While nobody knows what will happen to taxes next year, most taxpayers can count on getting at least a small dose of relief because of inflation adjustments. But millions of high-income workers will get hit by higher Social Security taxes.
Because of annual inflation adjustments, many tax provisions, such as the basic standard deduction and personal-exemption amounts, increase each year. For example, the basic standard deduction will rise to $11,400 for married couples filing jointly, up $500 from 2008. For most singles and married people filing separately, it will be $5,700, up $250. For someone who qualifies as head of household, it will be $8,350, up $350. There are additional amounts for those age 65 or over, and for the blind.
These and other numbers for 2009 will show up on federal income-tax returns for 2009, to be filed in 2010.
Tax-bracket income thresholds will rise for each filing status. For joint filers, for example, the taxable-income threshold separating the 15% bracket from the 25% bracket will be $67,900, up from $65,100 in 2008, the Internal Revenue Service said.
In another major change, the annual gift-tax exclusion will increase in 2009 to $13,000 from $12,000 this year. That means you will be able to give away as much as $13,000 next year to anyone you wish -- and to each of as many people as you want -- without having to worry about taxes.
Moreover, you can pay for someone's tuition or medical bills, and the payments won't count toward the annual exclusion. Just be sure to make those payments directly to the educational or medical institution. This annual exclusion can be an important part of estate planning for many wealthy people.
Separately, the maximum amount of earnings subject to the Social Security tax in 2009 will rise to $106,800 from $102,000 in 2008. Of the estimated 164 million workers who will pay Social Security taxes next year, about 11 million will pay higher taxes because of this increase, the Social Security Administration says.
NOVEMBER 9, 2008
Tom Herman's Tax Tip
source: wsj
http://online.wsj.com/article/SB122619877179711425.html
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Rory Vanucchi
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