2009 Highlights of the New Tax Laws
Summary of Federal Tax Law Changes for 2009-2011
Many of the tax breaks in recent tax-relief bills were designed to be phased in over a number of years or are indexed to inflation.
Starting in 2009
Extension and Modification of the First-Time Homebuyer Credit: The Act expands the first-time homebuyer credit by extending the December 1, 2009 expiration date of the first-time homebuyer credit to taxpayers who enter into a written binding contract to purchase a home before May 1, 2010 and who close before July 1, 2010. Taxpayers have until April 30, 2010 (June 30, 2010 to close) to purchase a home and receive the first-time homebuyer credit. The Act increases the income limitations from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for joint filers. The Act continues to allow taxpayers to elect to treat a home purchase as having occurred in the year prior to the year of purchase in order to expedite any refund. The Act also expands the first-time homebuyer definition to include homebuyers who are long-time residents of the same principal residence. The Act allows for a $6,500 ($3,250 for married filing separately) credit for homebuyers who have been in their current residence for five consecutive years out of the last eight years and who purchase another residence. The Act also places a limit on the purchase price of the home to $800,000 for either the first-time homebuyer credit or its expanded version for long-time residents. The Act places limitations on who is eligible for the credit. Pursuant to the Act, individuals who can be claimed as a dependent of another taxpayer for the taxable year that the credit is claimed are ineligible for the credit.
Payroll Tax Credit: For 2009 and 2010, Congress gave workers a credit of 6.2% of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, it starts phasing out at $75,000 of adjusted gross income and dries up at $95,000. The phase-out zone for couples is $150,000 to $190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check.
Self-employed workers can reduce their quarterly estimated payments to get an advance benefit from the credit. The exact amount of the payroll tax credit for the year will be calculated on the filers’ tax returns.
Recipients of Social Security benefits, Railroad Retirement benefits, Supplemental Security Income or Veterans Disability Pensions will get a one-time $250 check instead for 2009. Federal retirees who don’t receive any Social Security will also get a $250 check.
Sales Tax Deduction for New Vehicles: Buyers of new vehicles can deduct the sales tax paid on the purchase, even if they don’t claim sales taxes as itemized deductions. They can add the tax they pay to their standard deduction. This break applies to new cars, motor homes, light trucks and motorcycles purchased after February 16, 2009 and before January 1, 2010. Sales tax paid on the first $49,500 of cost qualifies. The benefit begins phasing out for married couples with AGIs over $250,000 and singles with adjusted gross incomes over $125,000, and is completely gone for single filers with an adjusted gross income of $135,000 or more or joint filers with AGI of at least $260,000.
Itemizers who elect to deduct state sales taxes in lieu of state income taxes get no benefit from this change because the auto sales tax is already included in the sales tax deduction. Itemizers who deduct state income taxes will get a separate deduction for auto sales taxes; non-itemizers will add the sales tax amount to their standard deduction amount.
Indexed Tax Brackets: Thanks to higher inflation in the past year, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets all kick in at approximately 5% higher levels of income than in 2008.
Larger Personal Exemptions: For 2009 each personal exemption you can claim is worth $3,650, up by $150 from 2008.
Higher Standard Deductions: For 2009, the standard deduction for married couples filing a joint return rises to $11,400, up by $500 from 2008. For single filers, the amount increases to $5,700 in 2009, up by $250 over 2008. Heads of household can claim $8,350 in 2009, a jump of $350 from 2008. Non-itemizers who pay real estate taxes can claim even larger standard deductions. Joint filers can add in up to $1,000 of property taxes paid. Singles can add in up to $500 of real estate tax payments. Non-itemizers can also add any casualty losses that occurred in presidentially-declared disaster areas.
Reduction in Itemized Deductions and Personal Exemptions for High-Income Taxpayers: Itemized deductions and personal exemptions are phased out as your income rises. In 2009 the reductions are a bit less painful. The cutback in itemized deductions occurs once your adjusted gross income exceeds $166,800, regardless of your filing status. Your itemized deductions are reduced by 1% of the amount by which your AGI exceeds $166,800, but you can never lose more than 80 percent of your itemized deductions. Also, your medical expenses, investment interest deduction, deductible gambling losses and any casualty and theft losses are not subject to the cut.
