News, Events and Updates -
There’s Still Time for Tax Savings for 2009
As 2009 draws to a close and the holidays take our focus, taxes and tax planning are not a favorite topic. However, with the extensive tax law changes that have taken place in 2009, it’s not too late to be aware of and plan for opportunities that could mean tax savings for many of us.
The American Recovery and Reinvestment Act enacted earlier this year provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient and parents and students paying for college. But all of these incentives have expiration dates so taxpayers should take advantage of them while they can.
There’s still time to make home improvements before year-end, which could mean both savings on energy bills as well as tax savings. The credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500. North Carolina also allows a credit on certain eligible energy-saving improvements. The North Carolina credit is 35% of the cost of the eligible improvements up to and subject to certain limitations.
The IRS has added a new section on its website (www.irs.gov), Tax Benefits for Education that includes details of the two key changes in education deductions and credits. One change is the expansion of the definition of qualified education expenses to include computers and computer technology in 529 Education Plans. There is also a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. Forty percent of this credit would be refundable.
Taxpayers are provided with a deduction for State and local sales and excise taxes paid on the purchase of new cars, light trucks, recreational vehicles, and motorcycles through 2009, subject to certain income limitations.
The Worker, Homeownership and Business Assistance Act, which was signed into law on November 6, 2009, extends the unemployment benefits for workers looking for jobs. This Act also extends, expands and improves the First Time Homebuyers Credit, which was set to expire on qualifying home purchases made prior to December 1, 2009. This refundable credit has been extended to apply to a principal residence purchased by the taxpayer between December 1, 2009 and before May 1, 2010 (closed before July 1, 2010). There is also a credit of $6,500 for long-time homeowners purchasing a new principal residence. Provisions relating to long-time residents of the same principal residence, and income, purchase price, age, related party, dependent, and documentation limitations apply.
There were also changes recently to North Carolina state tax laws that will impact your 2009 tax return. The new personal surtax affects taxpayers with North Carolina taxable income of $50,000 or higher for Married Filing Separately, $60,000 or higher for Single, $80,000 for Head of Household and $150,000 for Married Filing Jointly. The surtax, which is calculated as a tax on your regular state tax, is either 2 percent or 3 percent, depending on your taxable income. Corporations are subject to an income tax surcharge of 3 percent on its North Carolina income tax due before deducting any tax credits or payments.
