Making Work Pay Credit

If you have earned income, such as from W2 wages, you may have noticed you had less withholdings.  This was because of the Making Work Pay Credit enacted last year as part of the Stimulus Act of 2009.  Instead of giving you one lump sum (like the year before), you had less withholdings throughout the year.  To offset this “underpayment”, you will receive a credit on your tax return.  It is 6.2% of your earned income but cannot be more than $400 ($800 if married filing jointly).  You will find this on line 63 of your 2009 tax return.

Unemployment Compensation

You do not have to pay tax on unemployment compensation of up to $2,400 per recipient.  Amounts over $2,400 are still taxable.

COBRA Subsidy

The 65% subsidy for payment of COBRA health care coverage continuation premiums is not taxable for federal income tax purposes.

Home Mortgage Principal Reductions

Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program are not taxable.

American Opportunity Credit

The Maximum Hope education credit has increased to $2,500 for most taxpayers.  The increased credit is now called the American Opportunity Credit and can be used for 4 years of college instead of 2.  Part of the credit may be refundable.

IRA Deduction Expanded

You may be able to take an IRA deduction if you were covered by a retirement plan and your 2009 modified adjusted gross income (AGI) is less than $65,000 ($109,000 if married filing jointly or qualifying widow(er)).  If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2009 modified AGI is less than $176,000.

Deduction for Motor Vehicle Taxes

If you bought a new motor vehicle after February 16, 2009, you may be able to deduct any state or local sales or excise taxes on the purchase.  In states without a sales tax, you may be able to deduct certain other taxes or fees instead.  Take the deduction on Schedule A if you are itemizing deductions and are not electing to deduct state and local general sales taxes.  If you are not itemizing deductions, these taxes increase your standard deduction and are claimed on Schedule L.

First-Time Homebuyer Credit

The credit increases to as much as $8,000 ($4,000 if married filing separately) for homes bought after 2008 and before May 1, 2010 (before July 1 2010, if you entered into a written binding contract before May 1, 2010).  Did you buy a Meridian Idaho Short Sale?  Or did you sell your House for sale in Eagle Idaho last year??  You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit.  You generally must repay any credit you claimed for 2008 if you sold your home in 2009 or the home ceased to be your main home in 2009.

Move Up Credit

Long-time resident homebuyers can claim the Homebuyer Credit, but they must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased. Additionally, your settlement date must be after November 6, 2009

Credit for Non-Business Energy Property

You May be able to take this credit for qualifying energy saving items for yourhomeplaced in service in 2009.

Standard Mileage Rates

The 2009 rate for business use of your vehicle is 55 cents a mile.  The 2009 rate for use of your vehicle to get medical care or to move is 24 cents a mile.

Earned Income Credit (EIC)

The EIC has increased for people with three or more children and for some married couples filing jointly.  You may be able to take the EIC if:

• Three or more children lived with you and your earned less than $43,279 ($48,279 if married filing jointly).

• Two children lived with you and you earned less than $40,295 ($45,295 if married filing jointly).

• One Child lived with you and you earned less than $35,463 ($40,463 if married filing jointly).

The maximum AGI you can have and still get the credit also has increased.  You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.  The maximum investment income you can have and still get the credit has increased to $3,100.

Tax on Childs Investment Income

The amount of taxable investment income a child can have without it being subject to tax at the parent’s rate has increased to $1,900.

Limit on Exclusion of Gain on Sale of Main Home

In certain cases, gain from the sale of your main home is no longer excludable from income if it is allocable to periods after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home.

Electric Vehicle Credits

You may be able to take a credit for:

• A plug-in electric drive motor vehicle placed in service in 2009
• A plug-in electric vehicle bought after February 17, 2009.

Conversion of a vehicle to a plug-in electric drive motor vehicle place in service after February 17, 2009.

So in looking at this, there are lot’s of small deductions for this or that.  But the biggest deduction you’ll have is from your home!  If you bought or sold a home in Meridian, Eagle or Boise Idaho – or looking to buy or sale a home- contact me at 208-288-2976 or visit my website at www.idahorealtyinfo.com.

Need tax assistance… call Jodi at;

Jodi Whittaker, CPA, MST
Whittaker&Associates, Inc.

Certified Public Accountants

155 E. 50th Street
Boise, ID 83714

208.373.7890 p

Here’s to hoping you receive a LARGE REFUND!!!

Paul Wallin
208-288-2976paul@idahorealtyinfo.com
http://www.idahorealtyinfo.com