Personal exemptions are reduced by 2% for each $2,500 of adjusted gross income over $250,200 for married filing jointly, $208,500 for heads of household and $166,800 for singles, but the reduction cannot exceed $1,217 per exemption.
Increased Section 179 Expense Deduction
Tax Credit for College Tuition: For 2009 and 2010, the Hope credit is replaced by a new credit of up to $2,500 per student a year for four years of college, not just the first two years. It now also covers the cost of books and begins to phase out at $80,000 of adjusted gross income for single filers and $160,000 for joint filers. If the credit is more than your income tax liability, 40% of it is refundable. Also the full credit is allowed against the alternative minimum tax.
Child Tax Credit: If the credit exceeds the filer’s tax liability, all or part of the credit will be refunded if the filer earns more than $3,000 in 2009 and 2010, down from $12,550 in earnings previously.
Earned Income Tax Credit: For families with three or more children, the maximum EITC for 2009 and 2010 rises by $628.50. The phaseout of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of them to claim the credit.
Higher Income Limits for Deductible IRAs and for Roth IRAs
Contribution Limit for 401(k) Plans
Estate Tax Exemption: In 2009 the federal estate tax exemption rises to $3,500,000 from its 2008 level of $2,000,000.
Higher Annual Gift Tax Exemption: For 2009, you can give any individual up to $13,000 without owing any gift tax, a $1,000 increase over 2008.
Exemptions for the Alternative Minimum Tax
Credit for Residential Energy-Efficient Property: The credit for 30% of the cost of installing solar water heating equipment, solar electric equipment, geothermal heat pumps or small wind turbines in your primary residence or a second home is no longer limited to $2,000 after 2008. However, the credit for fuel cell property still cannot exceed $500 per half-kilowatt capacity.
Credit for Energy-Saving Home Improvements: The old 10% tax credit of the cost of energy-saving home improvements is increased to 30% for 2009 and 2010, up to a maximum of $1,500 in the two-year period. It applies to skylights, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners. In addition, the dollar limits on the particular type of improvement, such as a $200 cap on the credit for windows, are repealed.
Converting a Second Home to a Primary Home: If you convert a second home into a principal residence after 2008 you may not be able to exclude all of your gain. A portion of the gain on a subsequent sale of the home will be ineligible for the home-sale exclusion of up to $500,000, even if the seller meets the two-year ownership-and-use tests. The portion of the profit that is subject to tax is based on the ratio of the time after 2008, when the house was a second home or a rental unit to the total time you owned it. For example, if you have owned a vacation home for eighteen years and make it your main residence in 2011 for two years before selling it, only 10% of the gain (two years of non-qualified second-home use divided by 20 years of total ownership) is taxed. The rest qualifies for the home-sale exclusion of up to $500,000.
Refundable Child Tax Credit: The $8,500 income threshold needed to qualify to claim the child tax credit if it exceeds your regular income tax bill decreases to $3,000 for 2009.
Partial Exclusion for Unemployment Benefits: For 2009, the first $2,400 of unemployment benefits you receive is tax free.
College Savings Plans: Beginning in 2009, 529 College Savings Plans can be tapped tax free to pay for a computer or Internet access.
Estimated Tax Relief for Owners of Small Businesses: If an individual’s adjusted gross income for 2008 was less than $500,000 and more than half of the gross income was from a business with fewer than 500 workers, the estimated income taxes for 2009 estimated tax payments can be based on the lesser of 90% of tax liability for 2008 or 2009. The usual estimated tax benchmarks of 100% or 110% of tax liability do not apply.
