Income Tax Breaks Offered
As 2009 draws to a close, those hoping to get more back this year from Uncle Sam should keep a few potential income tax breaks in mind.
Taxpayers have only a few more days to take advantage of a tax break on new cars purchased after Feb. 16 of this year. The program expires Dec. 31, and it’s not clear at this point whether it will be back for 2010.
According to the Internal Revenue Service, those who buy passenger cars, light trucks, motorcycles or motor homes this year can deduct state and local sales and excise taxes they paid on those vehicles up to a purchase price of $49,500.
Jeff Yourkovich, a certified public accountant in Wheeling, said anyone who bought vehicles exceeding that price still will qualify – they’ll just be able to deduct the taxes they paid on the first $49,500.
And, according to Yourkovich, there are several other tax breaks available to taxpayers whether they file an itemized tax return or simply take the standard deduction.
“First-time homebuyers’ (deduction) is still there,” he reminded, referring to the program offering a credit of up to $8,000 to those purchasing their own home for the first time.
Also, Yourkovich said those who have lived in their “main home” for five out of the last eight years may deduct up to $6,500 if purchasing a home.
Both those tax breaks, he noted, are available on homes for which a contract is signed by April 30, 2010, and for which closing takes place by June 30, 2010.
College students and their parents also have reason to pay attention when filing their taxes. According to Yourkovich, in addition to a provision offering a deduction for college tuition, taxpayers now may deduct the cost of books and supplies for higher education as well.
“College parents should be keeping track of the books and related expenses this year,” Yourkovich stressed, adding that 40 percent of that deduction is refundable – meaning those who claim it will get money back even if their tax liability for 2009 was zero. “Basically, that becomes free money for the taxpayers.”
What’s more, Yourkovich said, the first time home buyers’ tax break is fully refundable. “That’s a kitchen or a bedroom, right there,” he added.
As unemployment figures rise, Yourkovich said people should be aware they can exclude up to $2,400 in unemployment benefits from their yearly income, a provision he said is new this year.
Finally, back this year is the credit for making “energy-efficient” home improvements, after a year-long hiatus in 2008. Yourkovich said 30 percent of the purchase price of approved merchandise, up to $1,500, may be deducted.
That program will be offered again in 2010.
Yourkovich said many of these programs are easily overlooked when filing tax returns, noting there are more than 65,000 pages of tax law containing provisions such as the above. He said tax professionals will ask the right questions, enabling you to get the best return possible.