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First-time homebuyer credit
The first time homebuyer credit increased to a
maximum of $8,000 refundable credit for qualified taxpayers. Homes bought
from January 1st, 2008 through April 30, 2010 or even through June 30 (if a
written binding contract is in effect by April 30th) can qualify. Income
levels above $75,000 for singles or $150,000 for married filing joint may
reduce or eliminate the credit. Selling or moving from your new home before 3
years residence may require payback of the credit.
Prior homeowners can also receive up to $6500
refundable credit for homes purchased between Nov. 7, 2009 through April 30,
2010 or even through June 30 (if a written binding contract is in effect by
April 30th) if qualified.
We can give you all the specifics if you think
you qualify for either of the above home credits.
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Move-up/repeat
homebuyers
The Worker,
Homeownership, and Business Assistance Act of 2009 has established a tax credit
of up to $6,500 for qualified move-up/repeat home buyers (existing homeowners)
purchasing a principal residence after November 6, 2009 and on or before April
30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by
April 30, 2010).
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Earned Income Credit expanded
The Earned Income
Tax Credit has been expanded for 2009 to include up to three qualifying children
for EIC. The most you can get for tax year 2009 is:
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$3,043 if you have
one qualifying child
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$5,028 if you have
two qualifying children
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$5,657 if you have
three or more qualifying children
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$457 if you do not
have a qualifying child.
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Additional Child Tax Credit
The earned income
threshold has been temporarily lowered to $3,000 for purposes of calculating the
Additional Child Tax Credit. Many taxpayers who didn't receive the credit
in a prior year because the threshold was $8,050 will qualify for this credit
for tax year 2009.
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American Opportunity Credit
For tax year 2009,
the Hope education credit is renamed to the American Opportunity Credit, and is
increased to 100% of the first $2,000 of qualified education expenses and 25% of
the next $2,000, for a total credit of $2,500. Part of the credit (40%) is
now refundable for many taxpayers. AGI phase-out ranges have been
increased, as well as the ability to claim this credit for the first four years
of post-secondary education. Qualified expenses now include course
materials such as books and computers needed for enrollment or attendance.
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Making Work Pay Credit &
Government Retiree Credit
Taxpayers with
earned income can claim a refundable credit equal to 6.2% of earned income, up
to $400 ($800 if Married filing Jointly). Taxpayers who receive a
government pension or annuity may qualify for a refundable credit equal to $250
($500 if MFJ if both spouses received a qualifying pension or annuity).
The Government Retiree Credit reduces the Making Work Pay Credit. Economic
Recovery Payments received are not taxable for federal income tax purposes.
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Qualifying Child Definition
Effective for tax
years after 2008, the following changes have been made to the definition of a
qualifying child:
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a qualifying child
must be
younger than the taxpayer or fully
disabled to be counted as a dependent
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a child cannot be
the taxpayer's qualifying child if he or she files a joint return, unless the
return was filed only as a claim for refund
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if the parents of
a child can claim the child as a qualifying child, but neither parent does so,
then no one else can claim the child as a qualifying child unless that person's
AGI is higher than the highest AGI of any parent of the child
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Non-business Energy Property
Credit
The tax credit for
insulation, exterior windows and doors, energy efficient central air and water
heaters, advanced main air-circulating fans, and other energy efficient
improvements has been reinstated for tax years 2009 & 2010. The credit is
increased to 30% of the improvement, including labor costs, up to a maximum
credit of $1,500.
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Sales & Excise Tax Deduction for
New Motor Vehicle
Effective February
17th, 2009, taxpayers may increase their standard or itemized deductions for
state and local sales and excise taxes imposed on the purchase of each qualified
motor vehicle. A qualified vehicle is:
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a NEW* passenger
automobile or light truck with a gross vehicle (GVW) of 8,500 lbs or less
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a NEW* motor home
(no weight limit)
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a NEW* motorcycle
that does not weight more than 8,500 lbs
*A NEW vehicle
means that the taxpayer is the first person to hold a title to the vehicle, not
counting the dealership.
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Standard Mileage Rate
For tax year 2009,
the allowable deductions for the standard mileage rate are as follows:
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Business
miles. $.55 per mile
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Charitable services. $.14 per mile
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Medical
reasons. $.24 per mile
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Moving.
$.24 per mile
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Unemployment benefits not fully
taxable
Beginning in 2009, each recipient of unemployment benefits can exclude from
income the first $2,400 of these benefits on their return. Unemployment
benefit amounts over $2,400 are taxed as ordinary income.
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Standard Deduction Increased for Most Taxpayers
Nearly two out of three taxpayers choose to take the standard deduction rather
than itemizing deductions such as mortgage interest and charitable
contributions. The basic standard deduction is:
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$11,400 for married couples filing a joint return and qualifying widows and
widowers, a $500 increase over 2008
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$5,700 for singles and married individuals filing separate returns, up $250
and
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$8,350 for heads of household, up $350
Higher amounts apply to blind people and senior citizens. The standard deduction
is often reduced for a taxpayer who qualifies as someone else’s dependent.
Taxpayers can claim an additional standard deduction, based on the
state or local real-estate taxes paid in 2009. Taxes paid on foreign or business
property do not count. The maximum deduction is $500, or $1,000 for joint
filers.
Mortgage Debt
Forgiveness Relief Act
Homeowners
who experienced foreclosure on their primary home can exclude the cancelled debt
amount from their taxable income. For example, a married couple filing jointly
with an adjusted gross income (AGI) of $35,000, and a home foreclosure that
includes $10,000 in cancelled debt, could decrease their tax liability by $1,500
under this act. In the past, the $10,000 of cancelled debt would have been
considered taxable income to the individual that owed the debt. The home must
meet the following criteria:
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It must be the taxpayer's
main residence
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The amount of debt
forgiven cannot exceed $2,000,000
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The loan must have been used to buy, build or substantially
improve the home.
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