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2009 Tax Filing Season

At Gilman Ciocia, you’ll have a personal tax team at your side working for you throughout the year. Taxes can be a complicated business and we strive to educate all of our customers on the laws, credits and deductions each and every year.

Below is a list of existing tax advantages, credits and changes for the 2009 Tax filing season. This is just a partial list and your Gilman Ciocia tax advisor can discuss additional opportunities with you when you have your taxes prepared this year:

First-time Homebuyer Credit (January 1, 2009 through November 6, 2009)

For a purchase in 2009 before November 7, 2009, eligible homebuyers may qualify for a tax credit of up to $8,000 ($4,000 if married filing separately) or, if less, 10% of the purchase price. The taxpayer (and his or her spouse if married) must not have owned another principal residence in the prior three years. The credit begins to phase out if modified adjusted gross income exceeds $75,000, or $150,000 on a joint return.

Expanded Homebuyer Credit

For a home purchased between November 7, 2009 and April 30, 2010 (closed by
June 30, 2010 if in contract by April 30, 2010), the first-time homebuyer credit has been expanded. The first-time buyer credit is still 10% of the cost of the home, up to a maximum of $8,000 ($4,000 if married filing separately). The income limits for eligible purchasers have been expanded to cover more buyers. The full credit applies to singles with MAGI of $125,000 and joint filers with MAGI up to $225,000. In addition, some long-time residents could qualify for a 10% up to a top credit of $6,500.

Unemployment Compensation Partially Untaxed

Recipients of unemployment compensation in 2009 may exclude from income the first $2,400 of benefits received.

Solar Energy Credit

A 30% credit is available for solar energy property, equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for) a structure, or to provide solar process heat (but not for heating a swimming pool). The previous limit for homeowners has been repealed. The 30% credit is available only for periods ending before 2017. After 2016, the credit will be 10%.

Residential Energy Credits

The credit for home energy improvements (high efficiency property such as insulation, storm windows, heaters), which expired after 2007, has been reinstated and increased. A 30% credit is allowed, with a two-year overall credit limit of $1,500 for 2009 and 2010.
There is no limit on the 30% credit for solar panels, solar water heating equipment, and other alternative energy improvements.

Plug-In Electric Vehicle Credits

A new 10% credit, up to $2,500, is allowed for the cost of qualified two- or three-wheel rechargeable electric vehicles and four-wheel low-speed rechargeable electric vehicles placed in service after February 17, 2009.
Another new credit applies for plug-in electric drive motor vehicles with at least four wheels. The minimum credit of $2,500 is increased depending on the battery capacity and weight of the vehicle.

Estimated Tax Relief for Small Business Owners

A 90% prior-year safe harbor makes it easier for certain small business owners to avoid a 2009 estimated tax penalty. Over 50% of 2008 gross income must have been from a qualifying small business, and 2008 adjusted gross income had to be less than $500,000, or $250,000 if filing separately for 2009.

Small Business NOL Carryback

The law signed November 6, 2009 provides an election to increase the present-law carryback period for an applicable NOL from two years to any whole number of years elected by the taxpayer that is more than two and less than six. An applicable NOL is a taxpayer's NOL for a taxable year beginning or ending in 2008 or 2009. An eligible small business is a taxpayer meeting a $15,000,000 gross receipts test.

Qualified Tuition Plan Distributions

For purposes of figuring if a distribution from a qualified tuition plan (Section 529 plan) is tax free, the cost of a computer, software, and Internet access that will be used while the student is enrolled is considered a qualified expense.

Hope Education Credit Expanded

The Hope credit for 2009 and 2010 has been renamed the American Opportunity credit. The maximum credit is generally $2,500 per student, and it is allowed for the first four years of post-secondary education. The phaseout of the credit applies if modified adjusted gross income is between $80,000 and $90,000, or between $160,000 and $180,000 on a joint return.

Transportation Fringe Benefits

For 2009, the monthly exclusion for employer-provided parking is $230. For transit passes and commuter van/bus transportation, the monthly exclusion for January and February 2009 is $120, and for March-December 2009, the monthly exclusion is $230. An exclusion of up to $20 may be allowed for reimbursed bicycle commuting costs, but restrictions apply.

Phaseout of Personal Exemptions and Reduction of Itemized Deductions

The reduction of itemized deductions applies if 2009 adjusted gross income exceeds $166,800, or $83,400 if married filing separately. The phaseout of personal exemptions applies if adjusted gross income exceeds $125,100 for married persons filing separately, $166,800 is single, $208,500 if head of household, and $250,200 if married filing jointly (or qualifying widow(er)).

Exemption Phaseout and Itemized Deduction Reduction

The reduction to itemized deductions and the personal exemption phaseout for high-income taxpayers are being gradually eliminated between 2006 and 2010. A taxpayer loses 1/3 for 2009 of the amount he would otherwise lose under the regular reduction computation.

