Key IRS Limits Increase for 2009

The IRS has announced changes in key limits for 2009.

There are new limits for both the standard deduction and personal and dependency exemption. 

The personal and dependency exemption will increase to $3,650.

The standard deduction will increase to $5,700 for single filers and $11,400 for married filing jointly.  Head of household will increase to $8,350

The above limits could affect whether or not you should itemize deductions for your 2009  return (filed in 2010).

The annual gift exclusion has increased to $13,000.  This means you can now make a gift of $13,000 without having to file a gift tax form or paying taxes on the gift.

Pension Plan Limits

The 402(g)(3) limits that affect the amount you can save in your 401(k)/403(b) plan has increased to $16,500 and those age 50 and older can contribute an extra $5,500 in 2009. 

Ask your employer if you can fill out a new salary reduction agreement now to take affect in January 2009 so you can spread the new limits throughout the year. 

Roth IRA

The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $159,000 to $166,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $101,000 to $105,000.

Traditional IRA

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $85,000 to $89,000.

The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $53,000 to $55,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $159,000 to $166,000.

Source IRS.gov

 http://www.irs.gov/pub/irs-drop/rp-08-66.pdf