New Tax Tips for 2009

New for 2009:

• Exemption amount. The amount you can deduct for each exemption has increased from $3,500 in 2008 to $3,650 in 2009.
• Exemption phaseout. You lose part of the benefit of your exemptions if your adjusted gross income (AGI) is above a certain amount. For 2009, the phaseout begins at $125,100 for married persons filing separately; $166,800 for single individuals; $208,500 for heads of household; and $250,200 for married persons filing jointly or qualifying widow(ers). However, in 2009, you can lose no more than 1/3 of the amount of your exemptions. In other words, each exemption cannot be reduced to less than $2,433.
• Definition of qualifying child revised. Beginning in 2009, the following changes have been made to the definition of a qualifying child.

  • To be your qualifying child, the child must be younger than you unless the child is permanently and totally disabled.

  • A child cannot be your qualifying child if he or she files a joint return, unless the return was filed only as a claim for refund.

  • If the parents of a child can claim the child as a qualifying child but no parent so claims the child, no one else can claim the child as a qualifying child unless that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child.

  • Your child is a qualifying child for purposes of the child tax credit only if you can and do claim an exemption for him or her.

• Standard deduction increased. The standard deduction for most taxpayers who do not itemize their deductions on Schedule A of Form 1040 is higher in 2009 than it was in 2008. The amount depends on your filing status. In addition to the annual increase due to inflation adjustments, your 2009 standard deduction is increased by:

  • Any state or local real estate taxes you paid that would be deductible on Schedule A if you were itemizing deductions, up to $500 ($1,000 if married filing jointly),

  • Any state or local sales or excise taxes you paid on the purchase of a new motor vehicle after February 16, 2009, and

  • Any net disaster loss from a federally declared disaster.