Five-Year Carryback of 2008 and 2009 Net Operating Losses (NOLs) for Eligible Small Businesses (ESBs): For 2008 and 2009, you can choose a 3-, 4-, or 5-year carryback period for the part of your 2008 or 2009 NOL that is an ESB loss. An ESB is a small business as defined in Internal Revenue Code section 172(b)(1)(F)(iii), except that an ESB’s 3-year average annual gross receipts can be up to $15 million (instead of $5 million). An ESB loss is the smaller of:
1. The amount that would be the 2008 or 2009 NOL if only income, gains, losses, and deductions attributable to ESBs were taken into account, or
2. The 2008 or 2009 NOL.
Starting in 2010
Roth IRA Conversions: Beginning in 2010, individuals with more than $100,000 of modified adjusted gross income are free to switch a traditional IRA to a Roth IRA. For conversions in 2010, taxpayers can spread the tax due over two years. Half of the tax will be due in 2011 and the remaining half will be payable in 2012.
Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which has no income limits for contributions) and immediately convert to a Roth.
Domestic Production Activities Deduction: In 2010, this deduction increases to 9% of qualifying business net income. This deduction applies to businesses engaged in construction, engineering or architectural services, film production, or the lease, rental or sale of equipment you manufactured. However, the rate remains 6% for oil and gas companies.
State and Local Sales Tax Deduction: The opportunity for itemizers to choose to deduct their state sales tax payments instead of deducting their state and local income taxes ends after 2009, unless Congress acts to extend it.
Educators’ Deduction: This deduction for up to $250 of classroom supplies purchased by educators lapses after 2009, unless Congress acts to extend it.
Nontaxable Combat Pay Allowed for Earned Income Credit: The election to include nontaxable combat pay in the calculation of earned income for the earned income credit is not available after 2009, unless Congress acts to extend it.
Tuition and Fees Deduction: The deduction for up to $4,000 of college tuition and fees expires after 2009, unless Congress acts to extend it.
Direct Donations of IRAs to Charity: Beginning in 2010, the opportunity for IRA owners age 70½ to directly donate part of their IRA balance to charity will disappear, unless Congress acts to extend it.
Additional Standard Deduction for Property Taxes: Starting in 2010, non-itemizers will no longer be allowed to increase their standard deduction by up to $1,000 of property taxes paid, unless Congress acts to extend this break.
Limits on Deducting Farm Losses: Beginning in 2010, the amount of farm losses you can use to offset nonfarm income is capped at the greater of $300,000 or your net farm income over the past five years. But this limit will apply only if you get federal farm payments or CCC loans. You can take suspended losses in later years. The caps will also apply to partners and S firm owners.
Credit for Energy-Saving Home Improvements: The tax credit for 10% of the cost of energy-saving home improvements ends for tax years after 2009, unless Congress acts to extend it.
Exemptions for the Alternative Minimum Tax: For 2010, the exemption levels drop to $45,000 for married filing jointly, $33,750 for singles and heads of household, and $22,500 for married couples filing separately. Congress is likely to act in 2009 to prevent this from happening. Otherwise, more than 20 million filers will be added to the AMT rolls.
Partial Exclusion for Unemployment Benefits: For 2010, the first $2,400 of unemployment benefits you received is no longer tax free.
Sales Tax Deduction for New Vehicles: Beginning in 2010, buyers of new vehicles no longer get a tax benefit for sales tax paid on new vehicles unless they itemize and elect to deduct sales taxes in lieu of state income taxes.
Credit for Energy-Saving Home Improvements: The 30% tax credit of the cost of energy-saving home improvements reverts to 10% after 2010 and is capped at $500.
Starting in 2011
Higher Tax Rates: Beginning in 2011, tax rates in effect prior to 2001 spring back into effect. The top income tax rate returns to 39.6% and the special low 10% bracket is eliminated. Whether this will actually happen will be at the heart of a spirited battle in Congress.
Increase in Capital Gains and Dividend Tax Rates: The tax rate reductions for long-term capital gains and dividends are scheduled to expire in 2010.
In 2011, the maximum long-term capital gains tax rate goes back up to 20% from 15%. A lower 10% tax rate is used by individuals to the extent that they are in the 15% tax bracket. Their long-term capital gains had been tax free since 2008.
In 2011, dividend income (other than capital gain distributions from mutual funds) is taxed as ordinary income at your highest marginal tax rate.
Child Tax Credit: The credit of $1,000 per eligible child reverts to $500 after 2010. This is one of many of the “Bush tax cuts” currently scheduled to expire after 2010.
