One of the fastest responses to the real estate slump was a new homebuyer credit. The plan, of course, was to stimulate new home purchases. It may have already had an effect — housing starts have jumped lately, and the property market has stabilized — but that may not be enough. If the National Association of Realtors gets their new plan enacted, the credit will be nearly doubled, and the “First-Time” part of “First-Time Home Buyer Credit” will be dropped.
Continue reading “Realtors Association Calls for Higher New Home Tax Credit”
First-Time Homebuyer Credit Expanded For 2009 Home Purchases
The IRS announced a special extension of the First-Time Homebuyer Credit this February, available for eligible taxpayers who purchase a home in 2009. The American Recovery & Reinvestment Act provides for a credit of up to $8,000 for anyone purchasing a home between January 1 and December 1 of 2009. Unlike previous years’ First-Time Homebuyer Credit, which was capped at $7,500 and required repayment in installments, the credit for 2009 purchases is a standard refundable credit, not requiring repayment and available regardless of the filer’s tax liability. It can be included on tax returns filed right now, and it will be available when 2009 tax returns are filed next year, as long as it is claimed on a home purchase occurring before December 1, 2009.
Any 2008 tax return claiming the credit for a home purchased between April 8 and December 31 of 2008 will still be eligible only for the previously existing credit, which must be repaid within the next several years. The new credit applying to 2009 purchases also has some of the same restrictions. The credit is equal to 10% of the home’s purchase price, with $8,000 as the new maximum amount. The amount of the credit will be lower for single taxpayers with an Adjusted Gross Income above $75,000 and joint taxpayers with an AGI above $150,000. Taxpayers who are Married Filing Separately are only eligible to receive one-half of the total credit amount, or $4,000. And while the new version of the credit, for 2009 purchases, does not require repayment, the waiving of repayment is conditional on the taxpayer maintaining ownership of the home and use of it as their main residence for 36 months from the date of purchase.
RapidTax.com currently has the First-Time Homebuyer Credit available to anyone who files a 2008 tax return through our site, in both its original form and the new form pertaining to 2009 home purchases. The amount of the credit will be calculated online, from the information provided during the submission process.
10 Most Commonly Missed Deductions
- Moving Expenses for Your First Job. You can deduct your moving expenses for job relocation purposes. If you have moved over 50 miles, you may deduct 20 cents per mile, parking fees and tolls. You may also deduct your car expenses and the costs of moving yourself and your belongings to your new home.
- Student Loan and Interest Paid. Previously, the IRS required that you pay student loan interest to qualify for the deduction. If your parents pay back your student loan, the IRS now views this as your parents giving you the money so that you can pay your debt. If you are not being claimed as a dependent, you can qualify to deduct up to $2,500 of your student loan interest paid by your parents.
- College Tuition. If your income is too high to qualify for the Hope Credit or Lifetime Learning Credit and you paid college tuition for yourself, your spouse, or your dependent, you can still deduct up to $4000 on your return. This can really offset your income and give you a break on your tax liability.
- Out of Pocket Charitable Contributions. You may be able to list out of pocket expenses you incurred while working or donating for charitable purposes. For example, if you prepare dishes for a nonprofit organization, you can list the cost of the ingredients you purchased.
- Child Care Credit. It is easy to overlook the child care credit if you pay your child care bills through a reimbursement account at work. You will be able to list up to $6,000 in child care expenses. However, if your expense is paid through a work account, you can only list up to $5,000.
- Military Reservists Travel Expenses. If you are a member of the National Guard or Military Reserve, you may qualify for a deduction for travel expenses to drills and meetings. In order to qualify, you must travel more than 100 miles and be away from home overnight. If you drove your own vehicle, you can deduct 48.5 cents per mile plus the cost of lodging and half the cost of your meals.
- Estate tax on income in respect of a descendent. If you withdrew money from an inherited IRA, you may deduct whatever taxes you paid from the amount you withdrew.
- $250 Educators’ Expenses. Both teachers and aides can deduct up to $250 they spent in 2008 for books and classroom supplies. You can get this deduction whether or not you itemized.
- State Tax you paid Last spring. If you owed tax when you filed your 2007 state tax return, you may list this as a state tax deduction for your 2008 tax return.
- Jury compensation paid to Employer. In many scenarios, employers require you to surrender your compensations from jury duty pay in exchange for your regular salary during the period you were fulfilling your civil duties. Even after passing this money over to your employer, the IRS still considers this to be taxable income. Therefore, you have the ability to deduct this amount as a job expense whether or not you itemized.
