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

See below for important disclosures.

Thursday, October 29, 2009

Changes to Form 1040 - Part II - Good news for students

A continuing discussion of the tax law changes for the 2009 Form 1040 Individual Income Tax Return.  Students (or prospective students), make sure that you check out the details on the Hope credit below!

Tax - Line 44: The amount of taxable investment a child can hve without being subject to tax at the parent's rate has increased to $1,900.  Reminder - "Kiddie Tax" now applies to all child dependents, regardless of age. 

Alternative Minimum Tax - Line 45: For 2009, the AMT exemption amounts are increased to $70,950, $46,700 and $35,475 for MFJ, Single, and MFS respectively.  This does not mean AMT will necessarily apply to taxpayers earning more than these amounts, but you must file Form 6251 to determine if AMT applies. 

Education Credits - Line 49:  Hold on to your horses!  Lots of beneficial changes here! The American Opportunity Tax Credit increases the Hope credit from $1,500 to up to $2,500 of the cost of tuition and related expenses (now including books).  The Hope credit is applied to 100% of the first $2,000 of qualifying expenses, and 25% of the next $2,000 of qualifying expenses.  The credit is now available for the first for years of post-secondary education in a degree or certificate program, and is potentially refundable.  Wow!  What a deal!

Credits from Certain Forms - Line 52: Credits available in 2009 includ the Residential Energy Efficient Property Credit (first available in 2007, then not available in 2008, and back for 2009), and Qualified Adoption Expenses.

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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."