— Thomson Reuters Tax Analyst Bob Scharin identifies new or expanded deductions and credits for 2009. This article originally appeared on ThomsonReuters.com. –
The payoff for grasping new tax breaks on the 2009 version of Form 1040 could be substantial, but businesses will miss out on the tax savings if they rely on last year’s return as a template for this year’s filing, said Bob D. Scharin, senior tax analyst for the Tax & Accounting business of Thomson Reuters.
Here is Scharin’s rundown of 10 new taxpayer-friendly provisions available for 2009 returns:
1. Motor vehicle sales tax. The sales tax you paid on the purchase of a new motor vehicle from February 17 through December 31, 2009 is deductible, regardless of whether you itemize your deductions, or claim the standard deduction. The deduction is limited to the tax on up to $49,500 of the vehicle’s purchase price, and the deduction phases out ratably for a taxpayer with modified adjusted gross income (MAGI) between $125,000 and $135,000 ($250,000 and $260,000 on a joint return).
2. Homebuyer credit. First-time homebuyers are entitled to a refundable tax credit of 10 percent of the purchase price, with credit maximum of $8,000. For home purchases after November 6, 2009, a first-time homebuyer is defined in an oddly expansive manner to include those who owned a home for at least five consecutive years out of the eight-year period preceding the purchase. The maximum credit for ‘long-time resident’ homebuyers is $6,500. The homebuyer credit phases out for MAGI of $75,000 to $95,000 ($150,000 to $170,000 for joint filers) for purchases before November 7, 2009, and $125,000 to $145,000 ($225,000 to $245,000 for joint return filers) for purchases made after November 6. This change in the phaseout rule means that timing counts, Scharin said. “The precise date in 2009 that you purchased the home can determine whether your income level lets you qualify for the credit.” Another tax return complication is that you can claim the credit on a 2008 amended return if you prefer (e.g., doing so may get you the cash faster or may produce a larger credit due to the income restrictions).