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“Tax filing time is upon us,” said Sue Hales, IRS spokeswoman for Illinois. “Gather all your 2009 tax records together and check out the many new or expanded tax credits and deductions that could reduce your tax bill or increase your refund. You don’t want to miss out on any tax breaks available to you.”
First-time homebuyers could be eligible for a credit that’s equal to 10 percent of the purchase price of a home, up to $8,000. A first-time homebuyer is an individual (or both spouses if married) who have not owned any other principal residence for three years prior to the date of purchase of the new home. Recent legislation extended and expanded the First-Time Homebuyer Credit. The new law extended the deadline for qualifying home purchases from Nov. 30, 2009 to April 30, 2010. If the buyer enters into a binding contract by April 30, 2010, they have until June 30, 2010 to settle on the purchase.
Long-time homeowners could be eligible for a credit of up to $6,500. Recent legislation also expanded the tax credit to include long-time residents who buy a new principal residence. A long-time resident is an individual who, with his or her spouse if married, has owned and used the same home as a principal residence for any 5 consecutive years during the 8-year period ending on the date the new home was purchased.
Check out IRS.gov for all eligibility criteria and income limits.
Residential Energy Property Credit
If you made energy-efficient improvements in 2009 to your current home, you may be eligible for a credit of up to $1,500. The Residential Energy Property Credit equals 30 percent of what a homeowner spent on eligible-energy-saving improvements and applies to improvements that include adding insulation, energy-efficient exterior windows and doors, and energy-efficient heating and air conditioning systems.
American Opportunity Credit for Education Expenses
Many parents and students can help offset the cost of college under the American Opportunity Credit. This credit modified the Hope Credit for tax years 2009 and 2010, making it available to more people. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many people eligible for this credit will qualify for the maximum annual credit of $2,500 per student.
Deduction for New Vehicle Purchases
If you purchased a new car, light truck, motor home or motor cycle from February 17, 2009 through December 31, 2009, you may be able to claim a deduction for the state and local sales taxes and excise taxes paid on this purchase regardless of whether you itemize or not. The deduction is limited to those taxes and fees paid on up to $49,500 of the purchase price. There are also income limitations.
Cash for Clunkers Payments Not Taxable
If you received a voucher or payment for an old vehicle through the CARS “Cash for Clunkers” program, it is not taxable and is not reported on your 2009 federal tax return.
Some Unemployment Benefits are Tax Free
Unemployment benefits up to $2,400 received in 2009 are tax free for unemployed workers. Every person who received unemployment benefits can exclude the first $2,400 on their 2009 tax returns. Unemployment benefits amounts over $2,400 are taxable.
Get more details on these and many other tax credits and deductions from the IRS Web site at www.irs.gov.