The IRS has provided this very important information. Please note this is directly from:
Five Tips for Avoiding Refund Delays Relating to Your Economic Recovery Payment
Posts Tagged tax credit
Avoiding Refund Delays
Feb 3
Well not the post I was hoping to get out next, but when you have days. . . . Below is a copy of an e-news release. I am busy trying to get the blog rolls up and complete today or at least for another hour or so. I hope to work on the Quotes tomorrow.
Seven Facts about the Non-business Energy Property Credit
Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.
This post is straight from the IRS Newswire, an IRS e-mail service. – subscribe. No I didn’t write any of this, you can get this information sent to you directly. I copied it here for you to see.
WASHINGTON — With 2009 now half over, the Internal Revenue Service reminds taxpayers to take advantage of the numerous tax breaks made available earlier this year in the American Recovery and Reinvestment Act (ARRA).The recovery law provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient and parents and students paying for college. But all of these incentives have expiration dates so taxpayers should take advantage of them while they can.
First-Time Homebuyer Credit
The Recovery Act extended and expanded the first-time homebuyer tax credit for 2009. Taxpayers who didn’t own a principal residence during the past three years and purchase a home this year before Dec. 1 can receive a credit of up to $8,000 on either an original or amended 2008 tax return, or a 2009 return. But the purchase must close before Dec. 1, 2009, and an eligible taxpayer cannot claim the credit until after the closing date. This credit phases out at higher income levels, and different rules apply to home purchases made in 2008.
New Vehicle Purchase Incentive
ARRA also provides a tax break to taxpayers who make qualified new vehicle purchases after Feb. 16, 2009, and before Jan. 1, 2010. Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. There is no limit on the number of vehicles that may be purchased, and you may claim the deduction for taxes paid on multiple purchases. But the deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels. This deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A.
Energy-Efficient Home Improvements
The Recovery Act also encourages homeowners to make their homes more energy efficient. The credit for nonbusiness energy property is increased for homeowners who make qualified energy-efficient improvements to existing homes. The law increases the rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to a total of $1,500 for improvements placed in service in 2009 and 2010. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
Tax Credit for First Four Years of College
The American opportunity credit is designed to help parents and students pay part of the cost of the first four years of college. The new credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. Tuition, related fees, books and other required course materials generally qualify. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
Certain Computer Technology Purchases Allowed for 529 Plans
ARRA adds computer technology to the list of college expenses (tuition, books, etc.) that can be paid for by a qualified tuition program (QTP), commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services to be used by the designated beneficiary of the QTP while enrolled at an eligible educational institution. Software designed for sports, games or hobbies does not qualify, unless it is predominantly educational in nature.
Making Work Pay and Withholding
The Making Work Pay Credit lowered tax withholding rates this year for 120 million American households. However, particular taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is withheld, including multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers and pensioners. Failure to adjust your withholding could result in potentially smaller refunds or in limited instances may cause you to owe tax rather than receive a refund next year. So far in 2009, the average refund amount is $2,675, and 79 percent of all returns received a refund.
Related Information
For more on the Recovery provisions that may apply to individual taxpayers see the ARRA page on IRS.gov.
Audio Files for Podcast
Tax Breaks for 2009 & 2010: In English and in Spanish
Videos
From the flyer notes
Dec 3
First time homebuyer Credit doesn’t mean you have to actually be a first-time buyer to qualify. And personally I think credit is the wrong word too.
During the summer President Bush signed the Housing Assistance Act of 2008. It allows first-time buyers (homes) a tax “credit” to the lesser of $7,500.00 ($3,750.00 if married filling separate) or 10% of the purchase price of a home. {Meaning if your home that you are buying only cost $45,500.00, your so called credit won’t exceed $4,500.00}
What is a first time home buyer? Well for this purpose it is described as an individual who had no present ownership interest in a principal residence for the three years prior the purchase of the home. If you are married both spouses’ must meet this requirement.
This “credit” is available for houses purchased after April 8th , 2008 and before July 1st, 2009.
Have you ever heard the phrase “If it sounds to good to be true it probably is.”? Well this in my opinion is one of those times. The “credit” has to be paid back. So is it a credit or a loan? Well, you decide. You must pay this back over a period of 15 years from your tax return. You have to start paying this back with the second tax year after the residence was purchased. No you only have to pay it back if you take the credit. You take the credit, two years later start paying it back.
So lets say you buy a $75,000.00 home and you elect to take this credit. You’ll get a credit of $7,500.00. In two years you will add back to your return (subtract from a refund, add to an amount due) $500.00 And will keep doing this for 15 years. There will be phase outs for income and a few other rules but that is the just of it.
Seems more like a loan than a credit to me.
I have a few clients who will qualify for this so called credit and I have already called and visited with them about it. I advised them of all the situations that applied to them and asked them to discuss it amongst themselves then to re-visit the issue come time to prepare their returns. As to take it or not I am not advising anyone in this, My view is that Taxes are high enough, new homeowners from my client base are young couples (one individual) starting out and having a tax liability for the next 15 years seems a bit questionable.
