IRS Reminds us of recent tax law changes
Jan 1st, 2009 by Afiya
The Internal Revenue Service reminds taxpayers as part of their year end tax planning to be aware of recent tax changes as well as recently reinstated tax deductions.
“Some tax breaks and a review of your current tax situation may result in a bigger refund or less taxes to be paid come tax time,” said IRS Spokesperson Jodie Reynolds.
The Internal Revenue Service offers these tax tips to consider.
First-Time Homebuyers Tax Credit - First-time homebuyers should begin planning now to take advantage of a new tax credit available for a limited time. The credit applies to primary home purchases between April 9, 2008 and June 30, 2009. This tax credit must be paid back in equal payments over 15 years. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. First-time homebuyers are those who have not owned a home in the three years prior to a purchase.
Real Estate Tax Deduction - There is an additional standard deduction for those who don’t qualify to itemize their tax deductions, but pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers. This deduction is available for the 2008 and 2009 tax years. This property tax deduction is in addition to the standard deduction used by filers.
Tuition and Fees Deduction - You may be able to deduct qualified tuition and required enrollment fees up to $4,000 that you pay for yourself, your spouse, or a dependent. You do not have to itemize to take this deduction. However, a taxpayer cannot take both the tuition and fees deduction and education credits (Hope & Lifetime Learning Credits) for the same student in the same year. Income limits and other special rules apply to each of these provisions. To determine whether your expenses are qualified, refer to IRS Publication 970, Tax Benefits for Education. IRS Publication 970 also describes other education-related tax benefits.
Educators’ Out of Pocket Expense Deduction - The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment and software used in the classroom. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. Worth up to $250, the educator expense deduction is available whether or not the educator itemizes deductions on Schedule A.
Recovery Rebate Credit - If you did not qualify or did not receive the maximum amount for the 2008 Economic Stimulus Payment you may be entitled to a Recovery Rebate Credit when you file your 2008 tax return. Review the tax return filing instructions including the Recovery Rebate Credit worksheet.
Recordkeeping - Are your tax records organized? The IRS encourages taxpayers to take the time now to gather and organize their records to reduce stress at tax time.
IRS.gov Web site - Check out the latest tax changes on the IRS.gov Web site and remember to e-file your tax return which helps ensure you do not miss out on any tax deductions, credits and benefits.
