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The IRS has sent out a reminder you can still take advantage of the American Opportunity Tax Credit, a tax credit that will help many parents and college students offset the cost of college. This tax credit is available through December 31, 2010 and can be claimed by eligible taxpayers for college expenses paid in 2009 and 2010. Here are six important facts from the IRS about the American Opportunity Tax Credit: (more…) |
Posts Tagged ‘tax credits’
Don’t Overlook Tax Credits for College
Tuesday, August 31st, 2010Payroll Tax Holiday – New Details on 2010 HIRE Act
Wednesday, August 11th, 2010|
Linda Chiappone, Senior Tax Manager |
| In March, the President signed into law the “Hiring Incentives to Restore Employment Act of 2010” (the 2010 HIRE Act), the centerpiece of which is a payroll tax holiday and up-to-$1,000 tax credit for businesses that hire unemployed workers. Here’s an overview of these new hiring incentives and some new details that carry important guidance on these new payroll tax breaks. (more…) |
Tax Credits for Home Improvements
Thursday, July 15th, 2010|
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Summer is a great time to tackle those home improvements on your list. And under the American Recovery and Reinvestment Act (ARRA) of 2009, the energy tax credit is increased. The new law raises the credit rate to 30% of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010. |
Closing Deadline Extended to Sept. 30 for Eligible Homebuyer Credit Purchases
Tuesday, July 6th, 2010|
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Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal, according to the Internal Revenue Service. On July 2nd the President signed the Homebuyer Assistance and Improvement Act of 2010. This extended the closing deadline from June 30th to September 30th for any eligible homebuyer who entered into a binding purchase contract on or before April 30th to close on the purchase of the home on or befor June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline. |
Health Care Tax Credit for Small Business
Friday, April 23rd, 2010|
Carolyn Valenti, CPA, Partner |
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The new law provides small employers with a tax credit (i.e., a dollar-for-dollar reduction in tax) for contributions to purchase health insurance for their employees. The credit can offset an employer’s regular tax or its alternative minimum tax (AMT) liability. (more…) |
Are You Eligible for a Tax Credit
Friday, April 2nd, 2010|
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You should consider claiming tax credits for which you might be eligible when completing your federal income tax returns. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to the point that you would receive a refund rather than owing any taxes. You should consider your eligibility for the credits listed below:
Note: The adoption credit is scheduled to revert back at the end of 2010 to its pre-2001 dollar limit of $5,000, or $6,000 if a special needs child is adopted.
Contact us if we can assist you. |
Two New Tax Credits to Lower Your Tax Bill
Monday, March 8th, 2010Two special tax credits offer taxpayers an opportunity to lower their tax bill or increase their refunds this filing season. Both credits are claimed on new Schedule M, Making Work Pay and Government Retiree Credits.
The making work pay credit helps millions of workers and self-employed individuals, while the government retiree credit especially targets former government workers who aren’t receiving Social Security benefits. Income limits apply to the making work pay credit but not to the government retiree credit. Both credits are refundable,meaning that those eligible can get them even if they owe no tax. Here are further details on each of these credits.
Making Work Pay Credit
Most eligible taxpayers qualify for the maximum making work pay credit of $800 for a married couple filing a joint return or $400 for other taxpayers. The credit equals 6.2 percent of earned income up to the maximum amount. Thus, any eligible couple whose earned income is $12,903 or more qualifies for the $800 maximum credit. Other taxpayers qualify for the $400 maximum if their earned income is $6,451 or more.
For most workers, the credit is based on the taxable wages reported to them on Forms W-2. Self-employed individuals figure the credit using the net profit or loss they receive from a business or farm. Additional calculations are necessary for some taxpayers, including those who have net business losses, wages from work performed while a prison inmate or foreign earned income. More information, including a worksheet, can be found in the instructions for Schedule M.
Some taxpayers are not eligible for the making work pay credit, including:
- Joint filers whose modified adjusted gross income (MAGI) is $190,000 or more.
- Other taxpayers whose MAGI is $95,000 or more.
- Anyone who can be claimed as a dependent on someone else’s return.
- A taxpayer who doesn’t have a valid social security number.
- Joint filers, if neither spouse has a valid Social Security number.
- Nonresident aliens.
Other taxpayers qualify for the credit but must reduce the amount of the credit they claim, including:
- Joint filers whose MAGI is more than $150,000 but less than $190,000.
- Other taxpayers whose MAGI is more than $75,000 but less than $95,000.
- Taxpayers who received an economic recovery payment. This special $250 payment was made during 2009 to recipients of Social Security benefits, supplemental security income (SSI), railroad retirement benefits or veterans disability compensation or pension benefits.
- Taxpayers who claim the government retiree credit.
- See Schedule M and its instructions for details.
