Here are some changes for your 2009 Federal Income Taxes; new deductions and some new tax credits. Also, many limits and income tax brackets have been raised to account for inflation and prevent “bracket creep”.
- The personal exemption has increased to $3,650 each for the taxpayer and dependents, up $150 from 2008.
- The exemption for the alternative minimum tax has been increased to $70,950 for joint returns and $46,700 for individuals. This just means that above these levels you MAY be hit by AMT.
- The standard deduction has increased to $11,400 for married couples filing jointly, $5,700 for individuals and $8,350 for heads of household. The standard deduction is even larger for taxpayers who are blind or over 65.
- New this year you can take more of a standard deduction if you paid state or local real estate taxes, bought a new car and paid sales or excise taxes and met the income limits, or were a victim of a federally declared disaster.
Raising your standard deduction this way does require you to file a new form Schedule L.
- Homebuyer tax credit has changed for 2009 tax year.
In 2008, the credit was actually an interest-free, long-term loan. For people who purchased a home in 2009, the credit is a true credit — you only lose it and have to pay it back if you stop using the home as your principal residence within three years of purchase. The credit is $8,000 for first-time homebuyers, defined as those who haven’t owned a home in the last three years.Congress also added a credit for long-time homeowners who purchase a new principal residence — $6,500. To qualify, a homebuyer would have had to live at least five years in a previously owned home.
There are income limitations for both of these generous credits.
- The new American opportunity credit provides a maximum annual credit of $2,500 per student for each of the first four years of college. This replaces the Hope credit (not named for Obama!). The Hope credit covered only the first two years and for most people was smaller. To be eligible for this new American Opportunity Credit, taxpayers would have to pay $4,000 or more in tuition, fees and course materials.
- If you lost your job and received unemployment compensation, the first $2,400 in unemployment benefits is not taxable.
- And don’t forget an IRA, mentioned elsewhere here on the blog