As early as now, you should have prepared all the papers to submit your tax returns on April 15, 2010.
You also need to know this year’s changes in tax laws. The government has created new and expanded deductions, credits and other breaks. They can benefit many people if they find time to read the fine print. Here are some details to watch out for before you submit your papers.
Standard Deduction – The basic deduction for 2009 is $11,400 for married couples filing together. For single individuals, the deduction is $ 5,700. There are higher amounts for the blind and people aged 65 years and above.
Charitable Giving – There is a new law that allows people who give money to charities, like relief to the recent Haiti earthquake, to deduct their contributions on their 2009 tax returns. This “immediate tax benefit” only applies to cash contributions after January 11, 2010 and before March 1, 2010. The gifts must be made specifically for Haiti quake victims.
Car Purchases – Taxpayers are eligible to deduct some or all of the state or local taxes or excise taxes paid for buying new cars, light trucks, motor homes or motorcycles during 2009. However, there are restrictions. Deductions are limited to taxes paid on up to $49,500 of the purchase price of each qualifying new vehicle. The new vehicles must be bought after February 16, 2009 and before January 1, 2010. Leases are not counted.
Home Purchases – The extended and expanded tax credit of as much as $8,000 will benefit those who purchased a house during 2009. It is widely known as the first-time homebuyer credit but can be useful to other qualified homebuyers.
Capital-Loss Carryovers – Be sure to check if you have loss carryovers. The rules are still the same. Capital losses can be used to soak up capital gains on a dollar-on-dollar basis. If there are more losses than gains, you can deduct up to $3,000 a year ($1,500 for married individuals and filing separately) from salary and other income. Additional losses are carried over into future years.
Mileage – The standard mileage for business use of a car, van, pick-up or panel truck for the period of 2009 is 55 cents a mile. If you use your car for medical reasons or as part of a deductible move, the deduction adds up to 24 cents a mile. If you use it to provide services to charity, the deduction is 14 cents a mile.
There are many sources available, including tax breaks for college costs and tax credits. We can assist in finding the most suitable options available for you. You can get them and more by signing up on the top-right form today.
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