Tax Tips

class tax cuts to stimulate the economy.

Some of those already in place are as follows:

• If you are 70 ½ years old or older, you can skip mandatory payouts from your retirement plans without penalty in 2009, should you decide to do so.

• The maximum 401K contribution you can make to your employer plan is $16,500 for those born after 1960 and $22,000 for those born before 1960. This is good news. Times are tough, but the more you can contribute to your 401K plan every year, the better off you will be later on.

• The estate tax exemption jumps to $3,500,000 in 2009, which is up from $2,000,000 in 2008.  This means that an estate worth less than $3,500,000 will owe no estate taxes in 2009. Any value in excess of $3,500,000 is taxed at 45%.

• The annual gift tax exclusion rises to $13,000 per donee in 2009.  This means that you and your spouse, if married, can give $13,000 each to as many individuals as you want without any gift tax ramifications.

• The deductibility of long-term care premiums has increased to $3,980 for those 71 or older, $3,180 for those 61 to 70, $1,190 for those 51 to 60, and $600 for those 41 to 50.

• The adoption tax credit also goes up again. In 2009, the credit can be taken on an amount up to $12,150 of adoption costs. Adoptions of special needs children get the full $12,150 credit, even if the adoption costs are less than $12,150.

My next two or three “Tax Tips for IBOs” will focus on additional changes to be made.  Be sure to check if any of these changes affect you personally.

Joe

Learn more about Joe DePetris, Jr., and IBO tax return preparation and tax issues at IBO Bookkeeping 101.

Find more Tax Tips for IBOs from Joe DePetris, Jr., CPA.

This article is provided as an educational resource for your guidance, and is strictly informational. It does not constitute legal, accounting, or other professional counsel. Nothing included herein implies a recommendation by the author, the IBOA International, or Amway Global, of any course or method of regulatory compliance. Readers and users who intend to take, or refrain from taking, any action based on information contained herein should first consult with their qualified tax advisor, preferably a C.P.A., or appropriate regulatory authorities.