2009 Inflation Adjustments Widen Tax Brackets and Expand Tax Benefits

IR-2008-117, Oct. 16, 2008
WASHINGTON - For 2009, personal exemptions and standard deductions will rise and tax brackets will widen because of inflation adjustments announced today by the Internal Revenue Service.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• 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 rises to $13,000, up from $12,000 in 2008.

Stimulus Payments - What You Need to Know

Updated Oct. 28, 2008
En Español: Pagos de Estímulo Económico

If you missed the Oct. 15 deadline for filing an income tax return for a economic stimulus payment, don't worry. You can receive a payment in 2009 by filing an income tax return when the filing season opens in January. The IRS will have more information shortly.

Also, if you filed a tax return for an economic stimulus payment in 2008 and have not yet received a payment, check out

If You Didn't File for a Stimulus Payment
If you didn't file for an economic stimulus payment in 2008 because you weren't sure you were eligible, you may be able to file for a payment in 2009. Find out more if you:

Receive Social Security retirement or disability benefits
Receive Veterans Affairs pension, disability or survivor's benefits
Receive Tier 1 Railroad Retirement benefits
Find Out if You're Eligible
You are eligible if:

You or your family has at least $3,000 in qualifying income from, or in combination with, Social Security benefits, Veterans Affairs benefits, Railroad Retirement benefits and earned income. Supplemental Security Income (SSI) does not count as qualifying income for the stimulus payment.
You and any family members listed on your tax return have valid Social Security numbers.
You are not a dependent or eligible to be a dependent on someone else’s federal tax return. (The same must be true of any family members claimed on your return.)

Contact Lupe Ruiz to e-file today. (619) 425-9388

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