Some tax changes … for sure !

Excerpted from WSJ, “Taxes for 2009 Already Set to Rise and Fall “, Nov. 9, 2008

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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. 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.

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 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.

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But millions of high-income workers will get hit by higher Social Security taxes.

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.

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Ken’s Take: The federal income tax code can be– and has been — modified RETROACTIVELY to the date that legislation is introduced (but not, as I understand it to a “closed” tax year).  Expect Obama’s tax changes to be introduced in the House (which has responsibility for initiating tax bills) soon after Obama’s inauguration — if for no other reason than to to set the retroactivity date.

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Full article:

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