Dec 222009

If your holiday schedule is anything like mine, the last thing you want to take time for is taxes. However, in this tough economic environment, where every dollar counts, tax breaks are more valuable than ever. Don’t miss out on these great tax saving opportunities!

Are you in the market for a new home?

On November 6, 2009, Congress extended and expanded the first-time homebuyer credit through the Worker, Homeownership and Business Assistance Act of 2009. The Act not only extended the deadline for purchasing  a home for first-time homebuyers to April 30, 2010, but for the first time, certain existing homeowners who buy a replacement principal residences may also claim a homebuyer credit of up to $6,500. The credit is available to taxpayers who owned and used the same principal residence for any 5 consecutive years during the 8 year period ending on the closing date of the new home. The Act also provides for more liberal income limitations. Individual taxpayers with a modified adjusted gross income (AGI) of $125,000 to $145,000 (or married couples with modified AGI of $150,000 and $170,000) are now eligible for the credit.

Need a new set of wheels?

The 2009 Recovery Act created a temporary deduction to encourage taxpayers to purchase new cars, trucks, and motorcycles. State and local sales taxes on the purchase of a new motor vehicle (between February 17 and December 31) may be deducted regardless of whether you itemize. The deduction is limited to the first $49,500 of the vehicle’s price and the deduction begins to phase out for single taxpayers with modified AGI of $125,000 and married couples filing joint returns with modified AGI of $250,000.

Are you paying college bills?

The 2009 Recovery Act also improved the tax breaks for paying college bills. The new American opportunity tax credit (AOTC) replaces the Hope Credit with a higher maximum credit amount, higher income phase-outs, and is partially refundable. The AOTC is equal to 100 percent of the first $2,000 in qualified tuition and related expenses and 25 percent of the next $2,000 of qualified tuition and related expenses, and is available for the first four years of post-secondary education.  The AOTC begins to phase out for individuals with modified AGI of $80,000 and married couples filing joint returns of with modified AGI of $160,000.

Are you making energy-efficient improvements to your home?

Energy tax incentives have also been enhanced for individuals who make energy-improvements to their homes during 2009 and 2010.

Individuals installing insulation, exterior windows and doors, and heating and air conditioning systems may be eligible for a nonrefundable personal credit of up to 30 percent of the cost of qualifying improvements. The limit on the amount of credit that can be claimed for improvements placed in service in 2009 and 2010 is $1,500 combined for both years.

Individuals can also claim a nonrefundable personal credit for installing solar water heaters, geothermal heat pumps, and small wind turbines in their homes. The credit reaches 30 percent of the cost of qualified property generally without limitation.

Still looking for more ways to reduce your bill?

Although I have touched on a few of the new tax incentives available to individuals, there are many more tax saving opportunities available. Effective tax planning can help you identify what deductions and credits you may qualify for and will enable you to take the necessary steps to maximize those opportunities. Contact your tax professional today!

Rea & Associates, Inc., accountants and business consultants, is an Ohio public accounting firm with more than 250 dedicated professionals who provide clients with a complete range of accounting services and professional business counsel. Rea has an extensive history that goes back 70 plus years. The firm’s specialists are respected by individuals and corporations throughout Ohio and the United States.

Angie Smith Medina Team
Company: Rea & Associates, Inc., CPA
Phone: 330.722.8222

 Posted by at 4:49 pm

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