DAT Financial & Tax Service

2009 Important Tax Changes

Making Work Pay Credit

For 2009 and 2010, the Making Work Pay credit allows a dollar for dollar tax reduction equal to 6.2 per cent of wages up to a maximum credit of $400 for single filers and $800 for joint returns. For those with modified AGI over $75,000 for singles and $150,000 for joint returns, the credit will be reduced by 2 per cent of income in excess of these limits. Other limitations disallow the credit for non-resident aliens and dependents claimed on another taxpayer's return. We'll be able to calculate any eligible credit to ensure you get the maximum credit available. Most wage earners already received the benefits of this credit through adjustments in withholding tax during 2009.

Deduction for Sales Tax on New Car Purchases

If you purchased a new car, light truck, motor home or motorcycle between February 18 and December 31, 2009, you can deduct the sales tax on the first $49,500 of the purchase price. The deduction is phased out for married taxpayers filing jointly with modified AGI between $250,000 and $260,000 and for all other taxpayers between $125,000 and $135,000.

The special deduction is available whether or not you itemize your deductions. If you don't itemize, there is a way to add the sales tax to your standard deduction on your 2009 return.

Unemployment Compensation Partial Exclusion from Income

If you received unemployment compensation in 2009, up to $2,400 of benefits can be excluded from taxable income. This is a temporary provision for 2009 only.

Electric Vehicle Credit

There are two credits available for electric car purchases, depending on the vehicle size and battery capacity. The Plug-in Electric Drive Vehicle Credit of $2,500 to $7,500 is for full-size vehicles purchased after December 31, 2009. For low-speed or two- and three-wheel electric vehicles purchased after February 17, 2009 and before January 1, 2012, the Plug-in Electric Vehicle Credit is worth 10 per cent of the cost of the vehicle, up to a maximum credit of $2,500. For either credit, vehicles must meet certain sizes, weights and battery requirements.

Hybrid Vehicle Credits

A complete list of available hybrids and their credits can be found at:

http://www.fueleconomy.gov/feg/tax_hybrid.shtml

Contact Us About Our Tax Consulting Services

Tax Checklist Tax Organizer 2009 Tax Year Newsletter Driving Directions to DAT Income Tax Tips Home Buyer Tax Credits for 2009 and 2010 Business income/expenses Education tax breaks E-File Energy tax credits Getting organized for tax time Income tax brackets, deductions and phaseout charts Income tax calendar Investments and capital gains/losses Non-cash donations Property Tax Reductions Real estate and mortgages Retirement and pensions Roth IRA conversions Year-end tax planning Links Privacy Notification Contact Us About Tax And Financial Consulting Home