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There is a new credit for first-time homebuyers. This new credit
provides a maximum tax credit of up to $7,500 or ten percent of the
purchase price of the home for eligible first-time buyers who bought
a house between April 2008 and June 2009. It is important to note
that this particular credit operates much like an interest-free
loan, because it must be repaid over a 15-year period.
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The IRS provides special relief provisions which may reduce or eliminate
the tax bite for those who have lost their homes. The Mortgage
Forgiveness Debt Relief Act of 2007 generally allows taxpayers to
exclude income from the discharge of debt on their principal
residence. Debt reduced through mortgage restructuring, as well as
mortgage debt forgiven in connection with a foreclosure, qualify
for this relief. This provision applies to debt forgiven in 2008
or 2009.
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A new tax credit worth between $2,500 and $7,500 now exists for
plug-in electric motor vehicles. The credit will phase-out after
250,000 of these vehicles are purchased in the U.S.
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There is also still time to purchase fuel-efficient hybrid,
electric, and diesel cars and trucks to get tax credits worth as
much as $4,000 in 2009. Note that you must be the original purchaser
of the new qualifying hybrid car to claim the credit and leases do
not count.
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There is an extension of the current energy property credit of up to
$500 for people who buy energy-saving products for the home such as
windows and insulation.
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Newlyweds, be sure to check your withholding status to avoid owing
more taxes than expected next April. Also, brides, if you are taking
your husband's name, be sure to officially change it with the Social
Security Administration in 2008 to avoid delays in 2009 by having to
verify your identity.
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Once again (until 2009), seniors over the age of 70 1/2 may draw
$100,000 from their retirement plans and contribute it to their
favorite charities. The contribution must be made directly from
their retirement plan.
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When making charitable contributions, be sure to gather all receipts
as proof of giving to charities in 2008. Cash donations must now be
supported by confirmation from the charity itself, or by bank
records or credit card statements. If any single donation is over $250. Then
a written contemporaneous acknowledgement of the contributions from the charity must be received. This acknowledgement must contain the name of the organization, date of contribution amount of cash contribution and description of non cash contribution or a statement that non goods or services were provided.
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The Higher Education Tuition Deduction has been extended to Dec. 31,
2009 and allows taxpayers to deduct some costs of higher education
expenses.
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There has been another AMT Patch. The Alternative Minimum Tax
exemption amounts are $69,950 for married couples filing jointly,
$34,975 for married couples filing separately, and $46,200 for
single taxpayers.
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Now is the time to maximize 401(k)s, or IRAs/SEPs: If you are 50
years or older, you are now allowed to contribute up to $6,000.
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The sale of investments: Timing a sale to reap the most tax benefits
should be decided before taking action. Take advantage of the $3000
loss allowed on your tax return each year if you have losers in your
portfolio or be sure to take unrealized losses if you have sold some
assets at a profit this year.
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Non-itemizers who paid 2008 real estate taxes can claim an extra standard
deduction equal to the lesser of the actual taxes paid or $500(single) or
$1,000(married).
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Individuals who did not receive the maximum available economic stimulus
payment in 2008 based on their 2007 returns may be able to claim a credit on their 2008 returns.
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For property placed in service in 2008 a special first year depreciation
allowance of 50% of the cost of eligible property is allowed in addition to first year expensing(property must be new)
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The maximum depreciation deduction for a car placed in service in 2008 is
$10,960 if the special depreciation allowance applies must be new). For a light truck or van, maximum deduction is $11,960 with the special allowances.
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The Federal credit for energy-saving home improvements was not extended.
You can still claim the 25% Montana credit with the maximum credit of $500.
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