We are just about to enter the holiday season, and I have a feeling that this one is going to be particularly stressful for a lot of people. Our country is in a state of transition at the moment, and for a lot of people change = concern. My advice is to stay hopeful. We are going to get through this, just like we have at every other pivotal point in the history of this great nation. American’s are much more resilient than the rest of the world gives us credit for.
Now is the time of year for us to do some financial planning. We need to be thinking about our money, along with all of our holiday festivities. Bearing that in mind, this is the first of many posts in which I will be addressing tax planning issues for the end of this year, and the beginning of the next.
The IRS has completed their inflation adjustments for the 2009 Tax Year. Many portions of the tax code are adjusted annually for inflation, among them being personal exemptions and standard deductions. If you care to look you can find all the details by clicking this link, Rev. Proc. 2008-66, or you can look at the summary that I have provided:
• Personal exemptions are now $3650 an increase of $150
• MFJ taxpayers will now have a standard deductions increase of $11,400 – a $500 increase
• Single taxpayers (and MFS) will now have a standard deduction of $5,700 – a $250 increase
• Taxpayers filing HoH taxpayers will now have a standard deduction $8,350 – a $350 increase
Other changes will include:
• The annual gift tax exclusion is now $13,000 – a $1,000 increase over last year
• EITC for families with two or more children will is now capped at $5,028, which is a$204 increase over last year. The income eligibility has also increased for MFJ filers with more than one child, you must now be under $43,415 to qualify
There has also been a change in the 2009 tax brackets. If you are a single taxpayer, your tax brackets are as follows:
• Taxable income up to $8,350 = 10%
• Taxable income over $8,350 to $33,950 = 15%
• Taxable income over $33,950 to $82,250 = 25%
• Taxable income over $82,250 to $171,550 = 28%
• Taxable income over $171,550 to $372,950 = 33%
• Taxable income over $372,950 = 35%
If you are MFJ your tax brackets will be:
• Taxable income up to $16,700 = 10%
• Taxable income over $16,700 to $67,900 = 15%
• Taxable income over $67,900 to $137,050 = 25%
• Taxable income over $137,050 to $208,850 = 28%
• Taxable income over $208,850 to $372,950 = 33%
• Taxable income over $372,950 = 35%
That’s all for today, but don’t worry, we will have a LOT more about the new tax law changes in the weeks to come. See you next time.
