Save Money, Prepare for the Upcoming Tax Year
- SECTION 179 maximum deduction decreases to $133,000. Phase-out threshold is $530,000. (It is generally expected that a stimulus law in early 2009 will increase these amounts to the 2008 levels of $250,000 and $800,000.)STANDARD MILEAGE RATE for business driving effective January 1, 2009, is 55¢ a mile. Rate for medical and moving mileage is 24¢ a mile. Rate for charitable driving remains at 14¢ a mile.
- ESTATE TAX top rate remains at 45%, but the exemption amount increases to $3.5 million. The ANNUAL GIFT TAX EXCLUSION increases to $13,000.
- 401(k) maximum salary deferral increases to $16,500 ($22,000 for 50 and older).
- SIMPLE maximum salary deferral increases to $11,500 ($14,000 for 50 and older).
- IRA contribution limit remains at $5,000 ($6,000 for 50 and older).
- KIDDIE TAX threshold increases to $1,900 and applies up to age 19 (up to age 24 for full-time students).
- TRANSPORTATION FRINGE BENEFIT limit increases to $120 for vehicle/transit passes and to $230 for qualified parking.
- SOCIAL SECURITY taxable wage limit increases to $106,800. Retirees under full retirement age can earn up to $14,160 without losing benefits.
- HOPE CREDIT maximum remains at $1,800.
- HSA CONTRIBUTION limit increases to $3,000 for individuals and to $5,950 for families. An additional $1,000 may be contributed by those 55 or older.
Thanks to the late passage in 2008 of AMT patch legislation, the AMT exemption amounts for 2008 are $69,950 for joint filers, $34,975 for couples filing separately, and $46,200 for single taxpayers and heads of household.
Written by Ben Lawler, CPA
CEO & President of ProActive Advisors, Inc.