Payroll Tax Credit: Starting in 2011, the partial credit for payroll taxes paid is no longer available.
Decreased Section 179 Expense Deduction: Taxpayers who purchase qualifying business property may elect to deduct the cost of the property (new or used) in the year that it is placed in service. This is referred to as a Section 179 deduction. In 2010, the maximum amount of property that may be taken as a Section 179 deduction is $125,000, as indexed for inflation. In 2011 and future years, the maximum deduction drops to $25,000.
College Savings Plans: Beginning in 2011, 529 College Savings Plans can no longer be tapped tax free to pay for a computer or Internet access.
Tax Credit for College Tuition: The Hope credit is now limited to the first two years of college and is capped at $1,800 once more. None of the credit is refundable if it is more than your regular income tax liability.
Child Tax Credit: After 2010, none of the child tax credit will be refundable to taxpayers unless their earned income is more than $12,550.
Earned Income Tax Credit: Temporary increases in the earned income tax credit for filers with three or more children and the higher income levels for the phaseout of the credit are repealed.
As always, Koerner, Koerner, Galati & Oriel, P.A. will be able to help guide you through the new tax legislation and allow you to make informed choices about your financial future.
New Jersey Tax Notes
Homestead Credit Program: Prior to the New Jersey 2009 tax legislation, taxpayers were allowed to claim a property tax deduction of up to $10,000. However, the new 2009 tax legislation suspends this tax deduction in 2009 for taxpayers with gross income above $250,000 who are not at least 65 years of age and are not allowed to claim a deduction for blindness or disability.
Eligibility: You are eligible for a 2009 New Jersey homestead credit or rebate if your domicile (or permanent legal residence) is in New Jersey and you meet the following conditions:
· Own and occupy a home in New Jersey that was your principal residence on October 1, 2009;
· Have gross income for 2009 of $250,000 or less; (Do not include income that is not subject to New Jersey gross income tax such as Social Security, Railroad Retirement benefits, or unemployment compensation.)
· The home must be subject to local property taxes, and 2009 property taxes must have been paid.
New Jersey residents are not eligible for a homestead credit or rebate if no property taxes are paid on their dwellings. This includes:
· Homeowners completely exempt from paying property taxes on their principal residence. This can include certain disabled veterans and their unmarried surviving spouses/surviving civil union partners/surviving domestic partners who may claim a 100% exemption from local property taxes under certain conditions.
· Homeowners who made P.I.L.O.T. (Payments-in-Lieu-of-Tax) payments to their municipality. These payments are not considered property taxes for purposes of the homestead credit/rebate.
How to File: Applications are expected to be mailed at the beginning of May to homeowners who were 65 years of age or older or disabled on December 31, 2009. Applications are scheduled to be mailed to all other homeowners in July.
NOTE: Homeowners do not file their homestead rebate applications with the New Jersey income tax return. Only tenants use Form TR-1040 in the resident income tax return packet and only tenants file their homestead rebate applications electronically at the same time they file their New Jersey tax returns.
Credit/Rebate Amount: The Division of Taxation calculates the amount of the credit or rebate based on the information provided in the application. The amount is determined by income, property taxes paid, and whether the applicant was age 65 or older or eligible to claim an exemption as blind or disabled for tax year 2009.
