Saturday, October 18, 2008

2009 Inflation Adjustments-Including Section 179

In a bulletin released on Thursday, the IRS announced the 2009 Inflation Adjustments and Expanded Tax Benefits taking effect 1/1/2009. You can read the full text by clicking on the above title. But you guys all know me--let's cut to the chase! What are the 2009 Section 179 deduction limitations?

$133,000 is the maximum deduction allowed on purchases not exceeding $530,000.

That is a reduction of $117,000 compared to the $250,000 deduction allowed for 2008. To date there has been no legislation extending the 50% bonus depreciation deduction through 2009. Looks like 2008 is the year with the best tax incentives for investing heavily in your alpaca business.

Now here is the rest of the release:

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.

The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.

The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.

The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

Information about the pension and retirement plan-related changes can be found in IR-2008-118. Other inflation adjustments are described in Revenue Procedure 2008-66.

The standard mileage rate has not yet been released. We will keep you posted as soon as it is.

Did I tell you this was the most advantageous tax year to invest in your alpaca business?

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