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IR-2009-2, Jan. 6, 2009
The Internal Revenue Service today kicked off the 2009 tax filing season by announcing a number of new steps to help financially distressed taxpayers maximize their refunds and speed payments while providing additional help to people struggling to meet their tax obligations.
Maximizing Refunds and Speeding Refund Delivery
This filing season, there are several steps taxpayers can take to maximize their refunds and speed the delivery of money from the IRS.
Taxpayers should look into the numerous tax breaks available and take every credit, deduction and exclusion for which they qualify. People who had less income in 2008 could find they qualify for credits for which they previously did not qualify. And there are several new benefits this year:
Those who bought a principal residence recently or are considering buying one should take note. This unique credit of up to $7,500 works much like a 15-year interest-free loan. A special page on IRS.gov has more details and answers to common questions.
This credit is figured like last year's Economic Stimulus Payment except that Recovery Rebate Credit amounts are based on tax year 2008 instead of 2007. Most people already received their full benefit in the form of the Economic Stimulus Payment. However, a taxpayer may qualify for the Recovery Rebate Credit, if, for example, he or she did not get an Economic Stimulus Payment, had a child in 2008 or had a change in income level. If you receive this credit, it will be included in your refund and will not be issued as a separate payment. See the Form 1040 Instructions, Fact Sheet 2009-3 or the information center on IRS.gov for details.
Taxpayers can claim an additional standard deduction, based on the state or local real estate taxes paid in 2008. The maximum deduction is $500, or $1,000 for joint filers.
For most homeowners, these are now tax-free. Eligible homeowners can exclude debt forgiven on their principal residence if the balance of the loan was less than $2 million. The limit is $1 million for a married person filing a separate return. See Form 982 and its instructions for details.
For more references you can visit these sites:
IRS
CalTax.com
Payroll TaxesSocial Security tax applies to employee wages up to $106,800 and the rate is 6.20.
There is no limit on the amount of wages subject to Medicare tax and the rate remains at 1.45%
You no longer need to wonder what to do with Form
W-4, as employers are no longer required to routinely send copies of Form W-4 Form claiming more than 10 allowances and
certain “exempt” W-4 Forms to the IRS. However, W-4 Forms should be kept on file as they are still
subject to review by the IRS.
State of California EDD announced the UI rate schedule in effect for 2009 to be scheduled as “F+.”
This is schedule F plus a 15 percent emergency surcharge, rounded to the nearest tenth. Schedule “F+”
provides for UI contribution rates from 1.5% to 6.2%.
The ETT rate for 2009 is the same as it was last year, 0.1%. The UI and ETT taxable
wage limit did not change. It will remain at $7,000 per employee per calendar year.
The SDI rate for 2009 is 1.1%. The taxable
wage limit is $86,698 for each employee per calendar year. The maximum amount to be withheld is $953.68.
The beginning of a
New Year is also a good time to review your retirement plans, employee medical and dental plans, and any other employee
paid supplemental benefit plans.
Retirement Plans for 2009
The following are the maximum annual retirement
plans contribution for 2007:
Payroll Deduction IRA – Up to $5,000. Catch-up
contributions of up to $1,000 for participant over age 50.
Defined
Contribution Plan – Calculated up to 25% of compensation or a maximum of $49,000.
Simple IRA – Employee is allowed a contribution
up to $11,500 and a catch-up contribution up to $2,500 for an employees age 50 and older.
An employer must either
match the employee contributions up to 3% of compensation or makes a non-elective contribution of 2% of compensation.
401(k) – An employee is allowed a deferral
of up to $16,500 and a catch-up contribution of $5,500.
Employer/employee combined contribution per participant is
the lesser of 100% of compensation or $49,000 and a catch-up contribution of $5,500.
Defined Benefit – An employer must contribute an actuarially determined
minimum funding amount.
Non-Qualified Plan –
No limit on contributions.
Maximum compensation on which
pension plan contributions can be made is $245,000 for 2009.
Mileage
Allowance
The
standard business mileage rate for 2009 is $0.55 per mile. The charitable business mileage rate for 2009 is $0.14
per mile; while the medical/moving mileage rate is $0.24 per mile.
