ffIndividual Tax:
1) New forms 1099A & 1099C
- 1099A deals with disposition of assets and 1099C cancellation of debt
- Bank repossession and foreclosure procedures are involved
- Must report as income when these forms are received; however, taxpayers
should closely exam the amount as debt forgiven for accuracy
- Forgiven debt is generally taxable income with the exception of the following
5 situations:
a) Bankruptcy
b) Insolvency
c) Qualified Far Debt
d) Non-Recourse Loans
e) Mortgage Debt
- good for 2007, 2008 & 2009
- Tax treatment of cancellation of debt income is very complex that requires
the assistance of a tax professional
2) Tax Rates Reduced on Net Capital Gain
- Taxpayers in the lowest tax brackets of 15% & 10%: rate reduced from 5% to 0%
- Taxpayers in the 25% tax bracket & above: rate reduced to 15%
3) Retirement Account Contribution Limit
- IRA $5,000 per person, $6,000 for taxpayers aged 50 or older at the end of the year
- 401(k) limit $16,500, catch-up contributions for individual aged 50 or over
Remains at $2,500
- SIMPLE IRA limit $11,500
-
4) Health Savings Accounts
- $3,000 for self-only coverage; $5,950 for family under a high deductible plan
5) alternative Motor Vehicle Tax Credit
- Previously only hybrid vehicles, fuel cell vehicles and alternative fuel vehicles qualify;
- Certain advanced lean-burn technology vehicles have been added (those generally
Run on diesel fuel); make and credit amounts are
a) 2009 Volkswagen Jetta 2.0L TDI Sedan - $1,300
b) 2009 Volkswagen Jetta 2.0L TDI SportWagen _ $1,300
c) Mercedes GL 320 BLUE TEC - $1,800
d) Mercedes R 320 BLUE TEC - $ 1,550
e) Mercedes ML 320 BLUE TEC - $900
6) Annaul Exclusion for Gifts
- $1,3000 to any person
- $133,000 of gifts to a spouse who is not a U.S. citizen is not taxable
7) Standard Deduction & Personal Exemptions
|
|
M F J |
H H |
Single |
M F S |
|
Standard Ded. |
$11,400 |
$8,350 |
$5,700 |
$5,700 |
|
Pers. Exempt. |
$3,650 each |
|
|
|
8) Earned Income Credit (EIC)
- No credit when investment income exceeds $3,100
- For Single, Surviving Spouse or Head of Household taxpayers:
|
Income Level |
1 Child |
2 or more Children |
No Child |
|
Maximum |
$8,950 |
$12,570 |
$5,970 |
|
Phase out at |
$16,420 |
$16,420 |
$7,470 |
|
No EIC |
$35,463 |
$40,295 |
$13,440 |
|
Max Credit |
$3,043 |
$5,028 |
$457 |
- For Married Filing Jointly taxpayers:
|
Income Level |
1 Child |
2 or more Children |
No Child |
|
Maximum |
$8,950 |
$12,570 |
$5,970 |
|
Phase out at |
$19,540 |
$19,540 |
$10,590 |
|
No EIC |
$38,583 |
$43,415 |
$16,560 |
|
Max Credit |
$3,043 |
$5,028 |
$457 |
9) Rollovers to Roth IRAs: eligible plans are
- A qualified pension, profit sharing or stock bonus plan, including 401(k)
- An annuity plan
- Tax Shelter Annuity Plan (Sec. 403 (b) plan)
- A deferred compensation plan of State or local government (Sec. 457)
10) Kiddie Tax Rules
- A child who is age 18 at the end of the year with income less than half of the
Child’s support
- A student who is under age 24 at the end of the year with income less than half of
the child’s support
11) First Time Home Buyer’s Credit
- $7,500 for MFJ or $3,750 for Single or HH
- 4/8/08 – 7/1/09 purchase of main residence is eligible
- AGI phase-out: $15,000 for couple, $75,000 for single or HH
- Equals a 15-year interest-free loan from the IRS
- Credit is recapped 2nd year on for 15 years
- Taxpayers must file tax return
- Credit recapped when the house is sold; recap stops at taxpayer’s death
12) Decrease in Alternative Minimum Tax (AMT) Exemption Amount
|
|
Single or H H |
MFJ or Surv. Spou |
MFS |
|
2007 amount |
$44,350 |
$66,250 |
$33,125 |
|
2008 amount |
$33,750 |
$45,000 |
$22,500 |
13) Special Depreciation Allowance
- New 50% additional first-year special depreciation allowance applies to most new
Property purchased and placed in service after 2007
- Recovery period must be 20 years or less
- Eligible properties are off-the-shelf computer software, qualified leasehold property or water utility property
- Limit for automobiles is increased by $8,000
14) Section 179 Expense Deduction
|
|
Regular |
Enterprise Zone |
Gulf Opp’ Zone |
|
Maximum |
$250,000 |
$285,000 |
$350,000 |
|
Phase-out begins at |
$800,000 |
$800,000 |
$1.4 million |
15) Truck Drivers’ Meal Expense Increase
- 80% deductible for business meals
- Covering air transport workers, interstate truck operators, interstate bus drivers, certain railroad workers and merchant mariners
16) Tax on Nonresident Aliens
- After 2007 exemption does not apply
- Covering certain interest-related dividends and short-term capital gain dividends paid to a nonresident alien by a regulated investment company
17) Expired Individual Provisions
- Allowance of certain personal tax credits against AMT
- Deduction for educator expenses
- Tuition and fees deduction
- Deduction for state and local general sales taxes
- Nonbusiness energy property credit
- Exclusion from income for certain IRA distributions made directly to a charity
- The election to include nontaxable combat pay in earned income for EIC
- The exception to early withdrawal penalty for plan distributions to reservists and repayments made to an IRA for individuals called to duty after 2007
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