TAX NEWS...

Gregory J. Cook, EA, CPA, Accredited Tax Advisor

Congress has approved new economic stimulus legislation, the American Recovery and Reinvestment Act of 2009. The IRS is working closely with Congress and the administration on the stimulus legislation and will implement tax-related provisions of the new program as quickly as possible.

President Obama has signed the much-anticipated roughly $800 billion economic stimulus package, the American Recovery and Reinvestment Act of 2009. The new law, which contains nearly $300 billion in tax relief and significant changes to the Internal Revenue Code, sets in motion a wave of direct spending and tax incentives to jump start the U.S. economy out of recession. Highlights of the American Recovery and Reinvestment Act of 2009 include:

 
* New Making Work Pay Credit
* Enhanced Child Tax Credit
* American Opportunity Tax Credit for Education
* Expanded Homebuyer Tax Credit
* Extended Bonus Depreciation and Code Sec. 179 Expensing
* Five-Year Carryback of NOLs
* New Car Purchase Deduction
* Extensions/Increases of Many Energy Tax Incentives
* Recovery Zone Bonds and Related Relief

 

On Wednesday, January 14th, Rep. John Lewis introduced H.R. 524, "GIVE Act of 2009," which would allow the Secretary of the Treasury to establish the standard mileage rate for use of a passenger automobile for purposes of the charitable contributions deduction and exclude charitable mileage reimbursements from gross income. The bill was referred to the House Committee on Ways and Means. A companion bill, S. 243 (text not yet available), was introduced on the same day in the Senate by Sen. Ben Cardin, and was referred to the Senate Committee on Finance.

IRS Finalizes Tax Year 2009 Inflation Adjustments
Among the tax code provisions that must be adjusted annually for inflation are personal exemptions and standard deductions. Rev. Proc. 2008-66 provides the full details, but here's a brief summary:

• Personal exemptions will increase $150, to $3650
• Standard deductions for MFJ taxpayers will increase $500, to $11,400 (You may benefit from Itemizing Deductions)
• Standard deductions for single and MFS taxpayers will increase $250, to $5,700
• Standard deductions for HoH taxpayers will increase $350, to $8,350
• The annual gift tax exclusion will increase $1,000, to $13,000
• The maximum EITC for families with two or more children will increase $204, to $5,028, while the income limit for the credit for MFJ filers with more than one child will be $43,415
• The foreign earned income exclusion will increase to $91,400
• The Standard Business Mileage Rate will increase to .55 per mile

Additionally, the rev. proc. presents the tax brackets for 2009. For single taxpayers, the 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%

Accordingly, the brackets for MFJ are:

• 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%

Identity Theft Hotline

The Internal Revenue Service has established an Identity Theft Hotline at 800-908-4490. The hours of operation are Monday through Friday, 8:00 am to 8:00 pm your local time. This should be particularly helpful to people that have had income reported under their Social Security number because an illegal alien used that number.