Many Taxpayers Stand to Gain From New Laws - Mercedes-Benz Forum

LinkBack Thread Tools Display Modes
post #1 of 3 (permalink) Old 01-08-2009, 08:26 AM Thread Starter
Jakarta Expat's Avatar
Date registered: Aug 2006
Vehicle: PM me to Join the Expat Muslims for Obama Club........
Location: Jakarta, Indonesia
Posts: 17,697
Mentioned: 0 Post(s)
Quoted: 4 Post(s)
(Thread Starter)
Many Taxpayers Stand to Gain From New Laws

Many Taxpayers Stand to Gain From New Laws

Wealthy Likely to Benefit Most From 2009 Changes; Putting More in Your 401(k)

New Year's Day brought relief for most taxpayers, especially upper-income ones -- even as President-elect Barack Obama is proposing new tax cuts as part of his wide-ranging economic-stimulus package.

Starting Jan. 1, the basic federal estate-tax exemption jumped to $3.5 million from $2 million in 2008. This large increase is expected to result in a major decline in the number of estates subject to the tax for 2009. It also will mean significant tax savings for many larger estates that are affected, says Sidney Kess, a New York lawyer and accountant.

Among other notable changes: The maximum amount that savers can contribute to a 401(k) plan increased. Many high-income taxpayers will benefit from changes affecting personal exemptions and certain deductions. And many Americans who live and work in other countries will be able to exclude more of their pay from U.S. tax collectors.

But not all the automatic 2009 changes will spell relief. For one thing, many people who suffer personal casualty and theft losses in 2009 won't be able to deduct as much. And about 11 million workers will pay higher Social Security taxes this year.

Standard Deductions

* The basic standard deduction for joint filers for the 2009 tax year will be $11,400, up from $10,900 for 2008.
* For singles, the amount for 2009 will be $5,700, up from $5,450.
* The amounts are higher for those age 65 or older, for the blind, for those who paid real-estate taxes and for those with losses from federally declared disasters.

Much larger changes are expected soon from Washington in response to the economic crisis. President-elect Obama and congressional leaders are working on a wide-ranging plan that includes large cuts for both individuals and businesses.

While it's not yet known what will become law or when the changes will take effect, Congress will likely pass relief from the alternative minimum tax, or AMT. Unless lawmakers do something, tens of millions of Americans will have to pay higher taxes for 2009.

Here are some of the major changes that automatically became law on Jan. 1. While these won't affect tax returns for 2008, they may help taxpayers with 2009 planning.

Estate and gift taxes. The increase in the basic estate-tax exemption amount to $3.5 million stems from a 2001 law. (Transfers from one spouse to the other typically remain tax-free.) "Many estate plans and wills will have to be modified to take into account this increased exemption amount," Mr. Kess says.

The top federal estate-tax rate for 2009 remains unchanged at 45%. In 2010, the estate tax is supposed to disappear entirely for that one year only -- but that isn't likely to happen. During the campaign, then-Sen. Obama proposed retaining the $3.5 million exclusion amount and the 45% top rate in coming years.

The annual gift-tax exclusion rose to $13,000, up $1,000 from 2008. This means you can give as much as $13,000 this year to anyone you wish, or to as many people as you want, without having to worry about taxes or even having to file any forms with the Internal Revenue Service. It's a simple way to help others and reduce the size of your taxable estate. You can give even more than that by paying directly for someone else's tuition or medical expenses. Just be sure to pay the institution directly.

The lifetime gift-tax exclusion amount remains unchanged at $1 million.

Retirement savings.
The maximum amount that someone under age 50 can contribute to a 401(k) plan for 2009 rose to $16,500 from $15,500. Those 50 or older can put away an additional $5,500 this year, for a total of $22,000, up from $20,500.

Minimum distributions. President George W. Bush recently signed legislation that allows millions of people who are 70½ or older to skip taking distributions from IRAs and certain other retirement plans during 2009. That new law, however, didn't provide any relief for 2008 -- as many investors had been hoping for from Congress, the Treasury Department or both.

Social Security taxes. The maximum amount of earnings subject to Social Security taxes rose to $106,800, up 4.7% from $102,000 in 2008. That means the maximum additional tax on an employee earning above last year's wage base will be $297.60, according to CCH, a unit of Wolters Kluwer. High-income self-employed workers may owe as much as $595.20 in additional self-employment tax but can recoup some of it through deducting it on their federal income-tax return, CCH said.

Nanny taxes.
Employers who pay nannies and other household employees a certain amount, or more, each year typically are required to pay Social Security and Medicare taxes on their wages. For 2009, the dollar threshold is $1,700, up from $1,600 for 2008, says Mark Luscombe of CCH.

