IRS Publishes Official 2009 Tax Rates, Standard Deduction And Other Key Inflation-Adjusted Amounts updated 1019/08

Rates: 2007 | 2009 | 2010

Overpayment and underpayment interest rates

For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3%. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3% and the overpayment rate is the federal short-term rate plus 2%. The rate for large corporate underpayments is the federal short-term rate plus 5%. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point (0.5%).

The interest rates for overpayments and underpayments for 10/1/08 through 12/31/08:

Rev. Rul. 2008-47new 10/1908

Missouri statutory interest rates can be found at http://dor.mo.gov/tax/intrates.htm new 7/29/09

Standard auto expense mileage rate (cents per mile)

 
  2003 2004 2005 1 9-12/
2005 2		 2006 2007 2008 3 6-12/
2008 4 		2009 5
Business 36¢ 37.5¢ 40.5¢ 48.5¢ 44.5¢ 48.5¢ 50.5¢ 58.5¢ 55¢
Charitable 14¢ 14¢ 14¢ 14¢ 14¢ 14¢ 14¢ 14¢ 14¢
Medical/Moving 12¢ 14¢ 15¢ 15¢ 18¢ 20¢ 19¢ 27¢ 24¢

1 IRS News Release IR-2004-139, 11/17/04. When the 2005 business standard mileage rate of 40.5¢ is used, depreciation will be considered to have been allowed at a rate of 17¢ per mile. updated 11/28/04

2 IRS News Release IR-2005-99, 9/905 new 9/18/05

3 IR 2007-92, Rev. Proc. 2007-70 new 11/28/07

4 IR-2008-82, June 23, 2008, Announcement 2008-63, increases rates for last 6 months of 2008 new 6/23/08

5 IR-2008-131, Rev. Proc 2008-72 new 11/26/08

Fair market values for employer-provided vehicles using the cents-per-mile valuation

IRS corrected 2008 maximum fair market values (FMVs) for employer-provided vehicles using the cents-per-mile valuation are $15,000 for passenger automobiles, and $15,900 for trucks or vans, including minivans and sport-utility vehicles (SUVs) built on a truck chassis (slightly lower than the 2007 FMVs). The originally released 2008 maximum fleet-average vehicle FMVs are unchanged. Announcement 2008-15. new 3/5/08

2009Capital gain tax rates

Holding period Maximum tax rate
12 months or less (short term) 35%
more than 12 months (long term) 15%
Key long term 15% rate exceptions:  
collectibles, such as art work 28%
gain attributable to depreciation on real property 25%
gain that would be taxes at 10% or 15% based on the taxpayers' regular income tax rate  5%

2009 Income Tax Rates

Taxable Income Tax Marginal Rate
(tax on next dollar) 		  Standard
deduction
Married filing joint return and surviving spouses $11,400
Less than $16,700   10%    
$16,700-$67,900 $1,670 + 15%  over $16,700  
$67,900-$137,050 $9,350 + 25%  over $67,900  
$137,050-$208,850 $26,637.50 + 28%  over $137,050  
$208,850-$372,950 $46,741.50 + 33%  over $208,850  
Over $372,950 $100,984.50 + 35%  over $372,950  
Heads of Households $8,350
Less than $11,950   10%    
$11,950-$45,550 $1,195 + 15% over $11,950  
$45,550-$117,450 $6,227.50 + 25% over $45,550  
$117,450-$190,200 $24,215 + 28%  over $117,450  
$190,200-$372,950 $44,585 + 33% over $190,200  
Over $372,950 $104,892.50 + 35%  over $372,950  
Single $5,700
Less than $8,350   10%    
$8,350-$33,950 $835 + 15%  over $8,350  
$33,950-$82,250 $4,675 + 25%  over $33,950  
$82,250-$171,550 $16,750 + 28%  over $82,250  
$171,550-$372,950 $41,754 + 33% over $171,550  
Over $372,950 $108,216 + 35%  over $372,950  
Married Separate $5,700
Less than $8,350   10%    
$8,350-$33,950 $835 + 15% $8,350  
$33,950-$68,525 $4,675 + 25% over $33,950  
$68,525-$104,425 $13,318.75 + 28%  over $68,525  
$104,425-$186,475 $23,370.75 + 33%  over $104,425  
Over $186,475 $50,447.25 + 35%  over $186,475  
Estates and Trusts
less than $2,300   15%    
$2,300-$5,350 $345 + 25% over $2,300  
$5,350-$8,200 $1,107.50 + 28%  over $5,350  
$8,200-$11,150 $1,905.50 + 33% over $8,200  
Over $11,150 $2,879 + 35%  over $11,150  

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $900 or the sum of $300 and the individual's earned income.

