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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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Member since 07/2006

« Filing Status: Am I Head of Household If You Count My Dog? | Main | Education Tax Benefits: Wise Up, Stupid »

2006.09.06

Dependency Rules: What Do You Mean My Cat Isn't My Dependent?

Q: Tax Playa, how do I know if someone is a dependent of mine or not?  How do I know if I'm a dependent of someone else's?
Matt, Cranston RI

A: If someone is a dependent of yours, you can claim an additional personal exemption for them.  You may also be eligible for other, more lucrative tax advantages.  If you are a dependent of someone else, you cannot claim many tax advantages generally available.  There is a multi-pronged test to apply to someone to see if they are a dependent.

For more information on this, please consult IRS Publication 501, "Exemptions, Standard Deduction, Filing Information."

You are allowed one personal exemption ($3300 in 2006) for everyone you can claim as a dependent. 

The first step is to see if the prospective dependent is a "qualified child" or "qualified relative."

A "qualified child" must:

  • Be a blood relative
  • Be under age 19 (under age 24 if full-time student), unless disabled
  • Have lived with you for a majority of the year
  • Not have provided a majority of his support

A "qualified relative" must:

  • Be related to you or live all year with you as a member of your household
  • Have gross income of less than the exemption amount ($3500 in 2008)
  • Have a majority of his support provided by you

A dependent cannot claim someone else as a dependent.  Anyone who files a "married filing jointly" return cannot be claimed as a dependent.  You cannot claim someone as a dependent who is not a citizen of the United States, Canada, or Mexico.  Household employees are not dependents.

There are tiebreakers if two or more taxpayers can legitimately claim that someone is their dependent.  Consult the IRS publication for details.

Posted by on 2006.09.06 at 06:18 PM |

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