If you saw my last blog, you know that there are many changes this year that taxpayers need to know as they complete their 2010 returns. Here are some more things you should know about in order to take advantage of all available credits and pay the lowest allowable tax:
Unemployment Compensation - Many people are not aware that unemployment compensation is generally taxable income. But the American Recovery and Reinvestment Act of 2009 allows everyone who received unemployment benefits during 2009 to exclude the first $2,400 of those benefits when they file.
To find out more go to: www.irs.gov/newsroom/article/0,,id=219191,00.html
New Vehicle Sales and Excise Tax Deduction - People who bought a new vehicle in 2009 may be able to deduct a portion of the sales and excise taxes. The taxes paid on up to $49,500 of the purchase price of vehicles such as new cars, light trucks, motorcycles, and motor homes are deductible. Vehicles except for motor homes must weight 8,500 pounds or less. You must have bought the vehicle after Feb. 16, 2009 and before Jan. 1, 2010. You can take this deduction even if you do not itemize, but the deduction is gradually phased out for those who earn more than $125,000 per year. To find out more go to: www.irs.gov/newsroom/article/0,,id=219139,00.html
Energy Tax Credits - Taxpayers who have made energy efficient improvements to their homes may be eligible to claim the Nonbusiness Energy Property Credit in 2009 and/or 2010. The credit is 30 percent of the cost of improvements such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. Taxpayers can claim up to $1,500 for 2009 and 2010 combined. Only certain products that meet strict energy efficiency standards qualify for the credit, so consumers must have a written statement from the manufacturer that the products qualify. The improvements must be made to the taxpayer's principle residence after Dec. 31, 2008 and before Jan. 1, 2011. To find out more go to: http://www.irs.gov/newsroom/article/0,,id=214979,00.html
For more information about any tax issue or to subscribe to receive IRS tax tips by e-mail, visit www.irs.gov.