Included in the economic stimulus plan that Congress agreed upon yesterday are various tax provisions. The economic stimulus plan still needs to have the House and Senate votes before having President Obama sign it into law. The total bill is almost $790 billion.
Here are some of the highlights to tax law:
- Home Buyer Tax Credit: Eliminate a proposed $15,000 Home Buyer Tax Credit in favor of an $8,000 home buyer tax credit for first time home buyers. Unlike the 2008 $7,500 Home Buyer Tax Credit it doesn’t need to be repaid.
- Tax Credit: $400 for single workers and $800 for couples in 2009 and 2010.
- Education: Offer a $2,500 expanded tax credit for college tuition.
- Alternative Minimum Tax: Save 24 million people from paying AMT in 2009.
- Bonus Depreciation: Businesses can use the increased depreciation schedules again in 2009.
- New Cars: Sales tax will be deductible.
More details are available in: Economic Stimulus Plan Watch.
Posted February 12, 2009 in Tax News | Comments?
If you live in the Midwestern Disaster areas and were affected by the storms of 2008, there are various tax law changes for you to consider when filing your taxes this year.
The Midwestern Disaster areas include Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin. Specific counties are listed in Publication 4492-B.
Tax Changes
Here are highlights of some of the additional tax credits and tax changes you can take advantage of:
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Hope Credit: The maximum is increased from $1,800 to $3,600 per student.
- Lifetime Learning Credit: The maximum is increased from $2,000 to $4,000 per return.
- Casualty Losses: Casualty losses from the disasters are not subject to the $100 or 10% of AGI limits.
- Debts Not Taxable: If a mortgage is canceled due to the disaster, the forgiven debt will not be taxable.
- Housing of Displaced People: If you provide housing for a person displaced by the disasters, you can claim an additional exemption of $500 per person.
There are other tax law changes that apply to the disaster areas including changes to the earned income tax credit, use of retirement funds, and charitable miles. See Publication 4492-B for complete details.
Posted February 10, 2009 in Tax Deductions & Credits | Comments?
The earned income tax credit (EITC) is intended to help low to moderate income individuals and families and provide an incentive to work. The earned income tax credit is refundable, which means that even if the credit is more than the tax owed, you can still get a refund.
Earned Income Tax Credit Requirements
The maximum 2008 income for the EITC is as follows:
- More than one qualifying child: You must earn less than $37,783 ($39,783 if married filing jointly).
- One qualifying child: You must earn less than $33,241 ($35,241 if married filing jointly).
- No qualifying children: You must earn less than $12,590 ($14,590 if married filing jointly).
Qualifying children must meet relationship, age, and residency tests. If you don’t have children, you must be age 25 – 64 to qualify for the earned income credit.
Other EITC requirements:
To get the earned income tax credit, you must have earned income and file a tax return. You cannot claim foreign earned income and your investment income must be $2,900 or less.
In addition, you must have a SSN and be a U.S. citizen or resident alien all year. You cannot file as married filing separate.
More information is available in Publication 596.
Posted February 4, 2009 in Tax Deductions & Credits | 3 Comments
Looking for tax tips in small doses? The IRS counts down to April 15 with a daily tax tip posted on their website.
Recent tips that caught my eye included:
Posted February 2, 2009 in Taxes | Comments?
Children who earn investment income, including interest and dividends, usually pay a lower tax rate than their parents.
However, once the child’s investment income exceeds $1,800, the child’s income will be subject to the kiddie tax. When the kiddie tax applies, part of the child’s income will be taxed at the parent’s tax rate.
The kiddie tax used to apply to children under age 14. In 2006, Congress expanded it to include children under age 18. In 2008, the kiddie tax includes children under age 19, and dependent, full-time students under age 24.
Posted January 29, 2009 in Taxes | Comments?