Working in other countries. Many Americans who live and work abroad are eligible to exclude a certain amount of their pay from U.S. income taxes. The so-called foreign earned income exclusion for 2009 is $91,400, up from $87,600 for 2008, Mr. Luscombe says.

Casualty and theft losses. For 2008, the general rule for most taxpayers was that personal casualty and theft losses could be deducted only to the extent they exceeded 10% of adjusted gross income -- and that was after reducing each loss by $100. But for 2009, that $100 dollar amount rose to $500. For more details, see IRS Publication 17 on the IRS Web site.

Mileage rates. Taxpayers who use their vehicles for work can deduct their actual costs or rely on the IRS's optional standard mileage rate. This year, the IRS rate for using your car for business will be 55 cents a mile. That's down from 58.5 cents in the second half of 2008 but up from 50.5 cents in the first half. Separately, the IRS rate for medical or moving purposes will be 24 cents a mile. That's down from 27 cents in last year's second half but up from 19 cents in the first half. The mileage rate for helping charitable organizations remains unchanged at 14 cents; this one is set by law, not the IRS.

Stealth taxes. These refer to laws that increase taxes owed by millions of upper-income Americans without actually raising the official tax rates. They're known as stealth taxes because they're often complex and difficult to detect.

Among them is a provision known as "Pease," named after a former congressman, which imposes limits on certain itemized deductions for taxpayers whose incomes exceed a certain amount. The good news for taxpayers is that the dollar threshold rose again: For the 2009 tax year, most taxpayers will begin to lose some of the value of these itemized deductions if their adjusted gross income exceeds $166,800, up from $159,950 in 2008.

Another stealth-tax provision imposes limits on personal-exemption amounts. Warning: Calculating the precise limits can be tricky, especially because of tax-law changes that have reduced the amount of those limits.

The IRS expands a free electronic-filing offer

This year, as in past years, the IRS and a group of private-sector software companies are offering free tax preparation and e-filing services through what's known as the "Free File" program. Anyone with an adjusted gross income of up to $56,000, or about 98 million Americans, can use the standard Free File options this year for their 2008 return, the IRS said Tuesday.

The big change this year is that "virtually everyone" -- even those with higher incomes -- will be able to fill out and file their tax forms electronically. However, this new option will be much more limited than other Free File programs. It will allow taxpayers to enter their data, do basic math, sign returns electronically, print returns and e-file them. More details are expected later this month.
Jakarta Expat is offline  
Sponsored Links
post #2 of 3 (permalink) Old 01-08-2009, 09:30 AM
BenzWorld Elite
Date registered: Feb 2006
Vehicle: 1999 ML320
Location: Ratville
Posts: 24,029
Mentioned: 1 Post(s)
Quoted: 311 Post(s)
Give it up,man
mlfun is offline  
post #3 of 3 (permalink) Old 01-08-2009, 09:44 AM Thread Starter
Jakarta Expat's Avatar
Date registered: Aug 2006
Vehicle: PM me to Join the Expat Muslims for Obama Club........
Location: Jakarta, Indonesia
Posts: 17,697
Mentioned: 0 Post(s)
Quoted: 4 Post(s)
(Thread Starter)
Originally Posted by mlfun View Post
Give it up,man

I am not bending over for a fag like you Muffy.............
Jakarta Expat is offline  
Sponsored Links

  Mercedes-Benz Forum > General Mercedes-Benz Forums > Off-Topic

Quick Reply

Register Now

In order to be able to post messages on the Mercedes-Benz Forum forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Please enter a password for your user account. Note that passwords are case-sensitive.


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:


Human Verification

In order to verify that you are a human and not a spam bot, please enter the answer into the following box below based on the instructions contained in the graphic.

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Display Modes
Linear Mode Linear Mode

Similar Threads
Topic Author Forum Replies Last Post
An expense account to envy: taxpayers foot the tab for lost loot Jakarta Expat Off-Topic 0 10-22-2008 02:23 AM
Court leery of suits by taxpayers GeeS Off-Topic 0 03-01-2007 07:56 AM
We stand down, they stand up, and rip off everything in sight FeelTheLove Off-Topic 0 08-26-2006 09:39 AM
15hp Gain AMPM R170 SLK-Class 10 07-18-2005 04:43 AM
What will I gain? Bubbenz W163 M-Class 1 05-30-2004 12:15 PM

Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Title goes here

video goes here
description goes here. Read Full Story
For the best viewing experience please update your browser to Google Chrome