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The Year in Taxes
By: Mark E. Battersby
Posted: February 25, 2009, from the March 2009 issue of Skin Inc. magazine.
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Last fall, Congress passed and former U. S. President George W. Bush signed into law a historic financial markets rescue bill, the Emergency Economic Stabilization Act of 2008. Although the new law’s primary purpose was to solve the credit crunch in the financial markets, it also served as one of the largest tax bills in recent years. (See A Primer to Taxes and the Emergency Economic Stabilization Act of 2008.)
Included as part of the bill were almost 300 changes to tax laws—tax breaks expected to save taxpayers a whopping $150 billion. Designed specifically for small businesses, business owners and professionals who are, according to lawmakers, the ones with large amounts of deposits at risk, the bailout bill raised the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Share Insurance Fund deposit insurance limits from $100,000 per account to $250,000. Remember, however, the increased levels are only temporary, expiring after year-end 2009.
Fewer need dread the AMT
The bill also boosted the Alternative Minimum Tax (AMT) exemption amounts for individuals for 2008, and allowed, at least for 2008, personal nonrefundable credits to offset AMT and regular tax. The bill increased the income threshold where people begin to feel the effects of the AMT.
Although originally designed to prevent the wealthy from avoiding paying taxes because it was not indexed for inflation, the AMT has affected an increasing number of middle-class taxpayers. Each year, Congress has passed a series of patches to boost the threshold, and the patch included in the new law raised the AMT exemption amounts for 2008 to $69,950 for married couples filing jointly and $46,200 for single taxpayers. Total savings to taxpayers will be almost $62 billion.
Earlier tax law changes shortened the cost recovery period for improvements made to leased business property from 39 to 15 years. The new law not only extends the faster write-offs for those leasehold improvements until the end of 2009, but it also allows retail businesses to benefit from the shortened recovery period.