This section summarizes important tax changes for the 2009 tax year

• U.S. Savings Bonds ~ You can now use your refund to buy up to $5,000. in US savings bonds in multiples of $ 50.00.
• Cash for Clunkers ~ A $ 3,500. or $4,500. voucher or payment made for such a voucher under the CARS "cash for clunkers" program to buy or lease a new fuel efficient automobile is Not Taxable for federal income tax purposes.
• Unemployment Compensation ~ You do not have to pay tax on unemployment compensation up to$2,400. per person for the year. Amount over $2,400.0 are still taxable.
• American opportunity education credit ~ The maximum Hope educational credit is increased top $ 2,500. The increased credit has been renamed the American opportunity credit and part of it is refundable.
• Deduction for motor vehicle taxes. ~ If you bought a new motor vehicle in 2009 after February 16th you may be ablke to deduct any state or local sales or excise taxes on the purchase.In states without a sales tax, you may be able to deduct certain other taxes or fees.
• Qualifying child definition revised ~ The following changes to the definition of a qualifying child apply.
• Your qualifying child must be younger than you unless the child is permanently and totally disabled.
• A child cannot be your qualifying child if he or she files a joint return, unless the return was filed only as a claim for refund.
• if the parents of a child can claim the child as a qualifying child but no parent so claiming the child,no one else can claim the child as a qualifying child unless that persons adjusted gross income ( AGI) is higher than the highest AGI of any parent of the child who can claim the child.
• You child is a qualifying child for purposes of the child tax credit only if you can and do claim an exemption for him or her.
• Earned Income Credit ~ The EIC has increased for people with three or more children and for some married couples filing jointly.You may be able to take the EIC if:
• Three or more children lived with you and you earned less than $43,279. ($48,279. if married filing jointly).
• Two children lived with you and you earned less than $40,295. ($45,295. if married filing jointly).
• One child lived with you and you earned less than $35,463. ($40,463. if married filing jointly).
• A child did not live with you and you earned less than $13,440. ($18,440. if married filing jointly)
• The Maximum AGI you can have and still get the credit also has increased. you may be able to take the credit if your AGI is less than the amount in the list above. The maximum investment income you can have and still get credit has increased to $3,100.
• Standard deduction ~ The standard deduction for taxpayers who do not itemize deductions on Schedule A (form 1040) has increased. The amount depends on your filing status.
• Exemption amount ~ You are allowed a $ 3,650. deduction for each exemption to which you are entitled. However, you will lose part of your exemption amount if you have high income.
• Limit on itemized deductions ~ Some of your itemized deductions may be limited if your adjusted gross income is more than $166,800. ($83,400. if you are married filing separatly).
• Tax on child's investment income ~ The amount of taxable investment income a child can have without it being subject to tax at the parent's rate has increased to $1,900.
• Personal casualty and theft loss limit ~ Generally, a personal casualty or theft loss must be more than $500. to be allowed. This is in addition to 10% of AGI limit that generally applies to the net loss.
• First time home buyer credit ~ The credit increases to as much as $8000. ($4,000. if Married filing separately) for homes bought after 2008 and before May 1, 2010 ( before July 1, 2010, If you entered into a written binding contract before May 1, 2010). You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit. You generally must repay any credit you claim on your 2008 return if you sold your home in 2009 or the home stopped being your main home during 2009.
• Alternative minimum tax (AMT) exemption amount increased ~ The AMT exemption amount is in creased to $46,700. ($70,950. if married filing jointly or a qualifying widow(er); $35,475.if married filing separately.)
• Standard Mileage rates ~ For 2009, the standard mileage rate for the cost of operating your car for business use is 55 cents per mile. For 2008, the standard mileage rate for the coast of operating your car for medical reasons is 24 cents per mile. standard mileage rate for the cost of operating your car for determining moving expenses is 24 cents per mile.
• Electric vehicle credit ~ You may be able to take a credit for:
• A plug-in electric drive motor vehicle placed in service in 2009.
• A plug-in electric vehicle brought after February 17,2009, or
• Conversion of a vehicle to a plug - in electric drive motor vehicle placed in service after February 17, 2009
• Retirement savings plan ~ The following paragraphs highlight changes that affect individual retirement arrangements (IRAs) and pension plans.
• Traditional IRA income limits ~ You may be able to take an IRA deduction id you were converted by a retirement plan and your modified AGI is less than $65,000.( $ 109,000., if you are married filing jointly or a qualifying widow(er). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA dedution if your modified AGI is less than $176,00.)
• Roth IRA income limit ~ You may be able to make a roth IRA contribution if your modified AGI is less than $ 120,000. ($176,000. if you are married filing jointly or a qualifying widow(er).
• Retirement savings contributions credit ~ The AGI limit for claiming this credit is increased to $27,750 ($41,625. if head of household; $55,500. if married filing jointly).
• Military differential pay ~ For IRA purposes, your compensation includes any military differential pay you received from your employer while you are serving active duty for a period of more than 30 days.
• Elective salary deferrals ~ The maximum amount you can defer under all plans is generally limited to $16,500. ( $ 11,500. if you have only SIMPLE plans; $19,500. for section 403(b) plans if you qualify for the 15 year rule). The catch up contribution limit for individuals age 50 or older at the end of the year is increased to $5,500. ( except for section 401(k) (11) plans and SIMPLE plans, for which this limit remains unchanged).
• Temporary waiver of required minimun distribution rules ~ No minimum distribution is requiered from your IRA or most defined contribution retirement plans for 2009.