Jumping into income tax topics
There are still two months to go until April 15 but if this year is like recent ones, some 40 million individual income tax filers already have submitted their federal returns.
That’s a lot of early-birds but still leaves about 100 million filers who still can take advantage of a good tax-tips roundup. And this year, with energy credits, new homebuyers’ credits, worker credits and numerous other changes to tax laws, you have plenty of reader-friendly fodder from which to choose.
And there are several changes for the current tax year that your audience can benefit from now.
(Please note: I’m giving a synopsis of newsworthy topics and changes here; please review the fine print in IRS publications and consult tax-professional sources for full rules.)
So grab Publication 17 – the bible of the 1040 return – and choose from among a plethora of pointers, including a summary of what’s new.
Here are some changes for 2009 filers:
First-time homebuyer credit. Filers claim this up-to-$8,000 credit if they purchased a house after 2008 and before May 1 of this year. Eligible filers must not have owned a main home in the prior three years. Note: buyers who sign a contract before May 1 may claim the credit on their 2009 return instead of waiting a year, and buyers who purchased after November 6, 2009 but before July 1 of this year may be eligible for a reduced credit of $6,500.) The credits must be repaid if the properties are sold within 36 months.
Making work pay credit. Filers with earned income get a credit of $400 or 6.25 percent of income; the credit starts phasing out for those earning more than $75,000 and the recipients of some stimulus programs.
Non-taxable items: Benefits received under the cash for clunkers program, COBRA subsidy program, economic recovery payments and the first $2,400 of unemployment compensation are not taxable.
Larger education credits. The HOPE credit has been renamed the American opportunity credit and hiked to $2,500 – it’s also partially refundable.
Vehicle credits and deductions. Filers may be able to deduct sales and excise taxes on motor vehicles purchased after February 16, 2009. And plug-in vehicle credits are available, though few such models are actually on the road yet. Amounts vary based on purchase price, energy savings and other criteria.
These highlights will be of greatest interest to your readers; check the “what’s new” section of IRS guides for more information about line items like the Earned Income Credit, casualty loss limits, IRA deductions and more.
Changes in 2010:
Earned Income Credit thresholds change. Give readers a heads-up that the Earned Income Credit is expanding again; low-income filers may want to check eligibility and file a W-5 form so the extra cash is advanced to their paychecks immediately rather than held until they file next year.
Roth IRA conversion. Usually when non-taxed money in a traditional IRA or other tax-deferred plan is rolled into a Roth IRA, the full amount is taxed as ordinary income. This year, income resulting from conversions won’t be taxed until later: half in 2011 and half in 2012. And income limits are lifted so anyone can do a Roth conversion in 2010. It’s a win-win – nets the federal government a little more ready cash and lets investors choose a more advantageous savings vehicle. Note that a lot of advisory firms are pushing the conversions; a “should you/shouldn’t you” tips box with guidelines from a CPA or certified financial planner would be a good sidebar to this tax update.
All of the above news can be gleaned from IRS publications and presented to readers in easy-to-digest infographics; online versions can include hyperlinks directly to the applicable IRS forms and pamphlets.
