Your money might go a little farther this year, thanks to new raised limitations of several common IRS deductions. Use this information to plan your savings and contributions and to take advantage of what good news there is going into 2009.
1. The maximum earnings subject to Social Security tax is now $106,800. The Social Security tax rate remains at 15.3%.
2. The maximum annual wage that someone under the normal retirement age can earn without a reduction of Social Security benefits is raised to $14,160.
3. The SSI COLA is 5.8% for payments beginning January 2009. Welcome relief in Medicare premiums is that these premiums will remain the same in 2009, now at $98.60.
4. The 15% marginal income tax rate begins at $16,700 taxable income for Married Filing Joint (MFJ) and $8,350 for single. The 25% marginal bracket begins at $67,900 MFJ and $33,950 single. The 28% marginal bracket begins at $137,050 MFJ and $82,250 single.
5. The personal exemption for 2004 is now $3,650. The standard deduction for Married Filing Joint (MFJ) is now $11,400 and $5,700 for single filers.
6. The business auto mileage deduction is now .58 cents per mile. In fact, that rate began July 1, 2008.
7. The child tax credit remains $1000 per child.
8. The long-term capital gains tax rate remains 15% if your marginal tax bracket is higher than 15%. It is 5% if your marginal tax bracket is 15% or lower. Qualifying dividends are now generally taxed at the same rate as long-term capital gains.
9. The Traditional IRA deductibility phase-out for MFJ has been raised to $65,000 to $75,000 and to $45,000 to $55,000 for Singles.
10. Eligibility phase out for Roth contribution begins at $105,000 for singles and for MFJ at $166,000. The Traditional and Roth IRA deduction maximums remain at $5000 with $1000 catch-up provision for age 50 and over.
11. The SIMPLE IRA deduction is now $11,500 with a catch-up provision of $2,500 for those 50 and over.
12. The 401K, 457,403(b) and SARSEP maximum contributions are now $16,500 with a catch-up increased from $5,500 to inflation-indexed if you are 50 or over.
13. The SEP IRA and Defined Contribution limits are now $49,000. The maximum salary that can be considered is $245,000.
14. Health Savings account maximum contributions for 2009 are now $5,950 for families and $2,300 for individual plans. Anyone age 55 or older can add an additional catch-up of $1000.
Merra Lee Moffitt, AWMA, CMFC, CFP® spends all day, everyday helping families and business owners reach their financial dreams and goals. She can be found at, 888-920-2030 or by email at email@example.com.