NJ-1040
New Jersey Tax Rate Schedule
(For use in calculating your NJ personal income tax)
|
2009 Quick Tax Method - For Taxable Income of: |
|||||||||
|
Single, MFS, Civil Union (CU) partner |
$ 0 |
- |
20,000 |
x |
1.400% |
minus |
$ 0.00 |
= |
Tax |
|
20,001 |
- |
35,000 |
x |
1.750% |
minus |
70.00 |
= |
Tax |
|
|
35,001 |
- |
40,000 |
x |
3.500% |
minus |
682.50 |
= |
Tax |
|
|
40,001 |
- |
75,000 |
x |
5.525% |
minus |
1,492.50 |
= |
Tax |
|
|
75,001 |
- |
400,000 |
x |
6.370% |
minus |
2,126.25 |
= |
Tax |
|
|
400,001 |
- |
500,000 |
x |
8.000% |
minus |
8,646.25 |
= |
Tax |
|
|
500,001 |
- |
1,000,000 |
x |
10.250% |
minus |
19,896.25 |
= |
Tax |
|
|
1,000,001 |
- |
and over |
x |
10.750% |
minus |
24,896.25 |
= |
Tax |
|
|
|
|||||||||
|
MFJ, HOH, QW, Civil Union (CU) couple |
$ 0 |
- |
20,000 |
x |
1.400% |
minus |
$ 0.00 |
= |
Tax |
|
20,001 |
- |
50,000 |
x |
1.750% |
minus |
70.00 |
= |
Tax |
|
|
50,001 |
- |
70,000 |
x |
2.450% |
minus |
420.00 |
= |
Tax |
|
|
70,001 |
- |
80,000 |
x |
3.500% |
minus |
1,155.00 |
= |
Tax |
|
|
80,001 |
- |
150,000 |
x |
5.525% |
minus |
2,775.00 |
= |
Tax |
|
|
150,001 |
- |
400,000 |
x |
6.370% |
minus |
4,042.50 |
= |
Tax |
|
|
400,001 |
- |
500,000 |
x |
8.000% |
minus |
10,562.50 |
= |
Tax |
|
|
500,001 |
- |
1,000,000 |
x |
10.250% |
minus |
21,812.50 |
= |
Tax |
|
|
1,000,001 |
- |
and over |
x |
10.750% |
minus |
26,812.50 |
= |
Tax |
|
Family Leave Insurance: New Jersey employees are eligible to receive up to six weeks of paid leave for the birth or adoption of a child or to care for a sick family member. The program will be funded by a payroll deduction which began on January 1, 2009. Workers contribute at the rate of 0.09% on the first $28,900 (taxable wage base) in wages earned during the year. The contribution rate will increase to 0.12% of the taxable wage base for tax year 2010 and subsequent years. For further details please click on the link http://lwd.dol.state.nj.us/labor/fli/content/fli_fact_sheet.html
2009 Property Tax Reimbursement: The Property Tax Reimbursement (PTR) Program reimburses eligible senior citizens or disabled persons for property tax increases. Eligible residents must file a 2009 Property Tax Reimbursement Application (Form PTR-1 or PTR-2) by June 1, 2010. The 2009 PTR applications will not be available before February 2010.
Income Limits: For residents applying for reimbursements for tax year 2009, total annual income must have been:
For 2009: $80,000 or less, and
For 2008: $70,000 or less
These limits apply regardless of marital/civil union status. However, if an applicant’s status is married/CU couple, combined income of both spouses/CU partners must be reported.
For further details on the 2009 Property Tax Reimbursement program, please click on http://www.state.nj.us/treasury/taxation/ptrelig.shtml
Auto Standard Mileage
|
USE |
AMOUNT |
|
|
|
2009 |
2010 |
|
Business |
55¢ per mile |
50¢ per mile |
|
Charitable |
