Don’t forget the Schedule M....and other things to remember when filing your 2009 return

Now that everyone is getting their W-2 or 1099 forms, thoughts are turning to tax filing season. As with any tax season, there are several provisions for the 2009 tax year that filers will want to be on the lookout for this season. Here are, in our opinion, the top ten tax provisions that will impact taxpayers filing their returns over the next couple of months:

1. Making Work Pay Credit – if you work and earn less than $190,000 ($95,000 if single) in 2009, you are eligible for a tax credit of 6.2% of your earned income, up to a limit of $800 ($400 if single). This is HUGE, since virtually all returns filed will contain this credit in some form. The credit is claimed on Schedule M of the tax return, which is an entirely new schedule designed specifically for this credit.

2. The standard mileage rates for 2009 are 55 cents per mile for business travel, 24 cents per mile for medical mileage, and 14 cents per mile for charitable mileage.

3. For 2009, the first $2,400 of unemployment benefits received can be excluded from income. Previously, all unemployment benefits were taxable.

4. If you purchased a new car in 2009, the sales tax on that car purchase will be deductible as long as you itemize your deductions. In Texas, this provision has been around for a couple of years now, but for 2009 this deduction is available for taxpayers anywhere.

5. If you lost your home during the housing crisis and the mortgage company wrote off your debt, you will not have to pay taxes on the amount of debt that was discharged.

6. The penalties for filing late returns have increased. Now, if a return is more than 60 days late, the minimum penalty is $135 or 100% of the unpaid tax. In other words, late filers could end up owing double their original balance in a very short time period. So even if you can’t pay, file that return!

7. The minimum threshold for an event to qualify as a casualty must now be 10% of your income plus $500. Previously, it was 10% plus $100.

8. If you pay off your tax liability with a credit card and incur a ‘convenience charge’ to do so, that charge will now be deductible on your next return if you itemize.

9. Small businesses only need to pay in 90% of the previous years’ tax liability to avoid being penalized for estimated tax payments. Previously, the threshold had been 100%

10. Last but not least, don’t forget that the well-publicized First Time Homebuyer Credit was in effect for 2009.


There are also literally hundreds of changes to existing tax rules regarding phase-out limits for deductions, breaking points between tax brackets, and any other provision that is allowed to index annually for inflation.

As always, the information presented here is intended to be basic in nature and is to be used for general information purposes only. If you have questions about a specific item of tax law, please consult a tax advisor.