Lawmakers are struggling with an almost incomprehensible budget deficit. This is truly a beast to be reckoned with. One of the options many experts think Congress will try is the revamping of the tax code, and not in the favor of the average citizen. Many incentives will end and holes will be closed in order to increase tax revenues.

The time to act on some of the existing and even increased tax advantages is this year. There are still some things taxpayers can do before the end of the year to take advantage of the existing tax laws. As always, you should consult an experienced tax professional before making any decision or taking any actions.

Buying a home for the first time is still the number-one incentive

Buying a home for the first time is still the number-one tax incentivized government program. This program has just been made better with increased income limits for qualifiers. With the new law enacted in early November, single first-time buyers can have an income of up to $125,000 and married couples up to $225,000 in order to qualify for a 10% credit of up to $8,000.

The first-time home buyer’s incentive is is a direct dollar refund and not just a tax credit. Even if you do not owe the amount of the credit in taxes, you can get the full 10% amount in a refund. This is an increase in qualifying income up from $80,000 for a single home-buyer. The program is capped at $800,000 for a purchase price, however. You get no credit at all if the purchase price of the home is above $800,000.

Keep America moving

Buying a new car before January 1, 2010 can also get you a nice write-off on your taxes. Separate from the wildly popular “Cash for Clunkers” program, a lesser known incentive is still on the books. If you buy a new car by year’s end you can deduct sales tax, excise tax, and certain other fees on a purchase price of up to $49,500. This deduction is not dollar-for-dollar like the home-buying incentive, but it is still a considerable deduction. If your income is less than $125,000 for a single buyer or $250,000 for a couple, you may qualify for this program.

Jobs are not required

With so many people out of work, the government has even issued the unemployed a tax break. Although unemployment income is taxable, there is a $2400 exemption still on the books for this year. If you lose your job, you can write off the first $2400 of your unemployment benefit. Remember, you will still pay taxes on the rest, so plan accordingly.

So many exemptions, so little time

You should always consult a tax professional before making any adjustments or trying to take advantage of any tax programs. A lot of tax incentives are still on the books, but they might disappear soon. The time to ask questions is right now. Get the right information now, and you just might greet the Tax Man with a smile.

Parents looking for some debt relief can find aid trough a tuition tax credit of up to $2,500. Part of Obama’s stimulus bill is the higher-education tax credit. The stimulus, signed into law in February, should hopefully help Americans who are financially struggling.

This particular tax credit aims to help parents who are paying for college tuition this year. One of the benefits of this credit is that it requires no additional paperwork or a hefty financial aid application. Students only need to file their tax returns on time to take advantage of it. Jackie Perlman, analyst for H & R Block stated, “This will definitely help people.”

Complicated tax code

Like all tax code, the tuition credit does come with some complexity. In return for sorting through its regulations, however is a “bigger and more inclusive [tuition credit] than previous higher-education tax credits, which were so complicated that more than a quarter of eligible taxpayers failed [to get them],” according to Perlman.

Those who were able to collect normally saw a return of about $900. This time around the $2,500 tuition credit promises to be much simpler to manage. Perlman stated, “Any professional tax preparer knows how to use the credit and parents filing themselves can still do it relatively easily.”

How the credit works

Perlman explained the rules by sorting out some of the details:

• Taxpayers can utilize the credit for a reduction of their 2009 taxes.
• The credit can be up to $2,500, and even if taxpayers owe no money, they can still get a credit of $1,000.
• The tuition credit covers tuition, fees and books that were paid for throughout the 2009 to 2010 school year.
• The tuition credit is available to undergraduates who are enrolled at least half-time.
• Taxpayers with $80,000 adjusted gross incomes or $160,000 jointly-filed incomes are eligible for the full tax credit.
• Taxpayers who earn more than $90,000 and $180,000, single and joint filers, respectively, do not qualify.
• Because the credit covers only tuition, fees and books, students who have scholarships or grants that cover these are ineligible.
• Students with any drug felony convictions are not eligible either.

In the end, the tax credit is useful to a wide variety of taxpayers who are seeking small ways of finding debt relief. They need to follow a few rules to take advantage of the credit. Taxpayers can claim 100 percent of the first $2,000 they spend on tuition, fees or books and 25 percent of the next $2,000 spent. For example, if a parent has a $4,000 expense for tuition, fees or books, they can take $2,500 off of their 2010 taxes. If they owe less than the $2,500, then the government will return 40 percent of “whatever extra credit they qualify for, up to a maximum of $1,000.”

Finding help with college

Parents should utilize every tool they can to help defray the costs of college. It’s standard practice that tuition, fees and books increase every year as colleges and universities try to manage their own debt in a difficult economy.

With potentially an additional $2,500 in tax credited money, consumers can find some debt relief to help with their budgets. It may take a professional to sort through the complete tax code, but in the end it is worth the added trouble.