Click Here
Bankrate's 2010 Tax Guide
Man with key and lock
taxes
5 old tax laws, with new amounts

Some new tax laws make it into the Internal Revenue Code every year. But there also are some perennial tax provisions that remain the same and are adjusted annually to reflect inflation. These five old tax laws change every year, based on the inflation rate. While the adjustments may seem small, every dollar counts when it comes to taxes.

1. Standard deduction amounts

Most taxpayers claim the standard deduction instead of itemizing. On 2009 returns, the standard amount for single filers is $5,700. That amount, which is $250 more than the 2008 tax year, is also what a married taxpayer who opts to file separately from a spouse can claim. Head of household taxpayers get an $8,350 standard deduction this year, up $350 from 2008's amount.

Married couples who file a joint return get a $500 bump, giving them a $11,400 standard deduction. This is double the single-filer amount, thanks to legislation from several years ago that lessened the marriage tax penalty. The change was made to appease husbands and wives who had argued that filing one joint return cheated them of tax breaks they would have received if they had submitted two separate 1040s. Qualifying widows and widowers also can use this amount.

2. Personal exemptions

You, your spouse and each person you can claim as a dependent are valuable exemptions that can cut your tax bill. You're all worth $3,650 apiece this filing season. That's $150 more than the previous tax year.
5 old tax laws, new amounts:
  1. Standard deduction amounts.
  2. Personal exemptions.
  3. Social Secutiry wage base.
  4. Earned income tax credit, or EITC.
  5. Car costs.

However, if you make a lot of money, your exemption amount could be reduced or even eliminated. For 2009 returns, this income trigger starts at $83,400 for married taxpayers who file separately. Regardless of your filing status, if you hit that mark, you will have to complete a work sheet to determine your exemption amount.

3. Social Security wage base

Every worker knows that a portion of each paycheck goes to pay for Social Security benefits. But if you earn a lot, some of your wages escape this payroll withholding. The first $106,800 you earned last year was subject to this 6.2 percent levy. Your employer matched that percentage amount.

 

advertisement

If you earned more, the Social Security tax wasn't collected on the overage amount. You did, however, continue to pay the 1.45 percent Medicare portion, again matched by your company on every dollar you made last year.

The 2009 Social Security wage base was $4,800 more than the $102,000 wage base of the year before. For 2010 planning purposes, it stays at $106,800.

Show Bankrate's community sharing policy
          Connect with us
REFINANCE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed refi 4.01%  0.19 4.20%
15 year fixed refi 3.09%  0.08 3.17%
10 year fixed refi 3.16%  0.02 3.14%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.32%  0.02 4.30%
50K FICO-based HELOC 4.06% --0.00 4.06%
100K FICO-based HELOC 3.92%  0.01 3.91%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.81% --0.00 2.81%
48 month used car loan 3.04% --0.00 3.04%
60 month new car loan 3.24% --0.00 3.24%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 1.00%  0.02 0.98%
2 Year CD 1.19%  0.02 1.17%
5 Year CD 1.85% --0.01 1.86%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.73%  0.02 15.75%
Cash Back Cards 16.43%  0.02 16.45%
Low Interest Cards 10.98%  0.02 10.96%
 
Next
advertisement
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us