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Tax Info Blog

  • Welcome to the Tax Info Blog. This tax-focused blog is intended to be a helpful supplement for both clients and prospective clients of Ryan Ellis LLC.

    By all means, please email me with any questions you have, and I will answer them (for attribution or not--it's up to you). If you have anything you would like to learn more about, just let me know.

    The opinions set forth in this website are subject to the disclaimer pertaining to IRS Circular 230 set forth herein. Please click the about page to see the precise disclaimer details.

2008 Tax Limits

  • Retirement Limits

    401(k)/403(b)/457 Elective Deferral Limit: $15500

    401(k)/403(b)/457 Catch-Up Contribution Limit: $5000

    SIMPLE Elective Deferral Limit: $10500 ($2500 catch-up)

    Maximum Defined Contribution Pension Contribution: $46000

    Defined Contribution Compensation Limit: $230000

    Maximum Defined Benefit Pension: $185000

    Highly-Compensated Employee: $105000

    Key Employee: $150000

    IRA Contribution Limit: $5000

    IRA Catch-Up Contribution: $1000

    Traditional IRA AGI Contribution Limits: $0-$10000 if No Pension/Not MFS, $53000-$63000 S w/pension, $85000-$105000 MFJ w/2 pensions, $159000-$169000 MFJ w/1 pension

    Roth IRA AGI Contribution Limits: $101000-$116000 S/HH/QW, $159000-$169000 MFJ, $0-$10000 MFS

    Roth IRA Conversion AGI Limit: $100,000

    Saver's Credit AGI Limits: $53000 MFJ, $39750 HH, $26500 S

    Social Security Taxable Wage Base: $102000

    50% Social Security Benefit Taxation Threshold: $25000 Single, $32000 MFJ

    85% Social Security Benefit Taxation Threshold: $34000 Single, $44000 MFJ

    Extra Standard Deduction for Over 65 or Blind: $1350 Per Incident for Singles, $1050 Per Incident for MFJ

    Business Related Limits

    Mileage Rate: $0.505 Business, $.014 Charitable, $.019 Moving and Medical

    Fringe Benefit Transit Pass Limit: $115 Per Month

    Fringe Benefit Parking Pass Limit: $220 Per Month

    Child Care Fringe Benefit Limit: $5000

    179 Expensing Limit: $128000 in assets, phases out between $510000-$638000 in total assets

    Housing Related Limits

    Mortgage Acquisition Debt Limit: $1,000,000

    Mortgage Home Equity Debt Limit: $100,000 (Diasallowed Under AMT)

    Casualty and Theft Deduction Floor: 10% of AGI + $100 (Disallowed Under AMT)

    IRA First Time Homebuyer Distribution Limit: $10000

    Real Estate Passive Loss Limits: $25000 in Loss, Phases Out Between $100000-$150000 AGI

    DC First Time Homebuyers Credit: $5000, Phases Out Between $70000-$90000 ($110000-$130000 MFJ)

    Education Related Limits

    Coverdell ESA Limits: $2000 Per Child, Phases Out Between $190,000-$220,000 MFJ (Half That for Others)

    Tuition and Fee Deduction Limits: $4000 Limit, Disallowed After $160,000 AGI MFJ (Half That for Others)

    Hope Credit: 100% of first $1200 in expenses, 50% of $1101-$2400

    Lifetime Learning Credit: 20% of up to $10000 in expenses

    Hope and Lifetime Learning Credits AGI Phaseout: $48000-$58000 ($96000-$116000 MFJ, $0 MFS)

    Education Savings Bond Interest Exclusion Phaseout: $67100-$82100 ($100650-$130650 MFJ)

    Student Loan Interest Limits: $2500 Interest Amount, Phases Out Between $115000-$145000 AGI ($55000-$70000 for non-MFJ, $0 for MFS)

    Educator Expense Deduction: $250 Per Teacher

    Child Related Limits

    Personal Exemption:$3500

    Personal Exemption Phaseout: $239950-$362450 MFJ/QW, $199950-$322450 HH, $159950-$282450 S, $119975-$181225 MFS

