Tax laws that will help you this filing seasonThanks to various tax laws passed in mid 2008 and extensions of previous provisions at year end, you will see a number of new tax items that will help you get a bigger refund or reduce your liability.1. Taxpayers who live in states with no state income tax will appreciate the two year extension of the sales tax deduction. Those of us who itemize (on Schedule A) can choose to claim the greater of their local/state sales tax paid for the year or their state/local income tax paid for the year.2. College students and their parents will be happy to learn that the qualified tuition and fees deduction has also been extended for two years. Students or their parents can deduct up to $4000 in tuition and fees paid out of pocket to a college or trade school. Schedule A is not required for this deduction.3. Educators will have two more years to use the teacher classroom expense deduction. Teachers can deduct up to $250 for out of pocket expenses for their students. Schedule A is not required.4. Retirees aged 70 1/2 and older can continue to make tax free IRA distributions (either a traditional or Roth IRA) up to $100,000 to the charity of their choice for another two years.Please note: the above extensions expire on Dec 31, 2009. In other words, when you file your 2008 and 2009 returns, these extensions and others not mentioned here will apply.5. A new credit for new homeowners, the First Time Homebuyers Credit, allows taxpayers who bought a new home after April 9, 2008 and before July 1, 2009 a credit of up to $7500 or ten percent of the purchase price, whichever is smaller. It acts more like an interest free loan; the credit must be repaid on your tax return for 15 years starting in 2010.6. Many lower income parents with a qualifying child (go to my website Tax filing FAQs) younger than age 17 will potentially get a bigger refund now that the Additional Child Tax Credit's income threshold dropped from $12,050 to $8,500.7. Taxpayers who did not receive an economic stimulus check last year will have an opportunity to get the Recovery Rebate Credit on their tax return. Taxpayers who did receive a check in 2008 but experienced change in filing status or dependents or income may be able to get an increase in their rebate via the Recovery Rebate Credit. Instead of getting a check, any credit you are entitled to will give you a larger refund or reduce what you owe. The IRS will have a calculator on their website (The Internal Revenue Service Web Site) where you can calculate an estimate of your rebate credit.My website: http://llwe.net
Comments