1. Medical bills - Save receipts for medical bills, prescriptions and co-pays if you are not using a health savings account. You can take a deduction that will lower your tax liability, if your medical expenses exceed more than 7.5% of your adjusted gross income (AGI).
2. Invest in a retirement account - You can make a maximum contribution of $16,500 dollars to your 401K account annually. Investing in retirement savings can lower your tax liability by giving you a tax credit.
3. Buy a house - Paying rent does not provide you with a tax benefit. Owning a home not only means you are building equity, it also lowers your tax liability because mortgage interest is a tax deduction.
4. Make a charitable donation - Tax free donations are a great way to help an organization or individual in need and lower your taxable income for the next income tax season.
5. Make an extra mortgage payment - Your home mortgage payment is likely the biggest monthly expense in your household. Use your income tax refund to make an extra payment, or two! Making one extra mortgage payment every year could reduce the lifetime of your loan by up to 5 years.
6. Pay your property taxes - Real estate taxes are tax deductible. If your property tax bill is due early next year, you might want to pay it now and take the deduction.
7. Avoid the gift tax - By giving $13,000 or less per year per person you can avoid the gift tax. Gifts over that amount will reduce your lifetime gift tax exclusion, and gifts over the exclusion will be taxed to the giver.
8. Estimate Your 2009 Taxes - In six simple steps with the help of your paystubs and our Tax Refund Calculator you can estimate how much you may owe or be refunded.
Friday, November 20, 2009
Ten Ways to Spend Your Refund
1. Payoff a credit card – Credit card companies make their money by charging huge interest rates. Depending on how many credit cards you have, determine which one has the highest annual percentage rate (APR), and pay that one off first.
2. Build up emergency fund – Saving for a rainy day is always on our mind but not always the first thing we want to do with our money. It’s smart to plan ahead in case of an emergency, 3-6 months of living expenses should be sufficient.
3. Pay out of the ordinary bills – Most of us plan our monthly expenses pretty closely and don’t have a lot of spare money for the expenses that pop up when you least expect it. Take this time to pay the balance to your orthodontist, auto repair shop or veterinary bill.
4. Buy a new car – A new car purchase is a big investment and having a decent size down payment can be a challenge in this economy. Take this time to make a smart automobile purchase and have a smaller monthly payment, by making a sizable down payment with your federal tax return.
5. Make an extra mortgage payment – Your home mortgage payment is likely the biggest monthly expense in your household. Use your income tax refund to make an extra payment, or two! Making one extra mortgage payment every year could reduce the lifetime of your loan by up to 5 years.
6. Add it to a college fund – College fees are going up every year. If you have children, it’s a good idea to start saving for their college education now. If you have a 529 college savings plan, make a deposit to your account.
7. Make a charitable donation – Tax free donations are a great way to help an organization or individual in need and lower your taxable income for the next income tax season.
8. Make a deposit to your 401K – Rather than spending your money, reinvest it in your future. You can make a maximum contribution of $16,500 dollars to your 401K account annually. Take advantage of this opportunity and have the money available when you retire and need it most.
9. Prepay for a family vacation – It’s always fun to have a vacation to look forward to and you deserve it! Plan a vacation with family or friends and use a portion of your federal tax refund to pay for it.
10. Upgrade appliances – Energy efficient appliances can increase the resale value of your home, save you money on your electricity bills and be a nice upgrade if you are in need of new appliances in general. Think of taking this time to replace your washer, dryer, refrigerator or air-conditioner, not only will this help the environment but it will save you money as well.
2. Build up emergency fund – Saving for a rainy day is always on our mind but not always the first thing we want to do with our money. It’s smart to plan ahead in case of an emergency, 3-6 months of living expenses should be sufficient.
3. Pay out of the ordinary bills – Most of us plan our monthly expenses pretty closely and don’t have a lot of spare money for the expenses that pop up when you least expect it. Take this time to pay the balance to your orthodontist, auto repair shop or veterinary bill.
4. Buy a new car – A new car purchase is a big investment and having a decent size down payment can be a challenge in this economy. Take this time to make a smart automobile purchase and have a smaller monthly payment, by making a sizable down payment with your federal tax return.
5. Make an extra mortgage payment – Your home mortgage payment is likely the biggest monthly expense in your household. Use your income tax refund to make an extra payment, or two! Making one extra mortgage payment every year could reduce the lifetime of your loan by up to 5 years.
6. Add it to a college fund – College fees are going up every year. If you have children, it’s a good idea to start saving for their college education now. If you have a 529 college savings plan, make a deposit to your account.
7. Make a charitable donation – Tax free donations are a great way to help an organization or individual in need and lower your taxable income for the next income tax season.
8. Make a deposit to your 401K – Rather than spending your money, reinvest it in your future. You can make a maximum contribution of $16,500 dollars to your 401K account annually. Take advantage of this opportunity and have the money available when you retire and need it most.
9. Prepay for a family vacation – It’s always fun to have a vacation to look forward to and you deserve it! Plan a vacation with family or friends and use a portion of your federal tax refund to pay for it.
10. Upgrade appliances – Energy efficient appliances can increase the resale value of your home, save you money on your electricity bills and be a nice upgrade if you are in need of new appliances in general. Think of taking this time to replace your washer, dryer, refrigerator or air-conditioner, not only will this help the environment but it will save you money as well.
Thursday, November 5, 2009
New $6,500 tax break for homebuyers
WASHINGTON – Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.
Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.
The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."
The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.
"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.
The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.
The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.
The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.
"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.
The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.
By Associated Press Writer Stephen Ohlemacher
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.
Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.
The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."
The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.
"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.
The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.
The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.
The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.
"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.
The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.
By Associated Press Writer Stephen Ohlemacher
Tuesday, October 27, 2009
First Time Home Buyers Credit Extension
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Do you think the Fed will extend the First Time Home Buyers Credit? http://twtpoll.com/2rb6u7
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