    Child Tax Credit: $1000 Per Child, Phases Out at $110000 AGI MFJ/QW, $75000 S/HH, $55000 MFS
    Refundable CTC Begins at $12050

    Education Credit Phaseout: $94000-$114000 MFJ, $47000-$57000 others

    Dependent Care Credit Expenditure Limit: $3000 for One Child, $6000 for Two Children

    Child Care Fringe Benefit Limit: $5000

    Adoption Credit Limit: $11650 Per Child, Phases Out Between $174730-$214730 AGI

    Kiddie Tax Limit: $900

    Dependent Standard Deduction: $900, or $300 Plus Earned Income

    Health Care Related Limits

    HSA Contribution Limit: $2900 single, $5800 family

    Over 55 Catch-Up Contribution: $900

    HDHP Deductible Minimum: $1100 Single, $2200 Family

    HDHP Out of Pocket Max: $5600 Single, $11200 Family

    Medical Expense Deduction Floor: 7.5% of AGI (10% if in AMT)

    Long Term Care Insurance Premium Limit: <40=$310, 40-50=$580, 50-60=$1150, 60-70=$3080, 70<$3850

    Miscellaneous Limits

    Standard Deduction: $5450 S/MFS, $8000 HH, $10900 MFJ/QW

    Itemized Deduction Phaseout (Pease): $159950 of AGI (Half for MFS)

    Miscellaneous Itemized Deduction Floor: 2% of AGI (Disallowed Under AMT)

    Capital Loss Limit: $3000

    Gift Limit: $12000

    Foreign Earned Income Exclusion: $87600

    Death Tax Exemption: $2,000,000/45% Rate

    Ex-pat Trigger: $139000

    Earned Income Credit AGI Limits:
    MFJ No Kids: $15880
    MFJ 1 Kid: $36995
    MFJ 2/More Kids: $41646
    Others No Kids: $12880
    Others 1 Kid: $33995
    Others 2/More Kids: $38646

    Max Investment Income for EIC: $2950

2008 Individual Income Tax Brackets

  • Single
    10%: $0-$8025
    15%: $8026-$32550
    25%: $32551-$78850
    28%: $78851-$164550
    33%: $164551-$357700
    35%: $357701-
  • Married Filing Jointly/
    Qualified Widow(er)
    10%: $0-$16050
    15%: $16051-$65100
    25%: $65101-$131450
    28%: $131451-$200300
    33%: $200301-$357700
    35%: $357701-
  • Heads of Households
    10%: $0-$11450
    15%: $11451-$43650
    25%: $43651-$112650
    28%: $112651-$182400
    33%: $182401-$357700
    35%: $357701-
  • Married Filing Separately
    10%: $0-$8025
    15%: $8026-$32550
    25%: $32551-$65725
    28%: $65726-$100150
    33%: $100151-$178850
    35%: $178851-

Corporate Income Tax Brackets

  • 15%: $0-$50000
    25%: $50001-$75000
    34%: $75001-$100000
    39%: $100001-$335000
    34%: $335001-$10,000,000
    35%: $10,000,001-$15,000,000
    38%: $15,000,001-$18,333,333
    35%: $18,333,334-

Tax Calendar

  • Due Dates for Returns
    3/15: Corporations, S-Corporations
    3/15: S-Corporation Election
    4/15: Individuals and Partnerships
    9/15: Extension Deadline, Corporations and S-Corporations
    10/15: Extension Deadline, Individuals and Partnerships
  • Estimated Income Tax
    First Quarter: April 15
    Second Quarter: June 15
    Third Quarter: September 15
    Fourth Quarter: December 31 (January 15 Individual)
  • Employment Taxes
    1/31: W-2s and 1099s, and Unemployment
    1/31: Fourth Quarter FICA
    5/1: First Quarter FICA
    7/31: Second Quarter FICA
    10/31: Third Quarter FICA

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« Can S-Corporation Earnings Be Contributed to an IRA? | Main | House W&M Committee Passes Bill To Allow Spouse "Joint Ventures" »

2007.03.27

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Comments

very helpful....just on question...if I am unincorporated does the calculation or the tax position change?

