Tax Time: Tips for 2009

By Rachel Stockton

As 2009 winds to a close, it’s time to start thinking about income tax returns.  Every year there are tax changes that have resulted from legislation enacted by Congress.  In 2009, there are some new credits available as well as tax incentives for individuals and small businesses regarding energy efficiency.   It’s not too early to schedule an appointment with your tax professional to discuss these new benefits.

As a result of Obama’s stimulus package, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA) in an effort to ease some of the taxpayer burden during the economic recession.  There are a number of incentives that individual taxpayers can take advantage of:

*First time home buyers will be eligible for a tax credit of up to $8000 if they purchased their homes in 2009.  To qualify, the purchase of the home must have closed by November 30, 2009.

*The first $2400 in unemployment benefits are now tax free

*The Making Work Pay Act is allowing individuals a deduction of the lesser of the following:

            *$400 per individual ($800 for a married couple filing jointly)

            *6.2% of an individual’s earned income

*Congress is offering a tax credit for 30% of the cost of certain energy saving measures, such as adding insulation, installing energy efficient exterior windows and energy saving heat and air conditioning systems.

*Taxpayers who buy qualified, new vehicles will be able to deduct what they paid in state and local sales taxes from their federal return.

*The ARRA is providing a temporary increase in the earned income tax credit for qualifying families with three or more children. 

*Employees may exclude $230 in employer paid parking and toll pass benefits from their taxable income.

Some changes have also been made concerning COBRA premiums; for more information and a list of FAQs concerning these changes, visit the IRS website. 

Some Important Reminders

If you are unemployed and are looking for another job, keep in mind that all costs related to your job search, such as paper for resumes, faxing fees, travel costs, etc., are deductible.

* For 2009, make a note on your calendar to pay your January house payment in December so you'll have one more mortgage interest payment you can deduct. Purchase any supplies you will need this month, and if you don't expect your income to go up in 2010, prepay some of your state and local taxes, so you can deduct them. In this economy, every penny, every deduction, adds up.