It’s that time of year to get serious about tax planning. With nine weeks before year-end, time is running short to reduce your tax burden for 2009. I’ll rapid fire tax tips over the next few weeks, so check in often.
Today, we will discuss the additions to the standard deduction.
There are three things that will increase your standard deduction for 2009. 1.) Property taxes up to $500, $1,000 for married filing joint returns. 2.) Casualty loses in a federal disaster area. 3.) Sales tax on a new vehicle purchased after February 16, 2009 up to a $49,500 purchase price. Multiple vehicles qualify. Phase-out begins at $125,000 for singles, $250,000 for joint filers.
Issues to keep in mind: Alternative Minimum Tax and phase-outs. Normal tax planning goes out the window if you pay AMT. I’ll cover AMT in another post. Your deduction gets reduced (phased-out) after your AGI exceeds a certain level. Note: The personal exemption and itemized deduction phase-outs disappear in 2010, something to consider when building your tax plan.
Contributions to charity, elective medical and state taxes can be planned to take full advantage of the new rules, allowing for maximum tax savings between the standard deduction and itemization. By bunching deductions every other year, it is possible to itemize some years, taking the standard deduction in alternate years.
Any tax plan must consider future tax years. Keep 2010 taxes in mind when planning.
With all the new tax changes this year, I recommend you sit down with your friendly accountant and plan your tax strategy. The tax savings should be well worth your time.