UNEMPLOYMENT
INSURANCE / SOCIAL SECURITY
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Beginning in 2009, taxpayers or preparers who file 25 or more 2008 Forms W-2, W-2G, 1099-R, or 1099-MISC must electronically file personal income tax informational returns to the Connecticut Department of Revenue Services (DRS). The due date for electronic filers is March 31, 2009. The due date for paper filers is February 28, 2009. The DRS may waive the electronic filing requirement if an employer can show hardship. To do so, the employer must complete and submit a paper Form CT-8508, Request for Waiver from Filing Informational Returns Electronically, to the DRS by January 15, 2009. If a waiver is granted, the DRS encourages the informational returns to be submitted on a CD rather than paper. (Notice, Connecticut Department of Revenue Services, September 2, 2008.)
As a service to our subscribers, CCH INCORPORATED has projected inflation-adjusted 2009 tax brackets, tax rate schedules, standard deduction and personal exemption amounts. The projected figures are based on the inflation-adjustment provisions of the Code as currently in force and the average of the Consumer Price Index for All Urban Consumers (CPI-U) published by the Department of Labor for each month in the 12-month period ending on August 31, 2008. Official IRS figures will not be released until later in the year.
Standard deductions
The 2009 standard deduction will rise by $250, to $5,700, for single taxpayers; by $350, to $8,350, for heads of households; by $500, to $11,400, for married taxpayers filing jointly and surviving spouses; and by $250, to $5,700, for married taxpayers filing separately. The standard deduction for dependents will rise to $950 (or earned income plus $300.)
Personal exemptions
The amount of personal and dependency exemptions for 2009 will increase from the 2008 level by $150 to $3,650. The 2009 personal exemption phaseout for married taxpayers filing jointly will increase by $10,250 over the 2008 level and will begin at adjusted gross income (AGI) of $250,200; for single taxpayers, the phaseout will increase by $6,850 over the 2008 level, to begin at AGI of $166,800; for heads of households, the increase over 2008 will be $8,550, to begin at AGI of $208,500; and for married taxpayers filing separately, the phaseout will begin at AGI of $125,100, representing an increase of $5,125 over the 2008 level. For higher income taxpayers, the amount of their otherwise allowable itemized deductions will be reduced when AGI exceeds a threshold amount. The reduction is equal to the lesser of three percent of AGI over the threshold amount or 80 percent of itemized deductions otherwise allowable. For 2009, the threshold amount at which the three-percent itemized deduction limitation takes effect will increase by $6,850, to AGI of $159,950 for married taxpayers filing jointly, single taxpayers and heads of household, and will increase by $3,425, to AGI of $83,400 for married taxpayers filing separately.
Tax brackets
Note: these rates and brackets are not to be used for withholding purposes.
Joint returns: For married taxpayers filing jointly and surviving spouses, the maximum taxable income subject to the 10-percent bracket will rise from $16,050 in 2008, to $16,700 in 2009; the top of the 15% tax bracket will increase from $65,100 to $67,900. The bracket amounts for the remaining tax rates show similarly proportionate increases: $137,050 as the maximum for the 25% bracket (up $5,600 from 2008); $208,850 for the 28% bracket (up $8,550 from 2008); and $372,950 for the 33% (up $15,250 from 2008). Amounts above the $372,950 level will be taxed at the 35% rate.
Unmarried filers: For single taxpayers, the maximum taxable income for the 10% bracket will increase to $8,350 for 2009 (up from $8,025 in 2008). The remainder of the rate brackets show inflation increases of: $1,400 for the top of the 15% bracket (to $33,950); $3,400 for the 25-percent bracket (to $82,250); $7,000 for the 28-percent bracket (to $171,550); and $15,250 for the top of the 33% bracket (to $372,950).
Married filing separately: Married taxpayers filing separately will see a $325 increase for the upper limit of the 10% bracket (to $8,350) and a $1,400 increase for the 15% bracket (to $33,950). The top of the 25% bracket will increase by $2,800 (to $68,525); the 28% bracket will increase by $4,275 (to $104,425); and the 33% bracket will increase by $7,625 (to $186,475).
Heads of household: For heads of households, the maximum taxable income for the 10-percent bracket will rise to $11,950 (from $11,450). The top of the remainder of the bracket amounts will also increase: up $1,850 from 2008 for the 15% bracket, to $45,500; up $4,800 from 2008 for the 25% bracket, to $117,450; up $7,800 from 2008 for the 28% bracket, to $190,200; and up $15,250 from 2008 for the top of the 33% bracket, to $372,950.
Withholding tables
Due to the changes in some of the figures above, subscribers can expect to see new federal wage-bracket and percentage method withholding tables, effective for wages paid on and after January 1, 2009. We expect the 2009 federal withholding tables to be released during the second half of November.
Adoption credit expense
This $10,000 maximum credit was first subject to an inflation adjustment after 2002. For 2009, the amount will increase to $12,150, with the AGI phaseout beginning at $182,180.
Transportation fringe benefits
The monthly cap on the exclusion of qualified parking expenses will be $230 in 2009 (up from $220 in 2008). Transit passes/commuter highway vehicle amounts will rise $5 to $120 per month.
Pensions, Roth IRAs
The AGI limits for maximum Roth IRA contributions are: married filing jointly, $166,000 (formerly $159,000); other filing statuses, other than married filing jointly or separately, $105,000 (formerly $101,000). The AGI limits for maximum IRA contributions for individuals covered by a retirement plan are: married filing jointly, $89,000; head of household and single, $55,000.
The IRS has extended return filing and payment deadlines for victims of Hurricane Ike in the Louisiana parishes of Acadia, Beauregard, Calcasieu, Cameron, Iberia, Jefferson, Jefferson Davis, Lafourche, Plaquemines, Sabine, St. Mary, Terrebonne, Vermilion and Vernon. Taxpayers residing or having businesses in these presidentially declared disaster areas have until January 5, 2009, to file returns, pay taxes and perform other time-sensitive acts otherwise due on or after September 11, 2008, and before January 5, 2009. The extension includes individual estimated tax returns and corporate tax returns that were due on September 15 and extended individual returns due on October 15. The postponement of time to file and pay does not apply, however to information returns in the Form W-2, 1098, 1099 series or to Forms 1042-S or 8027.
The IRS will waive the failure to deposit penalties for employment and excise deposits due on or after September 11, 2008, and before September 26, 2008, as long as the deposits are made on or before September 26, 2008. This includes failure to deposit penalties on employment and excise deposits that were waived under previous relief granted due to Hurricane Gustav. Taxpayers whose books, records or tax professionals' offices are in the covered disaster area are also entitled to relief. In addition, all relief workers affiliated with a recognized government or charitable organization assisting the relief activities in the covered disaster area are eligible for relief. Affected taxpayers claiming a disaster loss due to Ike on their returns for the 2007 tax years should write, "Louisiana/Hurricane Ike" at the top of their returns to receive expedited service. (IRS New Release, IR-2008-108, September 19, 2008.)
Effective July 1, 2008, until December 31, 2008, Premium Rate Table 4 is in effect. Employers with a positive reserve ratio of 20% or more will receive a 0.30% premium rate. Effective July 1, 2008, until June 30, 2009, new employers in Manufacturing Sector 31 will pay 5.5%. Those in Mining and Extracting will pay 6.0%. All other new employer rates remain unchanged (DWLD Communication, 9/2/2008).
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