The IRS is a living, breathing and very much a dynamic tax-collecting machine. Consequently, tax rules—especially deductions—change all of the time.
Staying on top of tax deductions can save you money.
That is why for 2009, MainStreet is bringing you the IRS deduction updates straight from the pages of the tax code. Here are four of the most straightforward—and most popular—tax deductions available to U.S. citizens:
1. Standard Deductions
Anyone who is not filing an itemized return is allowed to deduct a particular amount automatically from income.
- Single: $5,700
- Head of Household: $8,350
- Married Filing Joint: $11,400
- Married Filing Separately: $5,700
- Qualifying Widow/Widower: $11,400
- Dependent(s): $950-$5,700
2. Filing Requirement Thresholds
Not everyone has to file an income tax return. You do, however, if your income exceeds the following amounts:
- Single: $9,350 ($10,750 if age 65 and over)
- Head of Household: $12,000 ($13,400 if age 65 and over)
- Married Filing Joint: $18,700 ($19,800 if one spouse age 65 and over; $20,900 if both spouses age 65 and over)
- Married Filing Separately: $3,650 (any age)
- Qualifying Widow/Widower: $18,700 ($19,800 if age 65 and older)
3. Retirement Plan Limits
The stock market may be in peril, but that won’t last forever. You can contribute tax-deferred money to your retirement, based on the limits for each retirement investment category listed below.
- Traditional or Roth IRA: $5,000 ($6,000 if age 50 or older)
- SEP IRA: $49,000
- SIMPLE IRA: $11,500 ($14,000 if age 50 or older)
- 401(k) plan: $16,500 ($22,000 if age 50 or older)
- 403(b) plan: $16,500 ($22,000 if age 50 or older)
- 457 plan: $16,500 ($22,000 if age 50 or older)
- Defined Contribution Pension: $49,000
- Defined Benefit Pension: $195,000