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For 2009, the maximum amount of student loan interest that may be deducted
is $2,500.
The deduction is phased-out when modified adjusted gross income falls
within the range of $120,000 - $150,000 for married filing joint, and
$60,000 - $75,000 for all others except no deduction for Married Filing Separate.
The Hope Education Credit is renamed the American Opportunity Tax credit and modified as follows:
- Increasing the credit limit to $2,500 per eligible student per year (100% of the first $2,000 and 25% of the next $2,000 of eligible expenses).
- Eligible expenses now include course materials (books, supplies, and related equipment)
- Allowable for the first 4 years of post-secondary education in a degree or certificate program.
- For tax years 2009 and 2010
- Phase out ranges: $160,000 - $180,000 for married filing joint, and $80,000 - $90,000 for all others except married filing separate who do not qualify.
In 2009, the combined contribution limit for traditional IRAs and Roth
IRAs is $5,000 ($6,000 if 50 or older).
IRA contributions must be made by the due date of the return, not including
extensions, i.e., April 15, 2010.
Salary deferral limits for 401(k), 403(b), SARSEP, 501(c)(18)(D), is $16,500.
Catch-up contributions $5,500.
The child tax credit remains at $1,000 per "qualifying child" under the age of 17. The credit is phased out beginning at $110,000 for Married Filing Joint, $75,000 for Single and Head of Household, and $55,000 for Married Filing Separate.
Non-Cash Contributions: No charitable deduction is allowed
for any contribution of clothing or a household item unless the clothing
or household item is in good used condition, or better. Household items
include furniture, furnishings, electronic, appliances, linens, and other
similar items. Household items do not include food, paintings, antiques,
jewelry and gems, or collections.
Cash Contributions: (Effective for tax years beginning
after August 17, 2006)
A charitable contribution deduction will be disallowed for any monetary
contributions (cash, check, etc.) unless the donor maintains a record
of the contribution. The record of the contribution must be in
the form of a bank record, cancelled checks, or a written communication
from the donee showing the name of the donee organization, the date of
the contribution, and the amount of the contribution. This provision applies
to any contribution of money, regardless of the amount.
A refundable tax credit for "first-time homebuyers", the lesser of $8,000 ($4,000 for MFS) or 10% of the home's purchase price. Available for principal residence purchased January 1, 2009 to April 30, 2010. For qualifying taxpayers, the credit also applies to purchases before July 1, 2010, provided the taxpayer has entered into a written binding contract to close on the purchase made before May 1, 2010. Effectively, this provision allows taxpayers an additional two months to close.
A first-time homebuyer is an individual who had no present ownership interest in a principal residence during the three-year period ending on the date of the purchase of the principal residence to which the credit applies.
Effective for purchases after November 6, 2009, long-time residents of the same principal residence are treated as first-time homebuyers, but their credit equals the lesser of $6,500 ($3,250 for MFS) or 10% of the purchase price. Long-time resident is a taxpayer who has owned the same principal residence for any 5 consecutive years during the 8-year period ending on the date of purchase of a subsequent residence.
Refer to IRS Notice 2009-12 for allocation of the credit between taxpayers who are not married.
The 2008 Housing Act provides a decuction for real property tax paid by taxpayers who do not itemize deductions. The real property tax deduction is a maximum of $500 ($1,000 MFJ) and applies to amounts paid in 2009 and not deducted elsewhere on the return.
Premiums paid or accrued by a taxpayer for qualified mortgage insurance in connection with acquisition indebtedness on a taxpayer's qualified residence are deductible as residence interest.
Homeowners may exclude from gross income "qualified principal residence indebtedness" cancelled during 2007-2012. Debt forgiveness on a second home, credit cards, or car loans does not qualify for this exclusion.
For 2009 and 2010, individuals other than nonresident aliens and dependents can claim a refundable tax credit equal to the lesser of: 6.2% of the individual’s earned income or $400 ($800 for a joint return). The credit phases out at a rate of 2% of modified adjusted gross income above $75,000 ($150,000 for joint returns).
Up to $2,400 of unemployment compensation is excludable from the recipient’s gross income.
All information on this page is provided as a brief summary and not considered binding authority.
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