It is critical to stay on top of the current tax rules so that you can take advantage of every way to save money. Below are the tax limits and rules.
- For the 2009 and 2010 tax years, the personal exemption amount is $3,650. You will claim a personal exemption for yourself, your spouse, and each of your dependents. For 2009, the exemption is phased out for taxpayers with an AGI over $166,800 (or $250,200 if married filing jointly); for 2010 the personal exemption phase out is repealed.
- The standard deductions for both 2009 and 2010 are $5,700 for single individuals, and $11,400 for married couples. When your allowable deductions exceed these limits, you will benefit from itemizing. For 2009, itemized deductions are reduced by 3% of a taxpayer’s of AGI in excess of $166,800, and in 2010 this limit has been repealed.
- The maximum contibution into an IRA is $5,000 per individual for 2009 and 2010, with $1,000 catch-up if you’re 50 or older. Remember, you have until April 15, 2010 to contribute to your IRA for 2009.
- Annual Gift Tax Exclusion amount is $13,000 in 2009 and 2010.
- Required Minimum Distributions (RMDs) from IRAs, 401(k), 403(b), Profit-Sharing, Money Purchase Pension, and certain 457 retirement plans are re-instated for 2010, after being waived for the 2009 tax year. If you turned 70 1/2 in 2009, you have until December 31, 2010 to take your first distribution.
Good Luck with your Taxes.
