1. Two year extension of reduced capital gain/dividend rates - through 2010.
2. The Sec. 179 expense limitation remains at $250,000 for Federal and $25,000 fpr Wisconsin. If you are actively engaged in farming the deduction in Wisconsin is $120,000.
3. AMT exemption increased from $69,950 to $70,950 for married filing joint and from $46,200 to $46,700 for single taxpayers.
4. "Kiddie" tax will apply to children under the age of 18 (Unearned income greater than $1,900).
5. "Cash for clunkers" is not income to the recipient.
6. Roth Conversions after 2009 modified AGI of $100,000 eliminated. Conversion in 2010 the tax can be spread over two years. (2011 and 2012) Wisconsin as of this date has not adopted the Federal change. Please contact our office if you are thinking about a Roth Conversion.
7. Deductions for sales tax, educators expenses, and tuition and fees have been extended for the 2009 year.
8. For 2008,2009, and 2010 only, the cost of one year's mortgage insurance for a qualifed personal residence is treated a qualifed residence interest subject to phase out based on income.
9. Prohibits deductions for "cash contributions" unless the taxpayer has a bank record or documentation from the charity.
10. On your Wisconsin state tax return for taxable years beginning in 2008 and thereafter, none of your social security benefits is taxable.
11. The standard mileage rate for 2009 is 55 cents per mile and decreases to 50 cents per mile in 2010.
12. Wisconsin estate tax is gone for decedents that pass away after December 31, 2007.
13. First-time homebuyer credit and a property tax deduction for non-itemizers ($500) became law in 2008 and has been extended into 2009 and 2010.
14. WARNING TO TAXPAYERS - THE IRS DOES NOT SEND EMAILS TO TAXPAYERS. Any suspicious IRS emails should be forwarded to phishing@irs.gov.
15. On December 23, 2008, the president signed into law H.R. 7327. The Pension Act included the waiver of the need to make qualified plan and IRA required minimum distributions for 2009.
16. Capital gain exclusion on the Wisconsin tax return has been reduced from 60% to 30%. On farm assets held more than one year the exclusion remains at 60%.
For additional information about these or any other tax updates please contact our office.