14¢ per mile |
14¢ per mile |
|
Medical |
24¢ per mile |
16.5¢ per mile |
|
Moving |
24¢ per mile |
16.5¢ per mile |
2009 Depreciation Schedule
|
Automobiles - 2009 Maximum Depreciation Deduction Based on 100% Business Use** |
||
|
Year |
Passenger Autos |
Light Trucks and Vans (SUVs Built on Truck Chassis) |
|
1 |
$2,960* |
$3,060* |
|
2 |
$4,800 |
$4,900 |
|
3 |
$2,850 |
$2,950 |
|
4 and beyond |
$1,775 |
$1,775 |
|
*For autos whose original use is with the taxpayer, add $8,000 **This limit includes claiming a §179 expense deduction. If the business use is less than 100%, you must reduce the maximum deduction above proportionately. |
||
|
Maximum Expense Election |
$250,000 |
|
Phase-Out Threshold |
$800,000 |
2009 Federal Income Tax Table
|
Calculation of Federal Tax Due* |
||||||||
|
Married Filing Jointly or Qualifying Widow Taxable Income: |
||||||||
|
$ 0 |
- |
16,700 |
x |
10% |
minus |
$0.00 |
= |
Tax |
|
16,701 |
- |
67,900 |
x |
15% |
minus |
835.00 |
= |
Tax |
|
67,901 |
- |
137,050 |
x |
25% |
minus |
7,625.00 |
= |
Tax |
|
137,051 |
- |
208,850 |
x |
28% |
minus |
11,736.50 |
= |
Tax |
|
208,851 |
- |
372,850 |
x |
33% |
minus |
22,179.00 |
= |
Tax |
|
372,951 |
- |
and over |
x |
35% |
minus |
29,638.00 |
= |
Tax |
|
Married Filing Separately Taxable Income: |
||||||||
|
0 |
- |
8,350 |
x |
10% |
minus |
0.00 |
= |
Tax |
|
8,351 |
- |
33,950 |
x |
15% |
minus |
417.50 |
= |
Tax |
|
33,951 |
- |
68,525 |
x |
25% |
minus |
3,812.50 |
= |
Tax |
|
68,526 |
- |
104,425 |
x |
28% |
minus |
5,868.25 |
= |
Tax |
|
104,426 |
- |
186,475 |
x |
33% |
minus |
11,089.50 |
= |
Tax |
|
186,476 |
- |
and over |
x |
35% |
minus |
14,819.00 |
= |
Tax |
|
Head of Household Taxable Income: |
||||||||
|
0 |
- |
11,950 |
x |
10% |
minus |
0.00 |
= |
Tax |
|
11,951 |
- |
45,500 |
x |
15% |
minus |
597.50 |
= |
Tax |
|
45,501 |
- |
117,450 |
x |
25% |
minus |
5,147.50 |
= |
Tax |
|
117,451 |
- |
190,200 |
x |
28% |
minus |
8,671.00 |
= |
Tax |
|
190,201 |
- |
372,950 |
x |
33% |
minus |
18,181.00 |
= |
Tax |
|
372,951 |
- |
and over |
x |
35% |
minus |
25,640.00 |
= |
Tax |
|
Single Taxable Income: |
||||||||
|
0 |
- |
8,350 |
x |
10% |
minus |
0.00 |
= |
Tax |
|
8,351 |
- |
33,950 |
x |
15% |
minus |
417.50 |
= |
Tax |
|
33,951 |
- |
82,250 |
x |
25% |
minus |
3,812.50 |
= |
Tax |
|
82,251 |
- |
171,550 |
x |
28% |
minus |
6,280.00 |
= |
Tax |
|
171,551 |
- |
372,950 |
x |
33% |
minus |
14,857.50 |
= |
Tax |
|
372,951 |
- |
and over |
x |
35% |
minus |
22,316.50 |
= |
Tax |
|
*Multiply taxable income by the applicable tax and subtract the amount shown. Although this method differs from the IRS Tax Rate Schedules, the results are the same.
Caution: IRS Tax Tables must be used for taxable income under $100,000. To calculate the exact tax using the above method for taxable income under $100,000, round taxable income to the nearest $25 or $75 increment before using the formula. Round $50 or $100 increments up.
