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Here's the latest edition of Maco & Associates' newsletter, News You Can Use, which brings tax issues to your attention year-round. As tax season swings into full gear, we want to
update you on some credits that may apply to you this year.
|IRAs - Deductibility & Income Thresholds...|
For those of you wondering about the
contribution limits for your traditional or Roth IRA, the limit for 2009
is $5,000 or the amount of your taxable compensation (whichever is
. If you are over 50, then
your contribution limit is $6,000. The
same limits will apply for 2010, in case you're starting to plan your contributions for this year. For a table that
compute your contribution and deduction limits for your Roth IRA, click here
Also, if you're considering a switch from a traditional IRA to a Roth IRA, check out this article from our blog for more information.
|Making Work Pay Credit...|
To earn back some of the taxes taken
out of your income, take advantage of a temporary tax credit available for years
2009 and 2010! This credit is for up to
6.2% of your earned income
, with a maximum of $400 per individual
or $800 for working married couples
. Other details include:
- The income
phase-out begins at $75,000 for individuals
income can be from wages or self-employment
credits (such as Economic Recovery Payments) can reduce the amount of this
- You cannot receive the credit if you are claimed by someone else
The Making Work Pay credit took effect in July 2009, so you may have
noticed relief - not in a lump sum, but in smaller withholdings on your
paychecks. If this applies to you, then
you may not receive the credit on your tax return, as it has already been
applied to your paycheck. In some cases,
employees may end up paying a small amount rather than getting a refund. If you wind up owing tax because too little was taken out of your paychecks during 2009, you may qualify for special relief on a penalty that sometimes applies.
To claim this credit on your 2009 return, you must determine
if you have already received the credit throughout the year. For those who are filling a 1040, you will use
Schedule M to determine your credit amount. Those filling a 1040-EZ should
use the worksheet on the back to determine the amount you put on line #8.
For more details, visit the IRS' website.
|American Opportunity Credit...|
The new American Opportunity Credit
is an extension of the Hope Credit from 2008. The changes make the credit more accessible to parents by increasing the
phase-out amounts. For 2009 and 2010, the
income phase-out will begin at $80,000 for individuals and $160,000 for married couples filling
. The expenses that the credit
covers will now include required course materials, like all those expensive
textbooks! The credit itself is also increased
to a maximum of $2,500 per student annually
and can be applied for 4 years of
post-secondary education, an increase from only 2 years!
Click here for frequently asked questions on the IRS website.
If you have more questions about paying for college or
applying for financial aid, visit our website.
- Maco & Associates
For helpful tax information year-round, visit our blog, where we provide information about tax deductible contributions (especially for those who
need help in Haiti!), appliance rebate credits, and obscure credits, like those for pet owners!
And don't forget to check the Resources section of our website, which
is loaded with helpful information, like links to refund tracking services, IRS
forms, and tax calculators!
As always, we are here year-round to help you make sense of the numbers. Call or email us anytime: 610-489-7215 or firstname.lastname@example.org