2009 Tax Changes -You Should Know How They Work

A side note for you. If you choose help, be sure you use a competent company or person to help you. Check over your own taxes prior to sending off final copies.

The following information is just the tip of the iceberg, but may help you get started.

The dependency exemption has increased by $150 per person this year. The value is up to $3,650 that you can take for yourself and an additional exemption for every eligible dependent. If you are copying from last year's form, be sure to make needed changes.

The basic standard deduction has been increased for 2009. The standard deduction for married couples filing a joint return is $11,400. This is $500 more than last year. For single filers

The home buyer tax credit has been expanded. The first-time home buyer's credit was increased to $8,000 in 2009 and is available for purchases made between January 1, 2009 and May 1 2010. For purchases after November 6,2009, no credit is allowed if the purchase price is more than $800,000.

The recent extension of the credit that kicked in on November 6, allows homeowners to be eligible for a reduced $6,500 tax credit if they buy a home. {There are also income limits for higher earners.]

If you are claiming this tax credit on your 2009 return, the IRS recently released a new form that you must include - Form 5405. This form requires additional documentation, such as a signed copy of a HUD - 1 settlement statement and other documents. The IRS will not begin processing the new forms until mid-February. They were instituted to crack down on fraud. Those who are claiming the credit may see their refunds take several additional weeks.

The child tax credit is worth $1,000 for each qualifying child who is under 17 at the end of 2009 and who qualifies as a dependent.

The Child Tax Credit can be taken in addition to the child's dependency exemption. This credit remains in effect through 2010, then it will decrease to $500 per qualifying child.

Note that for 2009, the child credit begins to phase out when modified adjusted gross income
The credit is reduced by $50 for each $1,000 or more, of modified AGI above these numbers.

Because many taxpayers are involved with home-buying, have children and need to know their own exemptions, these beginning pieces of information seemed they would help the most people. Even these simple changes may sound very complicated to the average taxpayer. Again, take time to learn and process the tax changes and if you choose a tax preparer, be ready to ask some questions before signing the completed return.