Category - Taxes

1
If You’re Married, You Can’t File as Single
2
Key Tax Changes in the Final Version of the Stimulus Bill
3
2009 Stimulus Bill – Tax benefits
4
Ruminations on Tax Planning for 2009
5
2009 Retirement Plan Contribution Limits

If You’re Married, You Can’t File as Single

Sometimes truth is stranger than fiction. I’ve learned that it’s not unheard-of for a professional tax preparer to advise a married individual to file his or her tax return using the single filer status. No! No! Bad tax preparer!

Last fall, one of my colleagues sought advice from a group of planners regarding a client whose CPA had advised him and his wife to file their returns separately using “single” filing status.  His inquiry prompted a number of responses from other planners with similar experiences.

Here’s the problem: if you’re married as of the last day of a tax year, …

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Key Tax Changes in the Final Version of the Stimulus Bill

The final version of the 1071-page American Recovery and Reinvestment Act of 2009 is due to be signed by President Obama tomorrow. My summary of the bill’s key tax items two weeks ago was not far off the mark, but there are a number of nips and tucks in the final version.

“Making Work Pay” tax credit
The refundable credit in the amount of 6.2 percent of earned income finally settled in at a limit of $400 for single returns and $800 for joint returns in 2009 and 2010. The credit starts being phased out at adjusted gross incomes (AGI) …

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2009 Stimulus Bill – Tax benefits

CCH has published a summary of the 2009 Stimulus bill that President Obama is scheduled to sign Tuesday, February 17th.  Significant items include:

  • Making Work Pay: For 2009 and 2010, $400 per person tax credit for AGI under $75,000; phased out to $95,000 (double everything for married filing jointly).
  • One-time $250 payment to Social Security and other fixed income recipients.
  • AMT patch for 2009: increase AMT exemption amount from 2008 levels by $500 per person or $1,000 per couple. (Comment: this should have been separate legislation and didn’t need to be part of the Stimulus bill)
  • First-time home
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    Ruminations on Tax Planning for 2009

    It’s too early to say with certainty what changes will be made in the tax laws this year. But it’s possible to make some educated guesses.

    Tax Cuts, or Increases?
    Things seem to be skewing towards tax cuts for middle income taxpayers in 2009. Moreover, higher income earners probably won’t see tax rate increases this year.

    If the present economic malaise does not extend past 2009, chances are good that tax rate increases will be enacted for the highest tax brackets in 2010. Instead of topping out at the current 35%, the top income tax rate could return to 39.6%, …

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    2009 Retirement Plan Contribution Limits

    The IRS has announced the cost of living adjustments applicable to dollar limitations for 401(k), profit sharing, IRAs, and other retirement plans in 2009. The new limits are as follows:

    • 401(k) limit will increase from $15,500 to $16,500.
    • 401(k) “catch-up” limit for individuals age 50 and over will increase from $5,000 to $5,500.
    • Defined contribution plan limit will increase from $46,000 to $49,000.
    • Defined benefit and cash balance plan annual benefit limit will increase from $185,000 to $195,000.
    • Contribution limit for benefit and contribution calculation will increase from $230,000 to $245,000.
    • Highly compensated employee definition will increase from $150,000 to
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