Milton GugenheimWhat’s New for Your 2009 Federal Income Taxes
by Milton Gugenheim

The following are the new/changes for Tax Year 2009. Go down the list for ones specific to your tax situation. Obtained specifics from publications at the IRS. Call, toll free,  1-800-929-3676 or internet at– a friendly and useful site. (Click on the upper left corner on “Form and Publications” to find and down load your publication).

  1. Makework credit - up to $400 ($800 for Married Filling Joint MFJ) on earned income. If the person is on Social Security or a government pension, the maximum is $150. Schedule M.
  2. Unemployed compensation - The first $2400 is not taxed.
  3. Education credit – Hope Credit is now called American Opportunity Education Credit. The coverage is now for four years and up to $2500 credit.
  4. Motor vehicle tax – For a car purchased after February 16, 2009. The tax is put on Schedule L for persons who do not use Schedule A
  5. Qualified child definition – See Publication 17 (Pub 17) chapters 3, 21, 34 and 36, or Form 1040 Instructions (Inst 1040) New requirements
  6. Earned income credit (EIC) – The change includes a third child in some cases. Details on maximum income levels, etc. See Pub 17, chapter 35 or Inst 1040.
  7. Divorced or Separated Parents – new rules for claiming a noncustodial child.
    See Pub 17, Chapter 3
  8. Child invested income - not subjected to parent’s tax rate with invested income under $1900.
  9. Personal casualty or theft loss – limit is over $500. This is addition to 10% of Adjusted Gross Income (AGI) limit that generally applies to the net loss.
  10. First home or replacement homebuyer credit –If home is bought after 2008 and no later the April 30, 2010. Credit is $8,000 max. Persons not qualified as “first time homebuyer” credit up to $6,500. Purchases made 2010 can claim credit on 2009 0r 2010 tax returns. There income limits. See Pub 17 chapter 17 for requirements.
  11. Standard mileage rate for 2009 is 55 cents per mile. Medical travel is 24 cents.
  12. Electric vehicle credit – See Pub 17, chapter 37 for details.
  13. Credit for nonbusiness energy saving item – Stoves, refrigerator, windows, heaters, AC, etc. You will receive a manufacturers’ certificate when the qualified item is purchased. See Pub 17, chapter 37
  14. Retirement saving accounts (IRA and Roth):
    Traditional IRA – modified adjusted gross income (AGI) has raised it to a maximum of $65,000 (single) or $109,000 MFJ Roth IRA – limit has been raised to $120,000 ($176,000 MFJ) modified AGI
    under certain conditions. See Pub 17, chapter 17 or Publication 590.
  15. Retired savings contribution credit – The limit has been raised to $27,000 single ($41,625 MFJ)
  16. Standard deduction is $3650 for each exemption (Income limit is $166,800 in addition, reduction is in effect).
  17. Maximum Social Security Tax for Self Employed – is now $106,800 (6.2%) Medicare is taxed on all income. (1.45%)

Note: Form 1040 Instructions contain much of this same information.

New for 2010 Income Tax

  1. EIC - income credit limits have been raised
  2. Personal casualty or theft loss - reduced to $100 vs. $500.
  3. IRA deduction increased for a person in a qualified retirement plan.
  4. Roth IRA income limits – raised to $120,000, single ($177,000 MFJ)
  5. Conversion to Roth IRA – no income limit required in 2010. Will be included in equal amounts in 2011 and 2012 income, or full amount in 2010 income.
  6. Mileage is 50 cents per mile. Others, no change.
  7. Expiring tax benefits:
    - Deduction for education expense in figuring AGI.
    - Tuition and fees deduction to AGI.
    - State income tax or local sales tax.
    - ax on a motor vehicle (Schedule L in 2009)
    - Unemployment compensation exclusion of $2,400

Note: Subject to changes by Congress.

Milton Gugenheim is a HAL-PC member and has been an AARP Tax Aide Instructor and Local Coordinator for over eighteen years. He may be contacted at
Editor’s notice: This article does not constitute tax advice and is presented for informational use only. For more complex questions consult a tax accountant or lawyer. Note: Even the IRS will not guarantee its own advice.