This page is to be used in conjunction with The Educator's and
Healthcare Income Tax Guide, The State and Local Government Guide,
and The Taxpayer's Guide, for preparing your 2008 federal tax return. As is the case in the
printed tax guides, it is the reader's responsibility to assure that the tax facts are correct and that they apply to your individual situation.
Due to the ongoing nature of Tax Code rulings, Tax Court decisions, new laws,
etc., this page will help keep you up-to-date. We will publish any changes or corrections to the guide on this page. As new information becomes available, we will add it to
this Tax Guide Updates page. Individual page updates are
listed below in numeric order.
Page 2
New in 2009
State & Local Sales Tax – The State and Local Sales Tax
deduction is available for new cars purchased between February
16, 2009 and January 1, 2010. This means if you live in a state
with no sales tax, you can deduct vehicle related fees and taxes
imposed by state or local governments. Phase outs are modified
adjusted income of $125,000 to $135,000 for singles, $250,000 to
$260,000 for joint filers.
Page 3
First Time Homebuyer Credit
Congress renewed the tax credit for first time home buyers. The
credit is up to $8,000. In addition, they added a credit of up
to $6,500 for new home purchases by individuals who have owned a
home for five out of the last eight years. To qualify, buyers
must sign a contract by April 30, 2010 and close by June 30,
2010. The maximum purchase price is $800,000. Phase out is
annual income between $225,000-245,000 for joint filers,
$125,000-145,000 for singles.
You can file an amended 2008 return to claim the credit for a
2009 home purchased before December 1, 2009.
To claim the credit, attach a copy of your settlement statement
to your tax return.
Page 6
IRS information can now be found on You Tube and iTunes.
Page 9
Per Diem Rates
Per diem rates were raised, effective October 1, 2009:
Lodging, meals and incidentals: $163 per day
Lodging, meals and incidentals in high cost areas: $258 per day
Meals and incidentals: $ 65 per day
Incidentals only: $ 5 per day
Page 16
Energy Credits
IRS has approved tax credits for street-legal electric golf
carts ranging between $4,000-6,000. Base credit is $2,500 plus
an amount dependent on battery capacity. Manufacturer’s credit
certification determines the credit.
IRS privately rules, the 30% solar energy property credit can be
used for solar panels and the cost of reflective roof coating,
if applied in 2009.
IRS privately ruled insulated vinyl siding is not eligible for
the 30% tax credit because even though it is energy efficient,
it provides structural support for the house.
Page 29
401(k)
The IRS has ruled that the value of an employee’s unused leave
can be deposited to a 401(k) plan rather than be lost or taxed
as a cash payout. The amount cannot exceed the contribution
limit. (Rev Rul 2009-31)
IRS has privately ruled that after-tax contributions to a 401(k)
can be converted to a Roth IRA tax-free.
IRA
If you convert your regular IRA to a Roth IRA, you will be hit
with a 10% penalty if you take a withdrawal in the first five
years unless you are 59 ½ years old, disabled or take
substantially equal distributions.
Page 37
Passive Loss Rules
Tax Court says casualty losses will not be counted toward the
$25,000 limit on deductible passive losses. (Agosto, TC Summ.
Op. 2009-191)
Page 40
Medical
IRS privately ruled that a person in a long-term care facility
for medical reasons can deduct meals and lodging as medical
expenses.
The Tax Court ruled that a sex change operation was a medical
expense because the man was diagnosed with a gender identity
disorder, and as a result treated a disease. The cost of breast
enlargement was not deductible. (O’Donnanhain, 134 TC No. 4)
The following are additions to the tax guide and are not
currently found on a certain page:
FICA Taxes
IRS privately ruled FICA must be withheld on grant payments to
postdoctoral fellows as they are treated as employees of the
university they attend. No FICA is due on National Research
Service grants.
Tax Court
Tax Court ruled a psychological assistant with a master’s degree
could not deduct her doctoral degree as an educational expense
because it qualified her for a new business. She became licensed
as a psychologist so she could supervise those who had jobs
comparable to her old one. (Ortega, TC Summ. Op. 2009-120)
Tax Court ruled a nursing quality control coordinator could
deduct the cost of an MBA degree because it improved her current
job skills and she continued in the same line of work.
(Singleton-Clarke, TC Summ. Op. 2009-182)
Lodging, meals and incidentals: $163 per day