Additional standard deduction amounts

The additional standard deduction amounts under § 63(f) for the aged (65 or older) and for the blind are $1,100 for each, increased to $1,400 if also unmarried and not a surviving spouse.

Itemized deduction phase out

The "applicable amount" of adjusted gross income under § 68(b) (above which the amount of otherwise allowable itemized deductions is reduced under § 68) is $166,800 (or $83,400 for a separate return filed by a married individual).

Exemption amount

The $3,650 personal exemption amount under § 151(d), begins to phase out at, and is completely phased out after, the following adjusted gross income amounts:

 

Filing Status Threshold Completely phased out
Married Individuals Filing Joint Returns 
and Surviving Spouse		 $250,200 $372,700
Heads of Households $208,500 $331,000
Unmarried (single) Individuals  $166,800 $289,300
Married Individuals Filing Separately $125,100 $186,350

The exemption amount for taxpayers with adjusted gross income in excess of the maximum phaseout amount is $2,433.

Social Security contribution and benefit base

The Social Security contribution and benefit base for 2009 remuneration and self-employment income is $106,800, and the "old law" contribution and benefit base is $79,200. Also, the domestic employee coverage threshold amount for 2009 has been determined to be $1,700.

"Kiddie tax" – unearned income of minor children taxed as if parent's income

The § 1(g)(4)(A)(ii)(I) amount used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $950. (This amount is the same as the $950 standard deduction amount under § 63(c)(5) for an individual who may be claimed as a dependent by another taxpayer.) A child's gross income must be more than $950 but less than $9,500 for a parent to elect to include a child's gross income in the parent's gross income and for calculating the "kiddie tax" to satisfy that requirement.

For a child to whom the § 1(g) "kiddie tax" applies, the alternative minimum tax exemption amount under § § 55 and 59(j) may not exceed the child's earned income for the taxable year, plus $6,700.

The Small Business and Work Opportunity Tax Act of 2007 (H.R. 2206) expands the kiddie tax to apply to children who are under age 19 or who are full-time students under age 24 (14 in 2005, under 18 in 2006).

Adoption credit

The maximum credit for an adoption of a special needs child is $12,150 (§ 23(a)(1)), and for other adoptions is the amount of qualified adoption expenses up to $12,150 (§ 23(a)(3)). The available adoption credit begins to phase out for taxpayers with modified adjusted gross income exceeding $182,180 and is completely phased out at $222,180 (§ 23(b)(2)(A)). The same limits apply to employer adoption assistance programs under § 137(a)(2) and § 137(b)(1).

Adoption Assistance Programs.

The amount that can be excluded in 2009 under § 137(a)(2) from an employee’s gross income for the adoption of a child with special needs is $12,150. Under § 137(b)(1) the maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $12,150. The amount excludable from an employee’s gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $182,180 and is completely phased out for taxpayers with modified adjusted gross income of $222,180 or more.

Child tax credit

The amount of credit under § 24 that may be refundable is $12,550, § 24(d)(1)(B)(i).

Hope and lifetime learning credits

100% of qualified tuition and related expenses not in excess of $1,200 and 50% of such expenses in excess of $1,200 (§ 25A(b)(1)), but not exceeding $2,400 (maximum $1,800). The amount of your Hope or lifetime learning credit is phased out (gradually reduced) if taxpayer's modified adjusted gross income exceeds $50,000 ($100,000) in determining the reduction under § 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship and Lifetime Learning Credits otherwise allowable under § 25A(a).

Earned income credit (EIC)

See also:

The following amounts are used to determine the earned income credit under § 32(b). To qualify you must work and have "earned income". The "earned income amount" is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The "threshold phase out amount" is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The "completed phase out amount" is the amount of adjusted gross income (or if greater, earned income) at or above which no credit is allowed. If you are married, you must file a joint return to receive the credit. You must be a US citizen or resident alien all year to qualify.

If your earned income credit (EIC) for any year after 1996 was denied (disallowed) or reduced by the IRS, you may need to complete an additional form (8862) to claim the credit for 2007.

Your qualifying child cannot be used by more than than one person. You can choose which person will claim the EIC and all of the following 5 tax benefits based on the qualifying child: child’s exemption; child tax credit; Head of household filing status; credit for child and dependent care expenses; exclusion for dependent care benefits.

