Newsletter May 2009


Changes to Tax laws that might affect individuals, starting 2009:
Standard mileage rate. The standard mileage rate for the cost of operating your car, van, pickup, or panel truck in 2009 is 55 cents a mile for all business miles.
Kiddie Tax. The amount of taxable investment income a child can have without it being subject to tax at the parent's rate has increased to $1,900 for 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.
  • 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 parent of 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.
Child tax credit.For 2009, the amount your earned income must exceed to claim the additional child tax credit is reduced to $3,000.
Deduction for Credit or Debit Card Convenience Fees. If you pay your income tax (including estimated tax payments) by credit or debit card, you can deduct the convenience fee you are charged by the card processor to pay using your credit or debit card
Deduction for Sales and Excise Taxes Imposed on Purchase of New Motor Vehicles. In 2009, you can deduct the state or local sales and excise taxes imposed on the purchase of a qualified motor vehicle after February 16, 2009, and before January 1, 2010. A qualified motor vehicle includes a passenger automobile, light truck, or motorcycle, the original use of which begins with that purchaser and that has a gross vehicle weight rating of 8,500 pounds or less.  A qualified motor vehicle also includes a motor home, the original use of which begins with that purchaser
For tax years 2009 and 2010, the following changes have been made to the Hope Credit.The Hope Credit can now be claimed for the first four years of post-secondary education
First-Time Homebuyer Credit. You may be able to claim the credit if:
  • You purchased your main home in the United States after April 8, 2008, and before December 1, 2009, and
  • You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
If you constructed your main home, you are treated as having purchased it on the date you first occupied it.
Estate Tax Exemption. In 2009, the $2,000,000 federal estate tax exemption rises to $3,500,000.
Credit for Residential Energy-efficient Property. The $2,000 maximum credit for the installation of solar water heating equipment, photovoltaic or fuel cell equipment in your primary residence or a second home expires after 2008.
Georgia First Home buyer’s credit
Governor Perdue signed HB 261 creating a Georgia income tax credit up for the purchase of an eligible single-family residence.  The credit is limited to eligible purchases made between June 1, 2009 and November 30, 2009.  The credit created by HB 261 can be claimed one time per taxpayer and is completely independent of the federal first time homebuyer tax credit.  The final version of the bill contains the GAR amendment to clarify condominiums and residences occupied at the time of sale are eligible for the credit.  In addition, eligible single family residences include 1) new single family residences; 2) previously occupied residences that were for sale prior to the May 11, 2009 and are still for sale after May 11, 2009; 3) owner-occupied residences with respect to which the owner's acquisition debt is in default on or before March 1, 2009; and 4) residences where a foreclosure has taken place and are owned by the mortgagor or the mortgagor's agent