2009 Tax Reminders
The American Recovery and Reinvestment Act (ARRA) of 2009 contained numerous provisions that could effect your individual tax return for 2009.
The following list covers the more important items. As always, law changes are generic, and may not pertain to your particular tax situation.
Income
Unemployment compensation. For 2009, $2,400 of unemployment compensation is excluded from tax.
Deductions
Motor vehicle taxes. Taxpayers may deduct "qualified motor vehicle taxes". Generally these are state and local sales and excise taxes. The vehicle must weigh 8,500 pounds or less or be a motor home and be acquired between February 17, 2009 and December 31, 2009. Only the tax on the first $49,500 of the purchase price qualifies.
Taxpayers who itemize and elect to deduct general sales taxes rather than state and local income taxes may not claim the additional standard deduction for the vehicle sales tax.
Credits
Child tax credit. The child tax credit is still $1,000 per dependent child under age 17, however, the refundable portion is increased for tax years 2009 and 2010 to the extent of 15% of the taxpayer’s earned income over $3,000 (instead of $8,500). Beginning in tax year 2009, a child who qualifies for the child tax credit must also be the taxpayer’s dependent.
Hope credit. For tax years beginning after Dec. 31, 2008, the Hope credit, now called the American Opportunity Tax Credit, is increased to a maximum of $2,500 per year. 40% of the credit is refundable.
Energy credits. The ARRA introduced or extended a range of energy tax incentives for individuals and businesses.
Earned income credit. The percentage has increased (for families with three or more qualifying children) from 40% to 45%. This only applies to 2009 and 2020.
First-time homebuyer credit. For home purchases after Dec. 31, 2008, and before Dec. 1, 2009, the ARRA increased the amount of the first-time homebuyer credit from $7,500 to $8,000. This credit is phased out as adjusted gross income increases.
Alterantive Minimum Tax (AMT)
AMT exemptions. In an attempt to easy the burden of this tax, the ARRA increased the AMT exemptions for 2009. The new exemptions are $70,950 for a joint return, $46,700 for single taxpayers and heads of household and $35,475 for married taxpayers filing separately.