2009 Tax Administration News
October 17, 2008
IRS Finalizes Tax Year 2009 Inflation Adjustments
Among the tax code provisions that must be adjusted annually for inflation are personal exemptions and standard deductions. Rev. Proc. 2008-66 provides the full details. - Personal exemptions will increase $150, to $3650
- Standard deductions for MFJ taxpayers will increase $500, to $11,400
- Standard deductions for single and MFS taxpayers will increase $250, to $5,700
- Standard deductions for HoH taxpayers will increase $350, to $8,350
- The annual gift tax exclusion will increase $1,000, to $13,000
- The maximum EITC for families with two or more children will increase $204, to $5,028, while the income limit for the credit for MFJ filers with more than one child will be $43,415
- The foreign earned income exclusion will increase to $91,400
Additionally, the rev. proc. presents the tax brackets for 2009. For single taxpayers, the brackets fall out as follows: - Taxable income up to $8,350 = 10%
- Taxable income over $8,350 to $33,950 = 15%
- Taxable income over $33,950 to $82,250 = 25%
- Taxable income over $82,250 to $171,550 = 28%
- Taxable income over $171,550 to $372,950 = 33%
- Taxable income over $372,950 = 35%
Accordingly, the brackets for MFJ are: - Taxable income up to $16,700 = 10%
- Taxable income over $16,700 to $67,900 = 15%
- Taxable income over $67,900 to $137,050 = 25%
- Taxable income over $137,050 to $208,850 = 28%
- Taxable income over $208,850 to $372,950 = 33%
- Taxable income over $372,950 = 35%
IRS Releases 2009 Pension Plan Limitations
In a press release, IRS announced the inflation adjustments for 2009. While the list of adjustments is lengthy, below are the following highlights: - The limitation under §402(g)(1) on the exclusion for elective deferrals in §402(g)(3) is increased from $15,500 to $16,500 (this limitation affects deferrals to §401(k) plans and the federal government's Thrift Savings Plan, among other plans, and
- The dollar limitation under §414(v)(2)(B)(i) for catch up contributions to an applicable employer plan (other than a §401(k)(11) or §408(p) plan) for individuals aged 50 or over is increased to $5,500 from $5,000.
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