Are you getting your daily dose of tax tips? One a day could help keep the auditor away. Even better, they could mean savings when you send the IRS your Form 1040. This week I’ll be starting my four part tax series to ensure that you don’t miss out on any credits available to you. This week I want to assist you with 3 new tax laws that can increase the size of your return.
Welcome to prime tax-filing time, we now have only three weeks remaining. Tax forms W-2s, 1099s and the like should have arrived by now and folks are ready to get their 1040s into the IRS so they can get their refunds.
If you’re among the 40 percent of taxpayers working on your return this month, here are some tax law changes that could help you maximize your refund. Or at least reduce any amount you might owe Uncle Sam.
1. Home is where the tax heart is the big break this filing season is the first-time and move-up homebuyer credits.The tax break underwent three revisions in less than two years, but the current rules are pretty cool for many property owners.Provisions in last year’s American Recovery and Reinvestment Act made this a true credit, meaning it can reduce dollar-for-dollar any tax you owe. Better yet, it’s a refundable credit so you could get money back from the IRS even if your tax bill is zero, any credit for which you qualify will be sent to you as a refund. And the credit amount was increased under that stimulus measure to $8,000 for first-time buyers.
Nine months later, Congress delivered more homebuyer credit changes. In addition to extending the first-time credit into 2010, lawmakers added a new credit for “long-time” homeowners. Here folks who owned and lived in a residence for at least five consecutive years of the eight years before they buy a new house can claim a $6,500 credit.
There are, of course, income limitations and plenty of other requirements before either first-time or long-term buyers can qualify.
But if you purchased a home last year (or close on one by June 30 of this year) be sure to take a close look at what you might qualify for here and how it could help your 2009 (or 2010) tax bill.
2. Energy improvements, tax savings Did your new house require a replacement furnace or air conditioning system? I know how costly that can be. But if you bought an Energy Star rated unit, you can claim a $1,500 credit on your tax return.
If you made it through 2009 without any energy upgrades, the energy efficient home improvement credit is still an option for 2010.
3. Driving home tax deductions, if in 2009 you bought a new vehicle between Feb. 17 and Dec. 31, you might be able to deduct the sales or excise taxes you paid on your new wheels. This option is available even to folks who claim the standard deducting. You’ll just have to fill out Schedule L to make your claim. Itemizers will still take their deduction on the newly redesigned Schedule A. There are limits, both to your income and the price of your new car that could reduce you deduction. But for most folks, this could be a nice write-off.