The IRS has just told us –
“Tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.”
Here are some of the tax provisions for tax year 2010, as per Revenue Procedure 2009-50:
* Personal Exemption = $3,650, unchanged from 2009.
* Standard Deduction-
Single = $5,700, unchanged from 2009
Head of Household = $8,400, up from $8,350 in 2009
Married Filing Joint = $11,400, unchanged from 2009
Married Filing Separate = $5,700, unchanged from 2009
Dependent = the greater of $950 or $300 plus the amount of earned income, not to exceed $5,700, unchanged from 2009
The additional Standard Deduction amounts for age 65 or older and/or blind = $1,400 for Single and Head of Household and $1,100 for Married (Joint and Separate) and Qualifying Widow(er), unchanged from 2009
* Annual Gift Tax Exclusion = $13,000, unchanged from 2009
In IR-2009-94 the Service reported that the 2010 annual contribution limits for retirement plans remain unchanged from 2009. They are:
* $5,000 (plus an additional $1,000 if age 50 or older at the end of 2009) for traditional and ROTH IRAs
* $16,500 (plus an additional $5,500 if age 50 or older at the end of 2009) for 401(k) and 403(b) plans
* $16,500 (plus an additional $5,500 if age 50 or older at the end of 2009) for 457 Plans (Deferred Compensation for state and local government employees)
* $11,500 (plus an additional $2,500 if age 50 or older at the end of 2007) for SIMPLE plans
* $49,000 for Defined Contribution KEOGH plans
* $49,000 for Self-Employed SEP plans (allowable contribution equal to 25% of net earnings of up to $245,000, which translates to 20% multiplied by the total of "net earnings from self-employment" from Schedule C, Schedule C-EZ or Form K-1 less the deduction for 50% of self-employment tax
* $195,000 for Defined Benefit pension plans
The compensation limit for participation in a SEP is $550.00.
I will be compiling a comprehensive report on “What’s New For 2010”, based on currently available information, which will be available soon.