Last Minute Tax Filing Strategies

April 15 is days away

Lots of people wait until the final weeks before doing their taxes and that isn’t a bad thing especially if you owe. Why give the government money sooner than you have to?

We did notice some important changes for the 2009 tax year which showed up in many tax preparation software programs. Whether you rely on H&R Block’s software, TurboTax, or some other tax program you should be on the look out for certain money saving deductions including the following:

• Helping Haiti – Although the earthquake happened during the 2010 tax year, Congress has decided to allow Americans to declare their donations as a 2009 deduction. But your chance to donate and receive a deduction ended on February 28 so any deductions made from here on this year will need to be declared with your 2010 tax filing. (see IRS.gov: Haiti Relief Donations Qualify for Immediate Tax Relief)
  
  
• Tax Free Unemployment – You pay unemployment insurance yet the federal government still taxes you for taking this benefit. What is the sense in that?! For 2009 and for 2009 only, the first $2400 of that is tax-free. If you and your spouse collected, then you can exclude $4800. (see The Wall Street Journal: Deducting Job Hunting Expenses)
  
  
• Your New Home – Congress played around with a tax deduction for new home buyers last year, offering an $8000 tax credit for most of the year before amending the law later to include a $6500 tax credit for other buyers who bought a house after November 6, 2009. Confused yet? Wait, there is more! You may still be able to take the deduction on your 2009 returns even if you haven’t signed a contract yet (April 30 is the deadline), giving you until June 30 to close. Yes, you’ll have to file an extension or an amended return to benefit now, but it could save you a bundle of money later on. (see Kiplinger: FAQs on the New Home Buyer Tax Credits)
  
  
• Home Energy Improvements – Making home improvements has never been so profitable! Well, at least deductible. Under the federal stimulus plan, various incentives were put in place to help homeowners update their abodes. We covered this information in detail last month so check out the link which follows for details. (see SayEducate.com: Enjoy Tax Credits For Energy Conservation)
  
  
• Your New Car – Eager to stimulate the auto industry—after all the federal government now owns significant chunks of General Motors and Chrysler—you can deduct the state sales tax if your purchase took place on February 16 or later for a car costing as much as $49,500. That trade-in for last summer’s cash for clunkers program can also be deducted. (see Intuit.com: Deduct the Sales Tax Paid on a New Car)

These are only a sampling of what you should look out for when you prepare your 2009 taxes. Certain deductions such as those for investment losses, college tuition, moving, and disaster recovery may also apply. Check the IRS site for more information to confirm what is available to you.