Life Changes Equal Tax Savings
H&R Block explains how to take advantage of new credits, deductions
KANSAS CITY, Mo. – From the homebuyer credit to parenthood, changes in the tax code affect the complexity of the 2010 tax filing season and could mean more money in taxpayers’ pockets.
The changes help taxpayers in five key areas:
Buying a home: More American homebuyers will get tax relief thanks to changes and expansions to the First-Time Homebuyer Credit:
1. Up to a $6,500 tax credit for existing homeowners in the market to move.
2. A new closing deadline of April 30, 2010 for the $8,000 First-Time Homebuyer Credit. Also, a special provision gives taxpayers two extra months to close if they entered into a contract by April 30, 2010.
Workers: Due to the Making Work Pay Credit, millions of taxpayers could find themselves with a tax surprise unless they adjusted their withholding last year. Taxpayers who should take special care in understanding the implications include:
1. Married couples with two incomes
2. Individuals with multiple incomes
3. Retirees who have taxes withheld from a pension or social security benefits
4. Individuals who work but who can be claimed as a dependent on someone else’s tax return.
Parenthood: The recovery act expands the Child Tax Credit, allowing families to begin qualifying for the credit with every dollar earned over $3,000. This change translates into a refundable credit of up to $1,000 for each qualifying child under 17 – even if the taxpayer has no tax liability.
Higher education: More taxpayers getting a higher education or supporting a dependent in college will be able to qualify for the American Opportunity Tax Credit, with a new, partially refundable $2,500 tax credit for college tuition paid in 2009.
In the garage: Taxpayers who purchased a new vehicle can deduct the state and local sales and excise taxes paid on the purchase – as long as the vehicles were purchased between Feb. 17 and Dec. 31, 2009.
About The Tax Institute at H&R Block
The Tax Institute at H&R Block is the go-to source for objective insights on federal and state tax laws affecting the individual. For more information: http://thetaxinstitute.com.
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