New Legislation has Immediate Impacts

The Making Work Pay Credit provides for a $400 credit per person/$800 per family.  Of course, there are phaseouts ($75k individial/$150k Married filing joint.)  But, the new tax tables have been released and people should begin seeing a $10 to $20 per paycheck difference.

There will also be a $250 economic recovery payment for social security recipients (with some limitations.)  The payments will basically be automatic and should start within the next three months.

The First Time Homebuyer credit has been increased to $8,000 for residences purchased between 1/1/09 and 12/1/09.  The repayment requirement has been waived for those homes and you can still elect to take the credit on your 2008 tax return.  Again, there are limitations so make sure you check with your tax professional.

For 2009 only (at this point), the first $2,400 of unemployment benefits are excluded from income.

The Hope Credit has been renamed The American Opportunity Credit.  Course Materials have been added to the eligible expenses.  The credit has also been increased from $1,800 to $2,500 for 2009 and 2010.  (100% of the first $2,000 and 25% of the next $2,000.)

Computer and internet related expenses have been added as eligible expenses under a 529 college savings plan.

Net Operating Loss carryback periods have been increased.  An eligible small business can elect a three, four or five year carryback - rather than simply a two year carryback.

The Energy Credit used to have a lifetime cap of $500 ($200 for windows.)  It is now a 30% credit with an overall $1,500 cap and has been extended through 2010.

This is only the beginning, there are also provisions for lower estimated tax payments, COBRA enrollment, new groups added to the Work Opportunity Credit.

Arizona Military Family Relief Fund Tax Credit

This is a fund that has been set up to help families of Arizona military who have been killed in action.  Families can apply for assistance to ease financial hardships.  Donations to the fund are eligible for an Arizona tax credit ($200/single and $400/married filing joint.)  Download the brochure here.

Arizona’s New 529 College Savings Credit

In addition to providing tax free earnings for education, investments in a 529 college savings plan for your children are now eligible for a subtraction from Arizona gross income. Only current year contributions are eligible. The maximum subtraction is $750 for single filers and $1,500 for married filing joint. The current law is good for tax years beginning in 2008 through 2012.

Standard Mileage Rate

For 2009, the standard mileage rate is 55 cents per mile for business miles.

Social Security Wage Limits for 2009

Contracting Tax Factors

The following rates are factored tax rates for Contracting in the various locations. The rates are factored by taking 65% of the existing rate thus allowing for the 35% standard deduction.