Tax Guru – Ker$tetter Letter

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Archive for February 28th, 2009

Be sure to thank the evil rich for the free lunch…

Posted by taxguru on February 28, 2009

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Deductions for the Evil Rich

Posted by taxguru on February 28, 2009

Q:

Subject: 2009 Standard Deduction

Hi:

Your Blog indicates that in 2009, the Standard Deduction will be eliminated for those filing jointly, and earning over $166,800.

What will it be replaced with ?

Will this be positive, or negative, for those whose AGI is $2000,000 + ?

Regards

A:

You are misunderstanding what that provision of the tax law means.

Standard deductions aren’t eliminated for anyone based on AGI.

What has been part of the tax code for several years now has been a dollar limitation on the total amount of itemized Schedule A deductions that people considered to be evil rich (as measured by AGI) are allowed to claim. At the threshold levels, which are increased each year based on inflation, the limit starts to be applied.

However, although this type of penalty on the evil rich can completely eliminate their personal exemptions, I have never seen where it has completely eliminated their Sch. A deductions.

The trend of punishing people with high AGIs is looking like it’s going to get worse. From what I have heard about our Supreme Ruler’s plans for future tax laws, there will be even tighter limits on the deductions allowed to be claimed by those folks he considers to be evil rich.

I hope this helps you understand this part of the tax code.

Good luck.

Kerry Kerstetter

Follow-Up:

Hi Kerry:

Many thanks for your explanation.

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Posted in Deductions | Comments Off on Deductions for the Evil Rich

Posted by taxguru on February 28, 2009

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