My chronicle of how the IRS and Tax Court affect taxpayers' daily lives.

See below for important disclosures.

Wednesday, October 28, 2009

Changes to Form 1040 - Part I

This will be a series of posts concerning how changes in tax laws are affecting the 2009 Form 1040.  Currently 2 pages long, the number of lines is getting onerous and I do not know how much longer it will be until we have a 5 page Form 1040.  This is not a comprehensive list of law changes, but a paired down list of information that may be most interesting for you as the reader. 

Personal Exemptions - Divorced couples listen up!
A noncustodial parent claiming the exemption for a child can NO LONGER rely on a divorce decree or separation agreement.  You MUST fill out Form 8332 (Release/Revocation of Release of Claim to Exemption) if the decree was executed after 2008.  The noncustodial parent must attach the form, or similar statement signed by the custodial parent. 

Children Qualifying as Dependents
  • The Qualifying Child must be younger than the individual claiming the deduction, unless the child is totally disabled.
  • If the parents of a child can claim the child as a dependent, but nobody does so, no one else can claim the child (such as a grandparent) unless that person's adjusted gross income is higher than the AGI of either of the parents.
Unemployment Compensation - Line 19
For tax years beginning in 2009, up to $2,400 of unemployment compensation is considered tax-free.  This is to avoid the "kick 'em when they're down" mentality of taxing people's unemployment proceeds. 

Moving Expenses - Line 26
The mileage rate for moving expenses is now 24 cents per mile. 

IRA Deductions - Line 32
The IRA contribution limit is $5,000 ($6,000 if over 50 by 12/31/09).  For 2009, participants in employer plans are allowed to contribute so long as their AGI is less than $89,000 for single filers or $109,000 for joint filers. 

Standard Deduction - Line 40
The standard deduction is $5,700, $11,400 and $8,350 for single, joint, and head of household tax returns, respectively.  A taxpayer may be able to increase his standard deduction for the amount of sales tax paid on the purchase of a NEW motor vehicle or by paying real estate taxes.  The standard deduction is no longer so standard, as it may require the attachment of the new Schedule L - Standard Deduction for Certain Filers. 

Exemptions - Line 42
The personal exemption amount for 2009 will be $3,650.  There is a phase out if adjusted gross income exceeds $166,800 (single), $125,100 (MFS), $250,200 (MFJ), or $208,500 (HH).

More to come later about tax, tax credits, and items that occur below Line 42!

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Aaron Blau, E.A. is the Vice President of the Central Arizona Chapter of Enrolled Agents and a member of the Government Relations Committee of the National Association of Enrolled Agents. The opinions and ideas expressed here are in no way representative of the official position of the National Association of Enrolled Agents, Arizona Society of Enrolled Agents or the Central Arizona Chapter of Enrolled Agents.

For official comments, please e-mail NAEA Director of Communications at or Arizona Society president

"To ensure compliance with the requirements imposed by the IRS, we inform you that, to the extent this communication (or any attachment) addresses any tax matter, it was not written to be (and may not be) relied upon to (i) avoid tax-related penalties imposed under the Internal Revenue Code, or (ii) promote, market or recommend to another party any transaction or matter addressed herein (or in any such attachment). In addition, nothing herein is intended to convey an expression of an opinion as to the likelihood a tax position would ultimately prevail if challenged by the IRS. This communication is intended solely for the person to whom it is addressed; no one else should rely on the tax advice provided herein. The person to whom this advice is addressed is under no obligation to keep the advice or matters related to the advice confidential."