Changes to Tax Laws for 2009

The tax code is constantly changing thanks to new laws, some of which are designed to gradually phase in over several years. Additionally, many income thresholds, deductions, credits and exemptions are indexed for inflation. Consequently, it's important to work with an experienced and knowledgeable tax consultant when preparing your taxes. Otherwise, you could miss out on tax savings opportunities newly available to you this year. At James T. Borello & Co., our consultants always stay current on changes to tax laws. We work hard to make sure you never pay a penny more than you owe in any tax year.

Here are just a few of the changes to tax laws that take effect in 2009:

• First Time Homebuyers Credit—First time homebuyers (those who have not owned a home in the U.S. for the last three years) who purchased a home in 2009 are eligible for a tax credit of up to 10% on the first $80,000 of the home's purchase price, or $8,000. This credit phases out starting at $150,000 AGI for joint filers and $75,000 AGI for single filers. Unlike its 2008 predecessor, the credit does not have to be repaid over 15 years. The expanded version of this credit effective on Nov. 7, 2009 has the same income limits as the Existing Homebuyer Credit.
• Existing Homebuyer Credit—As of Nov. 7, 2009, current homeowners who purchase a new or existing home as a primary residence by April 30, 2010 (close by July 1, 2010) will be eligible for a $6,500 tax credit. This credit begins to phase out at $125,000 for single filers and $225,000 for married filers.
• New Vehicles Sales Tax Deduction—If you bought a new vehicle after February 16, 2009 and before the end of the year you can deduct the sales tax you paid on the first $49,500 of the vehicle. This deduction is available even if you don't itemize your deduction, but it begins to phase out at $250,000 AGI for joint filers and $125,000 AGI for single filers.
• College Tuition Tax Credit—New in 2009, you can get a tax credit of up to $2,500 for each student you have in college for four years. This credit phase out at $160,000 AGI for joint filers and $80,000 AGI for single filers.

There are dozens of other changes to 2009 tax laws including new energy-efficiency tax credits, higher estate tax exemptions and higher standard deductions. Contact us to learn how these and other changes can affect your tax return for 2009.