Depreciation Limits for Autos

The maximum depreciation deduction (including expensing) for a car placed in service in 2009 is $10,960 if the special depreciation allowance applies; otherwise $2,960. For a light truck or van, the maximum depreciation is $11,060 with the special allowance, or $3,060 without the special allowance.

Bonus Depreciation

First year 50% bonus depreciation is allowed for tangible personal property, computer software, and leasehold improvements acquired and placed in service in 2009; for new qualified reuse and recycling property purchased after August 31, 2008; and for qualified cellulosic biofuel plant property placed in service after October 3, 2008. Bonus depreciation is allowed for qualified disaster assistance property used in a disaster area struck by a federally declared disaster occurring before 2010.

Exclusion for Direct Donations from IRAs

Taxpayers age 70 ½ and older can exclude from 2008 and 2009 income up to $100,000 of otherwise taxable IRA distributions if the funds are transferred directly from the IRA to a 50% limit charitable organization.

Capital Gain Rates

The favorable capital gain rates, which had been scheduled to apply through 2008, have been extended for two years. For taxpayers with a top bracket over 15%, the 15% rate will apply to net capital gains realized and to qualified dividends received before 2011. For those with a top bracket of 10% or 15%, other than for children subject to the "kiddie tax," there will be no tax ("zero" rate) on net gains and qualified dividends received in 2008-2010.

Direct Rollover from Retirement Plans to Roth IRAs

A distribution after 2007 from a qualified retirement plan, 403(b) plan, or governmental 457 plan may be directly rolled into a Roth IRA, subject to the Roth conversion rules. Thus, for years before 2010, the direct rollover is allowed only if the employee's modified adjusted gross income is $100,000 or less. A rollover is taxable except to the extent it is attributable to after-tax contributions, but the 10% penalty for withdrawals before age 59 ½ does not apply.

Making Work Pay Credit

Individuals with earned income in 2009 may be able to claim a tax credit of up to $400, $800 if married filing jointly. The credit is phased out if modified adjusted gross income exceeds $75,000, or $150,000 on a joint return. The Making Work Pay credit is also reduced if a $250 economic recovery payment was received during 2009 or if the $250 government retiree credit is allowed.

Deduction for Sales Tax on New Motor Vehicle

A deduction is allowed for sales/excise taxes on a qualifying new motor vehicle or motor home purchased after February 16, 2009 and before January 1, 2010. Used vehicles do not qualify. The deduction applies to the taxes on the first $49,500 of the purchase price. The deduction is phased out if modified adjusted gross income exceeds $125,000, or $250,000 on a joint return. The deduction increases the standard deduction for those who do not itemize. For taxpayers who itemize deductions, the deduction may be claimed in addition to the deduction for state and local income taxes.

IRA and Roth IRA Contributions

For 2009, the contribution limit for traditional IRAs and Roth IRAs is $5,000, or $6,000 for individuals age 50 or older.
The deduction limit for 2009 contributions to a traditional IRA is phased out for active plan participants with modified AGI (MAGI) of over $55,000 and under $65,000 for a single person or head of household, or over $89,000 and under $109,000 for married persons filing jointly. The phaseout range is MAGI of over $166,000 and under $176,000 for a spouse who is not an active plan participant and files jointly with a spouse who is an active plan participant.
The 2009 Roth IRA contribution limit is phased out for a single person or head of household with MAGI over $105,000 and under $120,000, and for married persons filing jointly with MAGI over $166,000 and under $176,000.
The 2010 limits will remain the same.

Health Savings Accounts (HSAs)

Individuals with qualifying high deductible health plan coverage may contribute up to $3,000 to an HSA for 2009 if the coverage is self-only, and $5,950 for family coverage. The limit is increased by $1,000 for HSA owners age 55 or older.

Gift Tax Annual Exclusion

The annual exclusion is $13,000 for gifts made in 2009.

Waiver of Required Minimum Distributions for 2009

Individuals age 70 ½ and older did not have to receive a required minimum distribution for 2009 from their traditional IRA or employer's defined contribution retirement plan. The minimum distributions for 2010 will be required.

Alternative Minimum Tax (AMT)

The AMT exemption for 2009 is $70,950 if married filing jointly or a qualifying widow(er), $46,700 if single or head of household, or $35,475 if married filing separately.

If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.

Securities offered through Prime Capital Services, Inc (PCS). Member FINRA/SIPC Investment Advisory Services offered through Asset & Financial Planning, LTD. (AFP), Gilman Ciocia, Inc., Prime Capital Services, Inc., and Asset & Financial Planning, LTD. are affiliated entities. PRIVACY STATEMENT