At least I am old...well 62 so I get the catch up.

Just updated the post. For Bryan, the maximum "elective deferral" is $20,000 for 2006, and $20,500 for 2007.

Not sure I understand the question about being unincorporated. The limits and opportunities are described in the post.

I have not really looked into this avenue. I currently contribute to an SEP IRA and get some nice tax benefit from that. Thanks for the info.

Jerr

What initial filing and registration requirements are required to form the self-employed 401(k)?

I would like to transfer existing corporate 401(k) funds into a self-directed plan. Is this permissible? Would I need an IRS determination letter to validate my self-directed plan?

Hi,
I'm a 40 yr old dentist and i am about to implement some sort of retirement plan for myself and my employees. i was told it's too late to institute a 401k plan for 07 but not too late to have the profit sharing plan for the office and then early next year convert it over to a 401k plan. my salary is above the 225k maximun limit. For me to take advantage of the max of 45k for me, i then have to contribute 20% of all employees eligible.
is that correct?
thanks.

I have a SEP IRA. One of the things I like about is the flexibiity of contribution, some years I can make the maximum contribution, some years I am not able to make any contribution.
Is the self employed 401 K similarly flexible, would I be able to make the maximum contribution during one year and not be obligated to make any contribution the next year?

I have a 401K with my previous employer. Currently I do trading (stock), my gross earning would be close to 125K. My wife is employed and she has her own 401k with her employer. Can I open another 401K and upto how much I can contribute (if my net incom online 12 would be $100k)?

Thank you for your very well written article about self employed retirement plans. This is the first time that I have seen a tax professional reference where to take the various deductions (i.e. line 14 of the 1040 etc) and it was very helpful.

After reading your information I did some additional research and found a website that provides detailed information about the Individual 401k, Defined Benefit Plan and SEP IRA. This was a particularly informative website and wanted to pass it along to other self employed people http://www.individual401k.com.

Thanks again for helping me better understand my self employed retirement plan options.

There is however a different calculation needed if you are in the lower self employment income realm... I just ran my solo 401k numbers on the TurboTax/IRS Keogh, SEP and SIMPLE contribution worksheet, and it lowered the employer amount I could contribute to almost 10%. It calculated the difference between my full personal contribution $15,500 and my adjusted self employment income (net less 1/2 SE Tax), and then halved that? and that (reduced employer amount plus max $15,500) was the max deductible I says I can claim... IRS quoted publication 560/page 14 to me.

This is a excellent site, provide a lof info.

Can a self employed contribute full elective deferral (15500) to individul 401k if that's more than the net profit? Here is the numbers:
Gross incoem 25000
expenses 12000
net profit 13000 ( less than elective deferral 15500)
Can I also do the 20% net profit (for employer) contribution?

Thanks in advance.

George

Max elective deferral is lesser of 15, 500 for 08' or net profit. U may not contribute more than the 13,000 in this case.

My SE income is well above the amount that would yeild the full 50,000 deduction (I am over 50). How do I determine the right (or best) way to split the deduction between the business contribution and the individual contribution?

I have a Simple-IRA at work and have a salary deferral of $13,000 (I am over 50). I also have self-employment income from a side consulting business. It seems to me that I could do an Solo 401k elective salary deferral of $15,500 - $13,000 + $5000 catchup and add to that 25% of my business profits. Does this seem right?

Fidelity has a great self-401k calculation worksheet PDF form available on their site (somewhere in "retirement"->"self-employed" ->self-401k section). You don't need to be Fidelity customer to download it -- give it to your accountant and ask him/her to follow it (it is really self-explanatory step by step calculations). It might be too late for some, but this form was MEGA useful for me. And don't forget -- the funds have to be deposited to your 401k account by April 15 not just postmarked.

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