2009 Inflation Adjustments Widen Tax Brakets and Expand Tax Benefits

The IRS announced on October 16, 2008 the new personal expetion and standard deduction amounts for 2009.  This will rise and tax brackets will widen because of inflation adjustments.

The key changes that will affect 2009 tax returns include the following:

* The new personal and dependency expemption amounts will be $3,650, up $150 from 2008.

* The new standard decution for married coupoles is $11,400 for a joint return. This is up $500. For singles and married filing separately it will be $5,700, up $250. For heads of household it will be $8,350 for heads of household, up $350.

* The tax-bracket thresholds will also be increasing for each filing status.

* The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.

* The annual gift exclusion is also up for 2009. It will be $13,000, up from $12,000 in 2008.


About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.