Maximize your tax return! Learn about important deductions before you file your 2009 taxes.
The American Recovery and Reinvestment Act was signed on 2/17/09 . This act is designed to stimulate the economy by giving tax credits and breaks to encourage consumer spending . While it has been slow in getting started there has been positive results as sales begin to turn upward again.
While we are waiting for the reinvestment act there are some tax breaks for individuals that you can use when filing your 2009 taxes to maximize your return and stimulate your own consumer spending.
If you purchased a house during 2009 that is your primary residence you qualify for an $8,000 credit. There used to be a credit for first time home buyers of $7500 but you eventually had to pay it back. This new credit is yours penalty free . $500-$1000 can be deducted from your real estate taxes paid.
There is a new Making Work Pay credit of $400 per worker and $800 per couple. This credit is useful because it will decrease taxes more than 95% for working families. If you choose not to take part in this credit and have a higher paid amount from each pay period, you will need to file a new W-4 with your employer to change the amount withheld.
Unemployed persons are exempt from being taxed on their unemployment checks for up to the first $2400.
If you purchased a car after February 17th, 2009; you can deduct the state and local sales tax on your standard and itemized deductions.
The Earned Income Credit or EIC has been expanded to allow credit for up to three children when before it had a two maximum. The AGI phase out limits have been adjusted so that married spouses who file jointly do not have to worry about the marriage penalty .
The American Opportunity Credit will now allow up to four years of degree costs compared to Hope allowance which only allowed for two. The amount of the credit has also increased from $1800 to $2500. You can now write off the cost of books and required software.
Other educational credits include: the Hope credit which now allows 100% of the first two thousand in eligible expenses and 25% of the second $2000 for each eligible student . The Lifetime Earning Credit has expanded to include computer hardware, software and internet expenses.
Home energy efficiency and improvements can be credited up to fifteen hundred dollars. The percent of the credit has increased to 30% and can roll over into the next tax year until the amount of the credit is used.
Military persons stationed out of the country for 90 days or more between 12/31/3008 and 5/1/2010 qualify for an extension on filing. Additionally, government retirees and disable veterans qualify for a credit of $250.
