IRA Contribution Limits: 2009 IRA contribution amount is $5,000 with catch up provision of $1,000 for an individual age 50 or older. Allowable contributions to traditional IRAs are always deductible if taxpayer (and spouse, if married) is not an active participant in an employer-maintained retirement plan. If one is not eligible for deductible contribution, Roth IRA should be considered.
The maximum contribution that can be made to a Roth IRA is phased out between $166,000–$176,000 AGI for married and between $105,000–$120,000 for singles. A taxpayer can always make a non-deductible contribution to an IRA if AGI is higher than Roth IRA phase-out range.
First-Time Homebuyer Credit: If you are claiming homebuyer credit, attach a copy of your settlement statement showing all parties’ names and signatures, the property address, contract sales price, and the date of purchase. In most cases, this is your Form HUD-1 Statement. Refer to instructions for Form 5405. Also, this return cannot be e-filed and will have to be mailed in.
Standard Deduction for Property Tax: For tax years beginning in 2008, the Housing Act allows an addition to the standard deduction for property taxes equal to the lesser of the amount paid or $500 ($1,000 for married filing jointly). This provision has been extended to year 2009 also.
New Deduction for Sales Tax on New Auto Purchase: The American Recovery and Reinvestment Act of 2009 provides that for vehicles purchased between February 17, 2009 and December 31, 2009, a taxpayer can deduct as an itemized deduction or as an addition to the standard deduction, sales tax on the purchase of a qualifying new vehicle with gross vehicle weight up to 8,500 pounds. The deduction is limited to the taxes attributable to the first $49,500 of the purchase price. Also, the deduction is phased out ratably for taxpayer with AGI between $125,000 and $135,000 ($250,000 and $260,000 on a joint return
IRS Memo Allows Taxpayer to Deduct Interest on $1.1 Million Mortgage:Taxpayers can generally deduct two types of debt secured by their residences: “acquisition indebtedness,” which is debt that is used to acquire, construct or substantially improve a residence, and “home equity indebtedness,” which is any other debt secured by the home.
Acquisition indebtedness cannot exceed $1 million, and home equity indebtedness cannot exceed $100,000. Now a taxpayer with a mortgage larger than $1 million can treat the first $100,000 in excess of the $1 million limit as home equity indebtedness.
Parveen Maheshwari is a Certified Public Accountant. He can be reached @ 650-340-1400 or email@example.com