When and where there are tax credits or breaks available, we try and make sure you know about them. No need to worry if you itemize or not, there are several deductions that you can be taking advantage of for 2009! Let’s take a look:
$ PROPERTY TAXES: By claiming state and local property taxes on your 1040, you may deduct up to $500 (or $1,000 filing jointly). If you do itemize, you may deduct the full amount.
$ CAR TAXES: Sales tax paid on a car purchased from Feb. 17-Dec. 31, 2009 can be deducted up to $49,500 of the car’s purchase price. This deduction is available even if you also used the Cash for Clunkers Program.
$ HOMEBUYERS CREDIT: The rules changed for the homebuyer credit midway through 2009. Now it can be applied to first time homebuyers and previous home owners. To know all the dates and limits go to the IRS website and to know more about the credit check out our blog on it.
$ TEACHERS SUPPLIES: If you spent money purchasing items for your classroom (crayons, calculators, paint) you are eligible for a $250 credit, dollar for dollar. This is only available if you do not itemize your return.
$ CAPITAL LOSSES: Any stocks or funds that you may have sold at a loss can be used to offset your gains. This means any losses from stocks in 2009 up to $3,000 or any carry over losses you did not get to use entirely in 2008.
$ JOBLESS BENEFITS: If you collected any in 2009, the first $2,400 of jobless benefits are tax deductible.
$ SANDWICH GENERATION: Are in the middle and taking care of both your children and your parents? If your parents makes more than $3,650 per year (not including social security benefits) then you cannot claim them as dependent. But, you may be able to claim them as a medical dependent if you or a group of you and your siblings provide more than 50% of their support. In this case, one person from that group may claim the parents as a medical dependent and can deduct their medical expenses as their own. The other slice of bread would be your children. While college is becoming more and more expensive, the American Opportunity Tax Credit allows you to claim $2,500 per student per year for the first four years of college. This credit however, does begin to phase out at income of $80,000.
$ CHARITY WORK OR HELP: Any donations that were made to Haiti in January and February of 2010 are deductible on 2009 tax returns. Volunteer mileage is also deductible if you spend time driving to soup kitchens, hospitals, or shelters to volunteer time the miles are deductible at 14 cents per mile. Also any donations you may have made to a local bake sale, supplies for soldiers, or gifts to charity are deductible for the cost of supplies.
With the domino effect that the economy is experiencing it is important to save money where you can! There is no reason to pay more than necessary in taxes so hopefully some of these credits and deductions can be applied to your personal return.
Tax deductions, rebates, and credits are all important terms when it comes to filling out a tax return. As accountants these words are used often and are common to us. We understand that clients may not be familiar or understand what these words really mean, so here is some information to help our clients understand the differences between these terms:
