TAX SEASON IS HERE!
I thought this would be a good time to share some of The New tax laws that would put some extra cash in your pocket.
Deductions:
529 Plans Education - For years 2009 and 2010 you can buy a computer and even pay for internet access from your 529 plan.
Non-Itemizers - This year you may want to take another look at electing to use the standard deduction. You can add to the standard deduction sales taxes, real estate tax, and DMV fees.
Haiti Earthquake Relief - Contributions made after January 11, 2010 and before March 1, 2010 can be deducted on your 2009 tax return. Remember to consider your tax bracket before you make your final decision.
Net Operating Losses - Can be carried back 2, 3, 4, or 5 years. It is critical that you carry back the loss to the year(s) with the highest income tax bracket to ensure the greatest refund.
Credits:
First Time Homebuyer - A credit of up to $8,000 ($4,000 if MFS) if purchased after 12/31/08 and before 12/1/09. It is limited to 10% of the purchase price. You are considered a first time homebuyer if you did not own a principal residence for at least three years prior to the date of purchasing this residence.
Plug-in Electric Vehicle - This credit is based on a formula. The credit can range from $2,500 to $15,000 based upon the weight of the vehicle and kilowatt hours.
Convert car to Plug-in Vehicle - The credit is limited to 10% of the first $40,000 cost to convert.
Residential Energy Efficient Property - A credit equal to 30% of the cost of certain qualified energy property expenditures. These costs include solar electricity, solar water heating, fuel cells, small wind and geothermal heat pumps.
Personal Energy Credit - A credit of 30% of the cost of energy efficient improvements to the principal residence is limited to a credit of $1,500.
Making Work Pay Credit - This is a refundable credit, maximum $400 ($800 MFJ). The credit is formula driven and is phased out at modified AGI of $95,000 ($190,000 MFJ).
American Opportunity Tax Credit Education - The maximum credit is $2,500 per student, per year. Qualified expenses now include course materials. The credit phases out at modified AGI of $90,000 ($180,000 MFJ).
Cancellation of Debt 1099-C Income - The last two years have provided tax legalization that could eliminate or greatly reduce tax on debt forgiveness. The rules are very complex and depend on whether the debt is recourse or non-recourse.
There are many other changes this year, so don't get caught paying more taxes than you owe. Let one of the tax professionals at ALEX A. ACCETTA, CPA & ASSOCIATES, INC., help you. For more information or to set up your appointment, please call Cristina at (714) 848-9158.
Alex A. Accetta
Alex A. Accetta, CPA & Associates, Inc.