Though all eligible taxpayers must file Schedule M to claim the making work pay credit, most workers got the benefit of this credit through larger paychecks, reflecting reduced federal income tax withholding during 2009.
Government Retiree Credit
This credit is designed to provide a benefit equivalent to the economic recovery payment to those government retirees who did not qualify for these payments. Retired federal, state or local government employees who receive pensions in 2009, based on work not covered by Social Security, are eligible to claim this credit. The credit is $250. For joint filers the credit is $500 if both spouses are retired government employees who receive pensions based on work not covered by Social Security. The credit cannot be claimed by an individual if he or she received an economic recovery payment during 2009. See Schedule M and its instructions for details.
Don’t Overlook These Valuable Tax Credits
Tuesday, February 2nd, 2010| __________________________________________________________________ |
 Each year, many taxpayers overlook tax credits, even though they often qualify for one or more of them. Though both tax deductions and credits save you money, they do it in different ways. A deduction lowers the income on which tax is figured. The tax credit is even better because it lowers the tax itself. Take time now to review your records and see if you qualify for one of these tax credits; many are new or expanded for the 2009 tax filing year.
First-time Homebuyer’s CreditA credit limit of $8,000 for qualified first-time homebuyers is available in 2009. Further, long-time residents who owned and used the same principal residence for any 5 consecutive years of the last 8 years prior to purchasing a subsequent new principal residence, may now qualify for a tax credit of up to $6,500. Contact us for further information regarding this credit. Energy Improvements Qualify for Expanded Tax CreditsPeople who weatherize their homes or purchase alternative energy equipment may qualify for either of two expanded home energy tax credits: the Residential Energy Property Credit and the Residential Energy Efficient Property Credit.
American Opportunity Credit Helps Pay for First Four Years of CollegeMore parents and students can use a federal education credit to offset part of the cost of college under the new American Opportunity Credit. This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. New Vehicle Purchase IncentiveNew car buyers can deduct the state or local sales or 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 eligible taxpayers may claim the deduction for taxes paid on multiple purchases. However, the deduction is limited to the tax on up to $49,500 of the purchase price of each qualifying new vehicle. Qualifying new vehicles must be purchased, not leased, after Feb. 16, 2009, and before Jan. 1, 2010. Earned Income Tax Credit (EITC)The Earned Income Tax Credit (EITC) helps low- and moderate-income workers and working families. Working families with incomes below $48,279 (married filing jointly in 2009) and childless workers with incomes under $18,440 often qualify. Ordinarily, you must have earned income as an employee, independent contractor, farmer or business owner. Some disability retirees are also eligible. There is only a slight increase in these income levels for 2010; for example, working families with incomes below $48,362 (married filing jointly) and childless workers with incomes under $18,470, may quality in 2010. Child Tax CreditIf you have a dependent child under age 17 at the end of 2009, you probably qualify for the child tax credit. This credit, which can be as much as $1,000 for each qualifying child, is in addition to the regular $3,650 personal exemption for 2009 you can claim for each dependent. A change in the way the credit is figured means that more low- and moderate-income families will qualify for the full credit on their 2009 returns. Don’t confuse the child tax credit with the child care credit.
Credit for Child and Dependent Care ExpensesIf you pay someone to care for your child so you can work or look for work, you probably qualify for this credit. Normally, your child must be your dependent and under age 13. Though often referred to as the child care credit, this credit is also available if you pay someone to care for a spouse or dependent, regardless of age, who is unable to care for himself or herself. In most cases, you need to obtain the care provider’s social security number or taxpayer identification number and enter it on your return.
Saver’s CreditThe saver’s credit helps low-and moderate-income workers save for retirement. You probably qualify if your income is below certain limits and you contribute to an IRA or workplace retirement plan, such as a 401(k). Income limits for 2009 are $27,750 for singles and married filing separately, $41,625 for heads of household and $55,500 for joint filers. These income limits are adjusted annually for inflation, however, will remain unchanged for 2010. The credit, up to $1,000, is based on a percentage (10-50%) of each dollar placed into a retirement plan, up to the first $2,000. The lower the adjusted gross income, the higher the credit percentage; resulting in the maximum credit of $1,000 (50% of $2,000).
A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly. Other Credits AvailableIRS.gov has information on these additional credits:
Tax Credits Can Save You MoneyThese credits can increase your refund or reduce the tax you owe. Usually, credits can only lower your tax to zero. But some credits, such as the EITC and the child tax credit, can actually exceed your tax. Though some credits are available to people at all income levels, others have income restrictions. These include the EITC, saver’s credit, education credits and child tax credit.
Tax credits help you pay part of the cost of raising a family, going to college, savings for retirement, or getting daycare so you can work or go to school.
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