Did you take advantage of the new deductions and credits with so many changes to tax rules for 2009? Mary Beth Franklin – Kiplinger’s Personal Finance March issue, 2010 – says to forget everything you thought you knew about filing your taxes. For instance, consider these KipTips:
- Earthquake relief – If you donated money to Haitian relief efforts between January 11-March 1, 2010, and you itemized your deductions, you can claim your charitable contributions on your 2009 tax return.
- The new American Opportunity credit is worth up to $2,500 pr student each year during the first four years of college.
- Tax form 8863 – use this form to claim the new American Opportunity tax credit and other education tax credits.
- New-home shoppers celebrated when the popular $8,000 first-time home buyer’s credit was extended to contracts signed through April 30, 2010. Income eligibility limits for this credit differ depending on the date of purchase; and current homeowners who buy a new home now qualify for a tax credit, too.
- Form 5405 – Use it to claim the home-buyer credit for new and existing homeowners.
- Use tax form schedule L – This is the form that non-itemizers use to claim additions to the standard deduction, including the property-tax deduction, the sales-tax deduction on new vehicles and disaster losses.
- Home-Energy Credit -You may claim a credit for 30% of the cost of eligible home improvements on your principal residence, up to a maximum of $1,500.
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Form 5695 – This is the form to use to claim the credit for making energy-efficient home improvements or installing renewable-energy systems.
- New-Vehicle Deduction –If you purchased the vehicle (car, motorcycle, light truck or a motor home) anytime after February 16, 2009, you may be able to deduct the state or local sales tax or excise tax.
- Break for unemployed – The first $2,400 of benefits collected in 2009 is exempt from federal income tax, but the exclusion isn’t automatic.
- Give some back? Some taxpayers will receive smaller refunds than usual and other may end up owning money. Blame it on the Making Work Pay credit. Employers adjusted tax-withholding schedules during the year so that you could receive an immediate benefit from the 6.2%tax credit worth up to $400 for individuals and $800 for married couples, subject to income limits. Schedule M must be filled out to claim this credit – even if you already received the benefit through lower tax withholding from your paycheck during the year. (Taxpayers who file form 1040EZ must use the worksheet for the credit on the back of the form).
DISCLAIMER — I am not a CPA or financial advisor. The information displayed is reprinted from Mary Beth Franklin’s article. Please consult your CPA or financial advisor for advice pertinent to your unique situation.
Petey