Come and Get It
Normally, nothing in life comes free. So when the IRS gives anything to you, you really ought to take advantage of it. There are a few tax incentives available this year under the American Recovery and Reinvestment Act (ARRA) for taxpayers to gain from. But the catch is, they are not available forever. This law provides tax incentives for various categories of people namely first time homebuyers, car buyers, those making their homes more energy efficient and parents or children paying for tertiary education. But if you are eligible, you must apply for these tax breaks fast because they each have an expiry date.
The First Time Homebuyers Credit
If you have not owned a principle home within the last 3 years, you are eligible for this tax break. If you buy a house before Dec 1 this year, under the ARRA you can get up to $8,000 credit on either an original or amended 2008 tax return or an original 2009 tax return. Once this is done, you can claim your credit but only after the closing date.
New Vehicle Purchase Credit
If you make a new vehicle purchase of a car, motorcycle, motor home or light truck between February 16, 2009 and January 1, 2010, you may deduct the state and local sales and excise tax you paid from your taxable income. You may buy as many vehicles as you want but each vehicle qualifies you to a tax deduction on up to $49,500 of the purchase price of each vehicle. However, this phases out for taxpayers in a higher tax bracket.
Energy-efficient Home Improvement Credit
If you make improvements to your home that saves energy, you qualify for a tax break. Such improvements include installing insulation, energy-efficient exterior windows, energy-efficient heating and air conditioning. The credit rate is increased to 30% of the cost of such improvements under the ARRA up to an increased limit of $1,500 in 2009 and 2010.
First Four Years of College Expenses Credit
This new credit break is aimed at helping Americans pay for tertiary education expenses in college or university for the first four years. The ARRA makes this provision available to a wider selection of taxpayers and is a modification of the Hope credit for the tax years of 2009 and 2010. Under the ARRA, even taxpayers of a higher income bracket and those who do not owe any taxes would be eligible. The maximum tax credit per student per year is $2,500 and expenses that qualify for this tax break are those for tuition and related fees, books and course materials.
Computer Technology Purchases under QTP Plan Credit
If you are enrolled in a Qualified Tuition Program (QTP) plan, commonly known as a 529 Plan, your expenses for computer technology, equipment and Internet access is tax deductible. Expenses for software related to games, hobbies or sports do not qualify unless they are educational in nature.
Making Work Pay and Withholding limit
For 120 American households, their withholding tax limit has been reduced this year thanks to the ARRA. But if you are a worker having multiple jobs, are a family in which both spouses work, a worker who can be claimed as a dependant by another taxpayer or a pensioner, please ensure that enough tax is withheld in your case. If insufficient taxes are withheld, you might just find that your refunds are significantly smaller next year. In some cases, you might even get into a position where you owe the IRS some taxes instead of receive a refund.
Thus far in 2009, the average amount of tax refund is $2,675 per household and 79% of all returns received a refund.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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