Underpay your taxes, and you could receive a sternly worded letter from the IRS, with ominous references to “interest,” “penalties” and possibly, “incarceration.”
But if you overpay, it’s unlikely that the IRS will send you a check or even a thank-you note. It’s your responsibility to claim all the credits and deductions available to you. Here’s a look at some new tax breaks that could cut your 2009 tax bill:
Home buyer tax credit
Eligibility extended to those who already owned a house
This tax credit was originally intended for first-time home buyers, but that’s no longer the case. Under legislation signed in November, two types of home buyers qualify for a tax credit on their 2009 returns:
•Home buyers who haven’t owned a primary residence for three years prior to the purchase are eligible for a tax credit of up to $8,000. This credit is available for home buyers who purchased a home from Jan. 1, 2009, to April 30, 2010
•Home buyers who have owned their primary residence for five consecutive years out of the last eight are eligible for a credit of up to $6,500. This credit is limited to homes purchased after Nov. 6 and on or before April 30, 2010.
For purchases after Nov. 6, the price of homes eligible for the first-time and existing home buyer credit is capped at $800,000.
There are income limits on the credit, but the threshold will depend on when you bought the home. For first-time home buyers who bought a home before Nov. 7, the cutoff for claiming the full credit is modified adjusted gross income (MAGI) of $75,000, or $150,000 for joint filers. Those with MAGI from $75,000 to $95,000, or $150,000 to $170,000 for joint filers, are eligible for a reduced credit; those with higher incomes don’t qualify.
For purchases made after Nov. 6, the full credit is available for first-time and repeat buyers with MAGI of up to $125,000, or $225,000 for joint filers. Those with MAGI from $125,000 to $145,000, or $225,000 to $245,000 for joint filers, are eligible for a reduced credit; and those with higher incomes are ineligible.
Taxpayers who buy a home from Jan. 1 to April 30, 2010, have the option of claiming the credit on their 2009 tax return, says Bob Meighan, vice president of TurboTax. “That’s a good tax-planning benefit,” he says. “You can get your refund much quicker.”
But probably not as quickly as you’d like, Meighan says. In an effort to deter fraud, the IRS is requiring taxpayers who claim the credit to attach a copy of their settlement document to their tax returns. That means those taxpayers won’t be able to file electronically. When you file by mail, you typically have to wait up to six weeks to get your refund, vs. as little as 10 days for e-filed returns.
To claim the home buyer tax credit, you’ll need to fill out Form 5405, available at www.irs.gov.
Earned income tax credit
Eligibility requirements are expanded, so you may qualify
This tax credit is designed to help low-income, working families. Many households saw their income drop last year because of the economic downturn, so even if you weren’t eligible in the past, you might qualify in 2009, says David Williams, IRS director of electronic tax administration and refundable credits.
New car sales tax deduction
Buyers eligible even if they did a ‘cash-for-clunkers’ deal
Taxpayers who purchased a new car, motorcycle, light truck or mobile home on or after Feb. 17, 2009, and before Jan. 1, 2010, can deduct sales taxes for the first $49,500 of the purchase price. You don’t need to itemize to claim this deduction. Single filers with AGI of up to $125,000 can claim the full deduction; those with AGI of up to $135,000 can claim a reduced amount. For married couples, the deduction phases out between $250,000 and $260,000.
American Opportunity Credit
A boost in help for families faced with college costs
Congress is always looking for ways to help families offset the cost of college. This year, though, millions of families will be eligible for a new tax credit that’s more generous and flexible than previous versions.
The American Opportunity Credit, part of last year’s economic stimulus package, allows taxpayers to claim a credit of up to $2,500 for each eligible college student. The credit is calculated as 100% of expenses up to $2,000, and 25% of expenses above $2,000, up to the maximum.
Contributions to Haiti relief
Make a donation now, take a deduction now
If you’re a regular giver, you’re probably accustomed to deducting the previous year’s charitable contributions on your tax return. But taxpayers who donate to Haiti relief organizations don’t have to wait until next year to get a tax break for their generosity.
A special tax provision signed into law last month allows taxpayers who donated to Haiti relief organizations from Jan. 11 to March 1, 2010, to deduct the contributions on their 2009 tax return. Congress adopted the law to encourage Americans to help victims of the Jan. 12 earthquake.
FULL STORY
http://www.usatoday.com/money/perfi/taxes/2010-02-08-mym08_ST_N.htm
Do you Want to say something?