2009 End of Year Tax Tips

The end of the tax year is quickly approaching. Here are a few ideas to help you take advantage of 2009 tax laws and some thoughts on how to plan for your tax year-end.

First-Time Homebuyers

If you (and your spouse if married) did not own any other main home in the previous three years and are looking to purchase a main residence in the United States, act now. If you purchase before December 1, 2009, you could qualify for a tax credit of $8,000 or 10% of the purchase price, whichever is less. Please note that other restrictions may apply, consult your tax advisor or realtor.

Windows, Doors, and Other Energy Efficient Items

The non-business energy credit that expired in 2007 is back in 2009 and 2010. You may claim a credit of 30% of the cost of certain energy-efficient property placed in your home. The credit is limited to $1,500. Thus, up to $5,000 of property may be purchased to maximize the credit. If you're considering a new heat pump, air conditioner, water heater, windows, doors, insulation, or asphalt roof, you may want to purchase the property by December 31^st to receive the credit on your 2009 taxes. Energy-efficiency restrictions apply, consult your tax advisor.

New Car Sales Tax

Thinking of buying a brand new car? Do so by December 31^st and you can use the state and local sales as a deduction on your 2009 taxes. You do not need to itemize your deductions in order to qualify for this deduction. If you know a new car is in your future, take advantage of this limited-time tax deal. Price of the vehicle and gross income restrictions may limit the amount you may deduct.

Self-Employed Tax Planning

For farmers, business owners, and other self-employed proprietors it is always a good idea to meet with your tax advisor before December 31^st. You can discuss your projected income for the year, plan for major asset purchases, discuss Simplified Employee Pensions (SEP) or other tax-saving retirement plans, and adjust your fourth quarter estimated tax payment if necessary. This kind of tax planning is essential to avoid major surprises when filing your tax return in the spring.

Housing Allowance

Preachers, teachers, and everybody else who qualifies for a housing allowance should do a year end review of their wages categorized as housing allowance compared to actual housing expenses. Then, consider adjusting your fourth quarter estimated tax payment, if necessary. If actual housing expenses do not match or exceed wages shown as housing allowance, expect a larger tax bill come April 15^th.

Sources: www.irs.gov