2009 Stimulus Updates
The new stimulus law gives individuals a payroll tax credit in both the 2009 and 2010 tax years. The maximum credit for singles is $400 and $800 for marrieds calculated at 6.2% of earned income. The credit will be taken in the form of lowered income tax withholding through payroll (the IRS is issuing new withholding tables). The exact credit will be calculated on the filer's tax return. The phaseout for singles starts at $75,000 of adjusted gross income and completely phases out at $95,000 of adjusted gross income. The phaseout for married couples starts at $150,000 and completely phases out at $190,000.
Individuals receiving Railroad Retirement benefits, Supplemental Security Income, veterans pensions or federal retirees not receiving social security will receive a one time $250.00 check in lieu of the tax credit.
First Time Homebuyer Credit
The Worker, Homeownership, and Business Assistance Act of 2009 extended the homebuyer credit. The credit is extended to principal residences purchased before May 1, 2010. It also applies to principal residences purchased before July 1, 2010 as long as a written binding contract was entered into before May 1, 2010. The credit for first-time homebuyers remains at 10% of the cost of the principal residence up to $8,000. For residences purchased after November 6, 2009 a new credit of 10% of the cost of the principal residence, not to exceed $6,500 applies to an individual who (along with the individual's spouse if married on date of purchase) has owned and used the same residence as the individual's principal residence for any five consecutive years out of the eight years prior to purchase. Please feel free to contact our office for the specifics and additional stipulations of the new credits.
First time homebuyers who purchased homes from January 1, 2009 through November 30, 2009 are eligible for the first time homebuyer credit as well. The maximum credit was raised to $8,000 (computed at 10% of purchase price of home) and does not have to be repaid as long as the taxpayer continues to use the home as his/her principal residence for 36 months. First time homebuyers who buy homes in 2009 can elect to claim the credit on their 2008 return.
New Sales Tax Deduction
Sales tax paid on the purchase of new cars, motor homes, light trucks and motorcycles purchased from February 17, 2009 through December 31, 2009 can be deducted even if sales tax is not claimed as an itemized deduction. The sales tax paid can be added to the filer's standard deduction. The sales tax paid on the first $49,500 of qualifying purchases is deductible. The phase out on this deduction starts at $125,000 for singles and $250,000 for marrieds.
Retirement Plan Ceilings
The ceiling on SIMPLE plans went to $11,500 for those under 50 in 2009 and will remain the same in 2010. The ceiling is $14,000 in 2009 and 2010 for those age 50 and over. The maximum 401(k) contribution will be $16,500 in 2009 and 2010. The maximum 401(k) contribution for those 50 and over has risen to $22,000 for 2009 and 2010. The payin limits will remain the same for IRAs and Roth IRAs in 2009 and 2010 as they were in 2008.
Penalties for S-Corporations and Partnerships
Partnerships and S-Corporations that do not file returns timely will owe $195 a month per partner or shareholder in penalties for up to 12 months. This is effective for 2010 tax returns. Fines for filing incorrect W-2 and 1099 forms have also increased.
NC Gift Tax Repeal
A repeal of the NC gift tax was signed into law July 17, 2008. However, it does not come into effect until January 1, 2009. There will not be any NC gift tax on gifts made on or after January 1, 2009.
Energy Efficient Home Credit
Contractors selling homes in 2006 may be eligible for an energy efficient home credit of up to $2000 per home. To qualify for the $2000 credit a contractor must build a home that has a level of annual heating and cooling energy consumption which is at least 50% below the annual level of heating and cooling energy consumption of a comparable dwelling unit. In addition building envelope component improvements alone must account for a level of annual heating and cooling energy consumption that is at least 10% below the annual level of heating and cooling energy consumption of a reference dwelling in the same climate zone. In order to qualify a contractor must obtain a certificate from an individual who has been accredited or authorized by RESNET to perform this certification.
Mileage Rates
The standard mileage rate for business miles driven in 2009 is $.55 cents per mile.
The standard mileage rate for business miles driven in 2010 is $.50 cents per mile.
The standard mileage rate for medical or moving miles is $.165 cents per mile for 2010. The standard rate for miles driven in service of charitable organizations is $.14 cents per mile for 2010.
Social Security Administration Employee Verification Service
The Social Security Administration offers a telephone service to help you verify that names and social security numbers given to you by employees are correct. You can call 1-800-772-6270 on weekdays from 7 a.m. to 7 p.m. to receive verifications for up to 5 employees at a time. You must have your company EIN available along with SSN, last name, first name, middle initial, date of birth and gender of all employees you wish to verify.
Taxpayer Records Online
The IRS will be releasing an online system in the near future that will allow taxpayers to access and print three years worth of tax returns along with other information.
Extended Tax Breaks for Investors
The maximum rate of 15% on dividends and capital gains will stay put through 2010. The 0% rate will stay in effect for low incomers through 2010 as well.
New Charitable Contributions Requirements
Beginning in 2007 in order to deduct a charitable contribution made in cash, by check, or by other monetary means, the contribution must be supported by a bank record or a receipt, letter or other written communication from the charity showing the name of the donee organization, the date of the contribution, and the amount of the contribution. If the contribution is $250 or more, donor's must receive a written receipt from the charity that includes detailed information, including a statement indicating whether or not goods or services were received in return for the contribution.
