The Tax Man Cometh: Steps to Take before It’s Too Late
Dark clouds loom on the tax horizon
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.