MAKING WORK PAY

For 2009 and 2010, anyone who works gets a tax credit of up to $800 for joint filers. There are certain requirements (for example, single filers must make less than $95,000 and claim yourself on your return)
This tax credit is unique as most won’t see a larger refund because of it. Congress reduced the amount of federal tax withheld from paychecks in order to front load this credit. This means, if you receive this credit, your paychecks should have been a little larger in 2009 as you didn’t pay as much for federal withholdings.

SALES TAX FOR NEW VEHICLES

Buyers of new vehicles can deduct the sales tax on their purchase even if they don’t itemize. This can be done on any vehicle purchased after February 16, 2009. The tax on the first $49,500 qualifies for this deduction.

COLLEGE TUITION TAX CREDIT

The Hope Credit is being replaced by a new credit worth $2,500 per student. This new credit applies for the first four years of college and covers the cost of books. The credit begins to phase out for single tax payers whose Adjusted Gross Income is $80,000 and joint filers whose Adjusted Gross Income is $160,000.

CREDIT FOR HOME IMPROVEMENTS

There are two different credits related to making your house more energy efficient. The Energy-Saving Home Improvement credit is 30% of your costs up to $1,500 applies for qualifying windows, skylights, outside doors, water heaters and central air conditioners.
The Energy-Efficient Property Credit is for up to 30% of your cost and applies to solar water heating, solar electric power, wind turbines
Be sure to check with your tax professional for information on these credits as there may be additional requirements.

HOMEOWNER'S CREDIT EXPANDED

There are more rules to the new homeowner’s credit, talk with your tax professional to see if you qualify.

CAPITAL GAINS TAX RATES

The capital gains rates for individuals in the 10% and 15% tax brackets are zero for this year. This means that individuals taking the standard deduction and making less than $41,500 and a married couple filing together making less than $83,000 will pay no capital gains tax.

KIDDIE TAX- Rules have changed for the

kiddie tax. Children under the age of 24 who are full time students may be subject to their parent’s tax rate for unearned income over $1,900.

ROTH CONVERSIONS- The income limits on

Roth conversions disappears in 2010. This means if you have a traditional or non- deductible IRA, you will be able to roll it over to a Roth regardless of income level.

Adjustments for inflation:

Standard Deduction:
    Single                                 $5,700
    Married                              $11,400
    Head of Household             $8,350

Person Exemption                   $3,650

Business Mileage:

1/1 - 12/31                   50.0 ¢ per mile
Medical and Moving Mileage:

1/1 - 12/31                    16.5 ¢ per mile
Charitable Mileage       14.0 ¢ per mile