|
||||||||
2009 Standard Deductions
|
2009 Standard Deductions |
|
|
Filing Status |
Amount |
|
Married Filing Jointly or Qualifying Widow |
$11,400 |
|
Head of Household |
8,350 |
|
Single/Married Filing Separate |
5,700 |
|
Dependent Children |
Greater of $950 or the amount of earned income plus $300 (not to exceed $5,700*). *Blind dependent: Add $1,400 |
|
Additional Standard Deduction if Age 65 or Older or Blind: |
|
|
Single/HOH |
$1,400 |
|
MFJ, MFS, QW |
$1,100 |
|
|
|
|
Kiddie Tax Threshold |
$1,900 |
|
Personal Exemption |
$3,650 |
2009 Deduction Phase-outs
|
2009 Personal Exemption Phase-out Range |
|
|
Married Filing Joint or Qualifying Widow |
$250,200 - $372,700 |
|
Head of Household |
$208,500 - $331,000 |
|
Single |
$166,800 - $289,300 |
|
Married Filing Separately |
$125,100 - $186,350 |
2009 AGI Threshold for Itemized Deduction Phase-out (begins)
|
2009 AGI Threshold for Itemized Deduction Phase-out (begins) |
|
|
Married Filing Single |
$83,400 |
|
Others |
$166,800 |
2009 Long-term Capital Gains
|
2009 Long-term Capital Gains |
|
|
15% Tax Brackets or Below |
0% |
|
Higher Tax Brackets |
15% |
|
Collectibles |
28% |
2009 Alternative Minimum Tax (AMT) Exemptions
|
Married Filing Jointly |
$70,950 |
|
Single |
$46,700 |
|
Married Filing Separately |
$35,475 |
2009 Retirement Plan Contribution Limits
|
Plan Type |
Under Age 50 |
Over Age 50 |
|
401(k), 403(b), 457, Salary Reduction SEP |
$16,500 |
$22,000 |
|
SIMPLE |
11,500 |
14,000 |
|
IRA (Traditional/Roth) |
5,000 |
6,000 |
|
Employer-sponsored plans may have additional contribution limits. Not all employer plans allow the higher contributions amount for those aged 50 and older. The SIMPLE plan limit is subject to inflation adjust for 2009. The IRA limitation caps a person’s combined contributions to traditional and Roth IRAs for the year. |
||
2009 Individual Retirement Accounts (IRAs)
|
2009 Individual Retirement Accounts (IRAs) |
||
|
Participant of Employer Retirement Plan: |
||
|
Filing Status |
2009 AGI |
Deduction |
|
Single |
less than $55,000 |
Full |
|
|
$55,000 - $65,000 |
Partial |
|
|
more than $65,000 |
None |
|
Married Filing Jointly |
less than $89,000 |
Full |
|
|
$89,000 - $109,000 |
Partial |
|
|
more than $109,000 |
None |
|
Spouse Participates - You Do Not: |
||
|
Filing Status |
2009 AGI |
Deduction |
|
Married Filing Jointly |
less than $166,000 |
Full |
|
|
$166,000 - $176,000 |
Partial |
|
|
more than $176,000 |
None |
|
Married Filing Separately |
special rules apply |
|
|
Retirement Plans |
|||||
|
|
Contribution Limits |
||||
|
Plan |
Use |
|
2009 |
2010 |
|
|
IRA |
For individuals |
Individual: |
$5,000 |
$5,000 |
|
|
Age 50+ add’l: |
$1,000 |
$1,000 |
|||
|
Plusses: |
Tax deferred savings; many investment choices |
||||
|
Minuses: |
Withdrawal not tax free, participation in employer plan affects contribution deductibility |
||||
|
Whom it helps: |
Those with no other plan who want tax-deferred savings |
||||
|
ROTH IRA |
For individuals |
Individual: |
$5,000 |
$5,000 |
|
|
Age 50+ add’l: |
$1,000 |
$1,000 |
|||
|
Plusses: |
Earnings and withdrawals tax free; flexible distribution; many investment choices |
||||
|
Minuses: |
No up-front deduction; income limits on eligibility |
||||
|
Whom it helps: |
Those with no Roth option at work |
||||
|
SIMPLE IRA |
For small businesses with less than 100 employees |
Individual: |
$11,500 |
Indexed to inflation in $500 increments |
|
|
Age 50+ add’l: |
$2,500 |
|
|||
|
Plusses: |
