By Harvey Amwake, C.P.A.

    The tax law requires that certain tax numbers be adjusted for inflation each year. Use these 2009 numbers in your 2009 tax planning.

• The standard mileage rate for business driving drops from 58.5¢ per mile to 55¢ per mile, effective Jan. 1, 2009. The rate for medical and moving mileage drops from 27¢ per mile to 24¢ per mile. The general rate for charitable mileage remains at 14¢ per mile.

    • The first-year expensing limit for the purchase of business equipment drops from $250,000 to $133,000. The expensing election phases out once total purchases for 2009 exceed $530,000. Look for Congress to reinstate the higher 2008 limits for 2009 in a new economic stimulus package

• The maximum earnings subject to social security tax increases from $102,000 to $106,800.
    • The “nanny tax” threshold increases from $1,600 to $1,700 for 2009. If you pay household workers more than this amount during the year, you’re responsible for payroll taxes.
    • The “kiddie tax” threshold goes up from $1,800 to $1,900. If your child under age 19 (under age 24 for students) has more than $1,900 of unearned income in 2009 (e.g., dividends and interest income), the excess could be taxed at your highest rate.
    • The maximum individual retirement account (IRA) contribution you can make in 2009 remains unchanged at $5,000 if you’re under age 50 and at $6,000 if you are 50 or older.
    • The maximum amount of wages employees can put into a 401(k) plan increases from $15,500 to $16,500. The maximum allowed for SIMPLE plans increases to $11,500. If you are 50 or older, you can contribute up to $22,000 to a 401(k) and $14,000 to a SIMPLE plan.
    The estate tax exemption increases to $3.5 million for 2009, but the top estate tax rate remains at 45 percent. The annual gift tax exclusion increases from $12,000 to $13,000.
    For a more complete review of 2009 changes check with your finiancial adviser or give us a call.

This article is for general information only and does not constitute financial advice.  If you have any questions about financial matters, consult a professional tax adviser.  Harvey Amwake, CPA, is a tax and small business consultant with the accounting firm of Arthur Spoon & Company, Ltd., at 1130 E. Missouri Ave., Suite 820, Phoenix, AZ  85014.  He can be reached at 602-264-6500 or by e-mail at Harvey@Arthur Spoon.com.