Everyone wants to try and get the best deal they can when it comes to taxes. You’ve probably heard plenty about the home buyer tax credit, but unless you are a first time home buyer, or haven’t bought a home in several years, you don’t qualify. Additionally, there are different income eligibility requirements, depending on when you bought your home in 2009. With all these requirements, chances are good that you can’t take advantage of this one.
Don’t be discouraged though, because there are other new tax breaks available for the 2009 tax year. They may even help you get an unexpected tax refund, so let’s get on with these four tax breaks that you might have more luck with:
- American Opportunity Credit: This tax credit is available to parents and students who pay at least $4,000 in qualified education costs during 2009. Right now, the Hope Credit and the Lifetime Learning Credit phase out rather early. The American Opportunity Credit, though, begins to phase out at $80,000 for individuals (disappearing at $90,000) and at $160,000 for married filing jointly (doesn’t disappear until $180,000). If you or a dependent are an undergraduate (sorry, no grad students) going to college, you can take advantage of this credit, which maxes out at $2,500.
- Purchase of a New Vehicle: If you bought a new car between February 16, 2009 and December 31, 2009, you could be eligible to deduct the state or local sales/excise tax that you paid on the car. The amount you can deduct maxes out at $49,500 of the purchase price, but qualifying vehicles (light truck, motor home and motorcycle in addition to a car) are unlimited. You can get a full deduction if you make less than $125,000 as a single, or $250,000 when married filing jointly, then the deduction phases out. You don’t even have to itemize in order to take this deduction if you file a Schedule L. However, if you do want to itemize, you can enter the deduction on line 5 or line 7 on the Schedule A.
- Home Energy Credits: You have access to tax credits if you made efforts to increase the energy efficiency of your home in 2009. There are no income limits on these, and there are two expanded credits. The first offers 30% of the cost of certain home improvements, up to $1,500. These home improvements include high-efficiency home heating and cooling, energy-efficiency windows and/or doors, and insulation. The second tax credit offers 30% of the cost plus installation of solar systems, wind turbines and geothermal heat pumps. There is no cap on the credit amount on this version of the tax credit either.
- Unemployment Benefits: It may not seem fair, but unemployment benefits are taxed as income. However, if you received unemployment benefits in 2009, the first $2,400 can be excluded. It may not seem like much, but it does lower your taxable income. (Every little bit helps right?)
Before you file your tax return, make sure that you understand your options, and that you are aware of what is available for you. The U.S. tax code is complicated, and there are a number of credits and deductions that you can take. Make sure to double check the new tax breaks, and determine whether or not you are eligible for them. If in doubt, you can always consult a tax professional. It may cost you a bit of money, but missing a tax credit can easily cost you more.