Personal Tax Tips

By Dian Vujovich

Received a great simple overview of things not to overlook and new news with respect to our personal taxes. It came from The Gardener Group, Inc., accountants with offices in North Palm Beach and Coral Gables, FL and Bethpage, NY.

Below is a listing of updates from tax year 2008 and what’s new for 2009 tax year:

UPDATES:

-Earned Income Credit has increased for people with three or more children and for some couples filing jointly.

-Personal exemption deduction is $3,650 per individual. Phase-outs on personal exemptions begin at $166,800 for single, $208.500 for head of household, and $250,200 for those filing jointly. It’s half that amount for married filing separately.

-Hope and Lifetime Earnings Credit is now known as “The American Opportunity Credit” and has increased to $2,500 from $2,000. Part of the credit is now refundable —40 percent even if you owe no tax.

-Investment Income for a Child without it being taxed at the parent’s tax rate has increased to $1,900.

-Alternative Minimum Tax Exemption is now$46,700 for single and the head of household filers, $70,950 for those married filing jointly.

-Adoption Credit has a maximum deduction from gross income of $12,150.

-IRA Deduction is $5,000 per individual or $6,000 if age 50 or over.

NEW:

-Work Pay Credit is up to $400 per working individual and $800 if filing jointly. However, it will phase out depending upon your income.

-Cash for Clunkers. If you participated in the program and bought a new fuel-efficient car, the income voucher received is not taxable.

-Unemployment Compensation. You don’t have to pay tax on the first $2,400 of compensation per recipient.

-Nonbusiness Energy Efficient Property Credit. This applies to heating and a.c. systems, water heaters, windows, doors and insulation. The credit is a maximum of $1,500. Solar energy is an additional credit separate from this nonbusiness energy credit and the amount is 30 percent of expenditures.

-Divorced or Separated Parents. If the decree was executed after 2008, a release must be signed by the custodial parent to allow dependent deduction to non-custodial parent and attached to the return.

-Sales Tax Deduction. You’ll get a sales tax deduction for new vehicles purchased after Feb.17, 2009 and before January 1, 2010 on the first $49,5000 paid. There are phase-outs on this based on income.

And there you have it. Short and simple.