To be your qualifying child, a child must be your:

If your child was married at the end of the year, he or she does not meet
the relationship test unless either of these two situations applies to you:

  1. You can claim the child’s exemption, or
  2. The reason you cannot claim the child’s exemption is that you gave that right to your
    child’s other parent under the Special rule for divorced or separated parents,
    described later.

Age Test – Your child must be:

  1. Under age 19 at the end of 2007,
  2. Under age 24 at the end of 2007 and a student, or
  3. Permanently and totally disabled at any time during 2007, regardless of age.

2009

Number of Qualifying Children One Two or More None
Earned Income Amount $8,950 $12,570 $5,970
Maximum Amount of Credit $3,043 $5,028 $457
Threshold Phaseout Amount (Single, Surviving Spouse, or Head of Household) $16,420 $16,420 $7,470
Completed Phase Out Amount (Single, Surviving Spouse, Head of Household) $35,463 $40,295 $13,440
Threshold Phaseout Amount (Married Jointly) $19,540 $19,540 $10,590
Completed Phase Out Amount (Married Joint) $38,583 $43,415 $16,560

The instructions for the Form 1040 series provide tables showing the amount of the earned income credit for each type of taxpayer. Investment income must be $3,100 or less for the year or the EIC is denied. The maximum Advance Earned Income Tax Credit (advance EITC) for tax year 2008 the employer is allowed to provide throughout the year with the employee's pay is $1,712.

§ 179 expense

A taxpayer may elect to expense up to $133,000 (§ 179(b)(1)), reduced (but not below zero) by the the cost of § 179 property placed in service during the 2009 taxable year in excess of $530,000.

Educator expenses deduction

An eligible educator in 2006 can deduct up to $250 of qualified expenses paid in 2006 as an adjustment to gross income, rather than as a miscellaneous itemized deduction. This provision has been extended through tax year 2007. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses. An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted in your educational field. A necessary expense is one that is helpful and appropriate for your profession as an educator. An expense does not have to be required to be considered necessary. Qualified expenses do not include expenses for home schooling or nonathletic supplies for courses in health or physical education.

Eligible Long-Term Care Premiums

For taxable years beginning in 2009, the limitations under § 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows:

2008

Attained Age Before the Close of the Taxable Year Limitation on Premiums
40 or less $320
More than 40 but not more than 50 $600
More than 50 but not more than 60 $1,190
More than 60 but not more than 70 $3,180
More than 70 $3,950

Social Security / Medicare tax new 1/14/07

  Social Security Medicare Total Tax
2009 income limit $_____ none n/a
Employee rate 6.2% 1.45% 7.65%
Employer rate 6.2% 1.45% 7.65%
Self-employed rate 12.4% 2.90% 15.30%

All covered 2009 wages are subject to the Medicare tax.

Transfer tax exemptions and rates (estate and gift) new 2/2/08

Year Estate and GST tax exceptions 1 Gift tax exemptions Highest estate, GST and gift tax rate
2007 $2 million $1 million 45%
2008 $2 million $1 million 45%
2009 $3.5 million $1 million 45%
2010 (repealed) $1 million 35% 3
2011 $1 million 2 $1 million 55% 4

1 Less any gift tax and GST tax exemption, respectively, used during life.

2 The GST tax exemption is adjusted for inflation.

3 Gift tax only, Equal to highest marginal income tax rate, which is currently 35%.

4 Reverts to 2001 rules. The benefits of the graduated estate and gift tax rates and exemptions are phased out for estates and gifts over $10 million.

The first $13,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.

The first $133,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § § 2503 and 2523(i)(2) made during that year.

2008Retirement contribution limits

Plan type Contribution limit Contribution limit for taxpayers 50 and over
Tradition and Roth IRAs $4,000 $5,000
401(k), 403(b), 457 and SARSEP 1 $15,500 $20,000
SIMPLE $10,500 $13,000
SEP and defined contribution Keogh $45,000 $45,000 2

1 Includes Roth versions where applicable

2 Not subject to "catch-up" provisions

For taxable years beginning in 2008, the applicable dollar amount under § 219(g)(3)(B)(i) for taxpayers filing a joint return is $85,000 ($159,000 if the taxpayer’s spouse is not an active participant), for married taxpayers filing separately is $0, and for all other taxpayers is $53,000.

The Roth IRA § 408A(c)(3)(C)(ii)(I) maximum income limit for taxpayers filing a joint return is $159,000, for married taxpayers filing separately (§ 408A(c)(3)(C)(ii)(III)) is $0, and all other taxpayers (§ 408A(c)(3)(C)(ii)(II)) is $101,000.