Sacramento CPA, Tax, Accounting, Bookkeeping
2009 Tax Law Changes
Education Tax Credit
Taxpayers can use a federal education tax credit to offset college costs called the hope tax credit. Tuition, related fees, and required course materials, such as books generally qualify for a maximum annual tax credit of $2,500 per student. The tax credit is equal to 100 per cent of the first $2,000 spent and 25 percent of the next $2,000. Taxpayer’s income must be $80,000 or less ($160,000 for joint tax filers). Students with more than four years of college are not eligible for this tax credit but are eligible for the lifetime learning tax credit or tuition and fees tax deduction.
Energy Tax Credit
The non-business energy property credit equals 30 percent of eligible energy saving improvements up to a maximum $1,500 tax credit for the combined 2009 and 2010 tax years. Taxpayers must make improvements to an existing principal residence. The cost of high efficiency heating and air conditioning systems, water heaters and stoves burning biomass, energy efficient windows, doors, qualifying insulation and roofs are eligible for the tax credit.
The residential energy efficient property tax credit equals 30 percent of qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.
Taxpayers should check the manufacturer’s tax credit certification statement to determine if it qualifies for the tax credit.
New Vehicle Purchase
Taxpayers may claim a tax deduction for taxes paid on multiple purchases of vehicles. The tax deduction is limited to the tax up to $49,500 of the purchase price of each vehicle. The vehicle must be purchased after February 16, 2009 and before January 1, 2010. The tax deduction is reduced for taxpayers whose income is between $125,000 and $135,000 for individuals and $250,000 and $260,000 for joint tax filers. This tax deduction is available whether or not a taxpayer itemizes deductions.
Standard Tax Deduction
The basic standard tax deduction increased to $11,400 for married couples filing a joint tax return, $5,700 for singles and married individuals filing separate tax returns, and $3,350 for head of household tax filers.
The standard tax deduction can also be increased by state or local real estate taxes paid in 2009, a net disaster loss, and state, local, or excise taxes paid on the purchase of a new vehicle.
AMT Exemption Increased for One Year
For tax year 2009 only, the alternative minimum tax exemption has increased to $70,950 for married tax filers, $35,475 for married filing separate tax filers, and $46,700 for single and head of household tax filers.
Mileage Rate
The standard mileage rate for the business use of a car is 55 cents per mile; medical reasons is 24 cents per mile; and charitable work is 14 cents per mile.
Personal Tax Exemption
The value of each personal tax exemption is $3,650. Taxpayers can take a personal tax exemption for themselves and for each eligible dependent.
Child Investment Income
A child can earn up to $1,900 of taxable investment income without being taxed at the parent’s rate.
Unemployment Benefits
Benefits received up to $2,400 in 2009 are not taxable. Any additional benefits are taxed.
Cash for Clunkers
A $3,500 or $4,500 payment under the cash for clunkers program isn’t taxable to the consumer buying or leasing a car.