A guest blog by Brian Wendroff
To address the budget and other issues, Congress is enacting more and more tax provisions on a temporary basis. Some become permanent while others expire by the end of the year. While CPA firms strive to stay on top of ever change in the Tax Code, it's almost impossible for the individual taxpayer.
So check out the following list of 12 last-chance opportunities for personal tax savings in 2009. Or see the complete list of 21 last-chance opportunities for business and personal tax deductions. That way you can at least say you saw it coming. Or going, as it were.
- Income. Up to $2,400 of unemployment compensation is excluded from the gross income of the recipient. However, this exclusion will not be available for benefits received in tax years beginning after 2009 [IRC Sec. 85(c)].
- Personal deductions. You can claim a deduction (whether you itemize or claim the standard deduction) for sales or excises taxes paid on the purchase of a new vehicle. The deduction (phased out at higher income levels) does not apply to purchases after December 31, 2009 [IRC Sec. 164(b)(6)(G)].
- Personal deductions. If you claim the standard deduction, take an additional deduction for state and local property taxes, up to a maximum of $500 ($1,000 for joint return filers). The deduction is not available for tax years beginning after 2009 [IRC Sec. 63(c)(7)].
- Personal deductions. You can elect to take an itemized deduction for state and local general sales taxes instead of an itemized deduction for state and local income taxes, but the election is available only for tax years beginning before Jan. 1, 2010 [IRC Sec. 164(b)(5)(I)].
- Personal deductions. You can claim an above-the- line deduction for "qualified tuition and related expenses" paid for the enrollment or attendance of yourself, your spouse or a dependent at an eligible institution of higher education. The deduction cannot exceed $4,000 (phased out at higher income levels) and applies only to tax years beginning before January 1, 2010 [IRC Sec. 222(e)].
- Personal deductions. The maximum deduction allowed annually for charitable donations is increased in the case of "qualified conservation contributions." The increased deduction is not available for donations after December 31, 2009 [IRC Sec. 170(b)(1)(E)].
- Personal tax credits. If you haven't owned a home in the previous three years, you can claim a first-time homebuyer credit of up to $8,000 (phased out at higher income levels) for the purchase of a principal residence. The credit can be claimed only for homes purchased before December 1, 2009. It is rumored that this credit may rise to $15,000 in 2010, but that's still just a rumor. [IRC Sec. 36].
- Alternative minimum tax. You can offset nonrefundable personal tax credits, such as the child and dependent care credit and the Lifetime Learning credit, against their alternative minimum liability. The offset will not be available for tax years beginning after 2009 [IRC Sec. 26(a)(2)].
- Alternative minimum tax. In 2010, the exemption amounts used in calculating a client's alternative minimum taxable income of $70,950 for married couples filing a joint return and $46,700 for singles and heads of households are scheduled to drop to $45,000 and $33,750, respectively [IRC Sec. 55(d)(1)].
- Retirement plans. The requirement that an IRA owner age 70 ½ or over must receive a minimum distribution annually is suspended for 2009, but will be reinstated in 2010 [IRC Sec. 401(a)(9)(H)].
- Retirement plans. An IRA may exclude from income distributions of up to $100,000 annually if paid directly by the IRA trustee to charitable organization. The exclusion expires in tax years beginning after 2009 [IRC Sec. 408(d)(8)].
- Employee benefits. If you are covered by employer- sponsored health plans and are laid off before January 1, 2010, you can qualify for subsidized plan continuation (COBRA) coverage for up to nine months. Employers can claim a credit against employment taxes for the subsidies provided to employees [IRC Sec. 6432]. This might change after 2010, so now's the time to get fired (just kidding).
Wendroff & Associates, LLC is a CPA firm that specializes in individual and business tax preparation, strategic financial consulting and outsourcing.
IRS Circular 230 Disclosure: Please be advised that the tax advice contained herein (including any attachments) is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding any U.S. tax- related penalties that may be imposed on the taxpayer.
Copyright 2007-2009 Gaea L. Honeycutt. All rights reserved.
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