High contribution limit; employer must match |
||||
|
Minuses: |
Withdrawals not tax free |
||||
|
Whom it helps: |
Employees of small businesses |
||||
|
SEP |
For self-employed individuals |
|
Employer can defer lesser of $49,000 or 25% of compensation |
|
|
|
Plusses: |
High contribution limits |
||||
|
Minuses: |
Withdrawals not tax free |
||||
|
Whom it helps: |
Self-employed individuals |
||||
|
401(k) |
Employer sponsored |
Individual: |
$16,500 |
Indexed to inflation in $500 increments |
|
|
Age 50+ add’l: |
$5,500 |
|
|||
|
Plusses: |
Tax-deferred contributions and growth; employer match not taxed to owner |
||||
|
Minuses: |
Employee withdrawals only allowed under limited conditions |
||||
|
Whom it helps: |
Most popular plan for businesses with over 25 employees |
||||
|
Roth 401(k) |
Employer sponsored |
Individual: |
$16,500 |
Indexed to inflation in $500 increments |
|
|
Age 50+ add’l: |
$5,500 |
|
|||
|
Plusses: |
Earnings and withdrawals tax free; employer can match |
||||
|
Minuses: |
No up-front tax deferral |
||||
|
Whom it helps: |
Generally great for everyone eligible |
||||
|
Defined Benefit Keogh |
For small businesses |
N/A |
|||
|
Plusses: |
Employer-funded; very high benefit limit (up to $195,000 in 2009) |
||||
|
Minuses: |
Complex rules and record keeping; can be expensive to maintain |
||||
|
Whom it helps: |
Self-employed individuals able to save large amounts |
||||
|
|
|||
|
Single Lifetime Table |
Uniform Lifetime Table |
||
|
Age |
Distribution Period |
Age |
Distribution Period |
|
70 |
17.0 |
70 |
27.4 |
|
71 |
16.3 |
71 |
26.5 |
|
72 |
15.5 |
72 |
25.6 |
|
73 |
14.8 |
73 |
24.7 |
|
74 |
14.1 |
74 |
23.8 |
|
75 |
13.4 |
75 |
22.9 |
|
76 |
12.7 |
76 |
22.0 |
|
77 |
12.1 |
77 |
21.2 |
|
78 |
11.4 |
78 |
20.3 |
|
79 |
10.8 |
79 |
19.5 |
|
80 |
10.2 |
80 |
18.7 |
|
81 |
9.7 |
81 |
17.9 |
|
82 |
9.1 |
82 |
17.1 |
|
83 |
8.6 |
83 |
16.3 |
|
84 |
8.1 |
84 |
15.5 |
|
85 |
7.6 |
85 |
14.8 |
|
86 |
7.1 |
86 |
14.1 |
|
87 |
6.7 |
87 |
13.4 |
|
88 |
6.3 |
88 |
12.7 |
|
89 |
5.9 |
89 |
12.0 |
|
90 |
5.5 |
90 |
11.4 |
|
91 |
5.2 |
91 |
10.8 |
|
92 |
4.9 |
92 |
10.2 |
|
93 |
4.6 |
93 |
9.6 |
|
94 |
4.3 |
94 |
9.1 |
|
95 |
4.1 |
95 |
8.6 |
|
For use by beneficiaries. |
For use by unmarried participants, married participants whose spouses are not more than ten years younger and married participants whose spouses are not the sole beneficiaries of their IRAs. |
||
|
Please see IRS Publication 590 for the complete list of ages. |
|||
|
IRS DIRECTORY |
|
INFORMATION PROVIDED |
|
Teletax: |
1-800-829-4477 |
To hear pre-recorded messages covering various tax topics. |
|
Forms and Publications: |
1-800-829-3676 |
To receive forms through mail. |
|
Fax Number: |
1-703-368-9694 |
To receive forms by fax. |
|
Customer Accounts Service: |
1-800-829-1040 |
|
|
Appeals Customer Service: |
1-877-457-5055 |
For Practitioners |
|
Taxpayer Advocate Service: |
1-877-777-4778 |
For Practitioners |
|
Refund Hotline: |
1-800-829-1954 |
Also click on “Where’s my Refund” on IRS website www.IRS.Gov |
|
Business and Specialty Tax Line: |
1-800-829-4933 |
|
|
STATE OF NEW JERSEY |
||
|
State of NJ Division of Taxation: |
1-609-292-6400 |
|
|
Web Site: |
||
|
Toll Free Touch Tone Information: |
1-800-323-4400
|
To hear pre-recorded messages covering various tax topics. |
|
NJ Department of Labor |
||
|
Web Site: |
||
|
General Information: |
1-609-292-2121 |
|
|
NJ Unemployment: |
1-609-292-0695 |
|
|
NJ Disability: |
1-609-292-7060 |
|