPRECIATION • Extended the 50% bonus depreciation through 2009 • $8,000 cap allowed on vehicles • Accumulated AMT and Research Tax Credits on the books can be monetized in lieu of taking bonus deprecation in 2009 • SECTION 179 EXPENSE • Up to $250,000 of deduction allowed to be taken • Threshold for reducing the deduction is $800,000 • NET RECOGNIZED BUILT-IN GAINS FOR S-CORPS • Reduced the recognition period and eliminated the tax for net recognized built-in gains of S corporations • If, the seventh tax year in the ten-year recognition period precedes the 2009 or 2010 tax year. • A comparable reduction in the recognition period applies separately with respect to any asset acquired in a carryover basis transaction

  6. The Worker, Homeownership, and Business Assistance Act of 2009 • Signed into law 11-6-2009 • HOMEBUYER TAX CREDIT EXTENDED • Generally apply to residences purchased after 11/30/09 • Extended to homes under binding contract on or before April 30th, 2010 and closed on the purchase before July 1st, 2010 • Limitations • 18 years of age (if married, at least one spouse must be 18) • Cannot be eligible to be claimed as another taxpayer’s dependent • Cannot purchase the property from a related party • Can be claimed on either the 2009 return or the 2010 return • Have to attach a copy of the settlement statement to the return • HOMEBUYER CREDIT EXTENDED TO LONG-TIME RESIDENTS • $6,500 for MFJ ($3,250 for MFS) • Generally apply to residences purchased after 11/30/09 and under binding contract on or before April 30th, 2010. Must close on the purchase before July 1st, 2010. • Must have owned and used their current home for 5 consecutive years during the eight year period ending on the date the new principal residence was purchased • Have to attach a copy of the settlement statement to the return • In addition must attach form 1098, property tax records, or homeowner insurance records for documentation of the five-consecutive-year period

  7. The Worker, Homeownership, and Business Assistance Act of 2009 • FIVE YEAR NOL CARRYBACK • Extends the extended carryback provision to 2009 • Allows the taxpayer to choose whether to carryback the NOL two, three, four, or five years • Expanded to allow the carryback for businesses of all sizes, not just small business owners • For NOL’s in a tax year ending after December 31st, 2007 and before January 1st, 2010 • The amount of NOL that can be carried back to the 5th year preceding the tax year of the loss cannot exceed 50% of the taxpayer’s taxable income for the carryback year • This election can only be made with respect to one loss year, unless the it is made for an eligible small business • If a taxpayer has filed their return and made an election before the enactment of this bill they allowed to revoke a prior election and timely file a new election

  8. HAITI EARTHQUAKE RELIEFCONTRIBUTIONS • Enacted 1-22-2010 • ONLY CASH CONTRIBUTIONS made after 01/11/2010 & Before 03/01/2010 • Not property contributions • Include contributions made by text message, check, credit card, or debit card • Must be made specifically for the relief of victims in areas affected by the January 12th, 2010 earthquake in Haiti • Taxpayers have the option of deducting on either their 2009 or 2010 tax return, but not on both

  9. GENERAL INFORMATION • STANDARD DEDUCTIONS • MFJ - $11,400, S & MFS - $5,700, HH - $8,350 • EXEMPTION AMOUNT - $3,650 • ADDITIONAL STANDARD DEDUCTION AMOUNT FOR REAL ESTATE TAXES IF NOT ITEMIZING • Up to $1,000 MFJ ($500 S & MFS) • CHILD TAXABLE INVESTMENT INCOME • $1,900 before having to be taxed at parent’s rate • MILEAGE RATES • Medical & Moving - $.24 • Charitable - $.14 • Business - $.55 ($.21 depreciation component) • NEW SCHEDULE L • Used to calculate standard deduction with additional tax deductions • NEW SCH M • Used to calculate the making work pay credit

  10. GENERAL INFORMATION • SOCIAL SECURITY WAGE LIMIT • Up to $106,800 for 2009 (no change for 2010) • SIMPLE IRA DEFERRAL LIMIT • $11,500 FOR 2009 & 2010 WITH $2,500 OVER 50 CATCH-UP • HSA CONTRIBUTION LIMIT • Self - $3,000 ($3,050 – 2010), Family - $5,950 ($6,150 – 2010) Add. Over 50 - $1,000 ($1,000 – 2010) • ANNUAL GIFT EXCLUSION - $13,000 • DIRECT DEPOSIT • Can designate a refund to be deposited in up to 3 different accounts with form 8888 • Can also purchase savings bonds to purchase up to $5,000 in low-risk, liquid Treasury I Bonds - Must be a multiple of $50 • TAX RETURNS DUE AFTER 12/31/2010 • Mandatory e-filing is required by all paid preparers who prepare more than 10 individual returns in a tax filing year • No mandate requiring that any tax due be e-paid

  11. GENERAL INFORMATION • FAILURE TO FILE S-CORP AND PARTNERSHIP RETURNS • Penalty increased to $195 per month up to 12 months for each K-1 • Effective for tax returns with years beginning after 12/31/2009

  12. TEXAS MARGIN TAX • NO-TAX DUE REVENUE THRESHOLD CHANGE • Increased to $1 Million for reports originally due Jan. 1st, 2010 through December 31st, 2011 • COMPENSATION DEDUCTION LIMITATION CHANGE • Increased to $320,000 per person for reports originally due Jan. 1st, 2010 through December 31st, 2011 • INITIAL REPORTS • The first margin tax report filed by a taxable entity that becomes subject to the tax on or after October 4th, 2009 will be an annual report • The first annual report will be due May 15th of the year after the calendar year the entity became subject to the tax

  13. Wood, Johnson, Heath, P.C. 8200 N. Mopac, Suite 110 Austin, Texas 78759 Telephone: 512-343-8075 Fax: 512-343-8087 Web: www.wjh-cpa.com

More Related