Mid-Year 2009

NEW GOVERNMENT PROGRAMS FOR 2009 …

a.  Making Work Pay Credit provides a $400 tax cut to most “working” individuals. You have and will be receiving this $400 from April 2009 through December 2009 as a reduction in the withholding from you pay checks.  This will, of course, increase your take home pay by a few dollars each pay day, which should eventually add up to the $400 credit provided by this program.

b.  Credit for Retired Government Workers ($250) will have to be claimed on the 2009 tax return.

c.  One-time payment for Social Security Recipients ($250 check or directly deposited to your bank). This extra payment went to anyone collecting social security, SSI, railroad retirement, veteran’s disability or pensions.

Possible areas of concern based on a, b, and c above are:

• If you work more than one job,
• If you and your spouse both work, and/or
• If you are employed and also collect social security and/or a government pension

Then you may need to repay some of the withholding, retired government and/or social security amounts received which could mean your refund will be less or you will have more tax due with your return than expected.

FIRST-TIME HOMEBUYER CREDIT

“First -Time Homebuyer” means you did not own a home in the prior three years.  There are two different first-time homebuyer credits.  The first was a $7500 loan (interest-free but repayable over the next 15 years) in effect from April 6, 2008 and July 1, 2009.  The second is $8,000, not a loan, no repayment, in effect until December 31, 2009.  (Note: This credit MAY BE extended into 2010.)

There ARE specific requirements to qualify for either of these credits and an income phase-out range as well.

Go to:  www.IRS.gov and search on “first-time homebuyer” for more specific details.

EDUCATION CREDIT MORE LIBERAL

For 2009 and 2010 the Hope Credit is renamed to “American Opportunity Tax Credit”.  Maximum increases from $1,800 to $2,500, and it now covers 4 years of post-secondary education leading to a certificate or degree.  The old credit only counted tuition and fees … and now it includes books and course materials.

UNEMPLOYMENT

Unemployment is usually taxed as income.  However, for 2009 only, the first $2,400 of unemployment insurance collected is NOT taxable.

SALES TAX ON NEW CAR, TRUCK, MOTORCYCLE, or RV

If you purchase a NEW vehicle on or after February 17, 2009 and before December 31, 2009, you can deduct the sales tax paid.  (There are limits, of course ;-D )    Only the tax paid on the first $49,500 is deductible, and the deduction phases out as your income ranges frrom $125,000 to $135,000 ($250,000 to $260,000 for a couple).

You can take the deduction even if you do NOT itemize.

HOME ENERGY CREDIT

Install insulation, heating or cooling system, specifically rated windows and doors and you can get a tax credit up to $1500. NOTE:  Be sure to check the specific IRS requirements for any of these home improvements and then ask the contractor if their product(s) meet those requirements before you purchase.