READY FOR TAX BREAKS?
“Show me the money!!” is what we all said during the
Presidential campaign. President Obama
promised that there will be a lot of tax breaks for the majority of the
population who did not fall under the 3% wealthy bracket, and even more for the
middle class. We are now upon the first
tax season since the implementation of President Obama’s new tax breaks and I
think we are off to an excellent start.
President Obama you get a A- for the new tax incentives. Let’s take a
look at what’s enstore this season…
Make Work Pay Credit- This year everyone that is
making earned income is eligible for up to a $400 (Single, Head of
Household) or $800 (Married Filing Joint) refundable credit
just for working. Of course there
are income limitations, however, for most of the population this is a
wonderful boost to your refund.
HOPE Education Credit- the
changes to this credit is AWESOME.
With the new changes, it now allows for a maximum credit of $2500
for the first 4 years of college (previously only for first 1st
and 2nd year) and 40% (up to $1,000) now refundable. Did you read that? If this isn’t an
incentive for finishing your degree or going back to school, I don’t know
what it. The changes also expanded
the covered expenses to course material (i.e. books, supplies,
equipment).
Sales and Local Taxes on Purchased
Vehicle- What is awesome about this deduction is that everyone who
purchased a motor vehicle (i.e. car, van, motorcycle, motor home) up to
$49,500 in costs can take this deduction either as an add on to the
standard deduction or under itemized deductions. This deduction is for those that
purchased their qualifying vehicle after 2/16/2009.
Homebuyer Credit- This
credit has been extended to cover homes purchased from 11/7/2009 – 4/30/2010. If you are building a home you must sign
the contract by 4/30/2010 and home must be ready by 6/30/2010. Now, the credit of up to $8,000 is not
required to be paid back if you stay in the house longer than 3
years. Also they have extended this
credit to homebuyers who have previously
lived in a primary residence for 5 consecutive years and purchases
a new primary residence , however, the tax credit is limited to $6500
(which is more than the credit they received last year…$0) Of course there are some limitations but
not so strict that most people qualify.
- Earned Income Tax Credits-
This year they have added another dimension to the earned income tax
credit by having another level of credit possibilities for 3 or more
children (previously the cap was 2 qualifying children). Also, the earned income has been
increased and the credit amounts are higher. So we are talking MO MONEY,
MO MONEY, MO MONEY….
- Unemployment- This is a BIG one. This year anyone receiving unemployment
compensation do not pay taxes on the first $2400 of unemployment
compensation they receive. I have
had several tax clients who’s tax refund was reduced because they received
unemployment and did not have any federal taxes withheld. With so many people being unemployed, I
know that this one will be great.
I have listed the top 6 new tax law changes that will
provide great benefits to the taxpayers who work tirelessly to keep their heads
above water during this “recession”.
These are definitely not inclusive as there are several more tax breaks,
such as: increased standard deductions;
home energy improvements; increased medical and moving mileage rates; higher
income limits for IRA; increased 401(k) contributions; increased adoption credits
and more.
Please be sure to contact me to discuss how these changes
affect your tax refund. Please browse
the website and utilize the tools that will help you through all aspects of
your life and if you have any questions, no matter how big or small, please
leave a comment.
**This article has been brought to you by Safiya
Andrew. I do the research and get to the
bottom of all the tax rules so you don’t have to.
