Catherine E Thomas CPA - serving Oro Valley, Marana & NW Tucson

Worker, Homeownership & Business Assistance Act of 2009
This new tax legislation was signed into law 11/6/2009. The main item of interest for individual taxpayers is extending the time period and eligibility for the first time homebuyer credit. The credit extends past the prior 11/30/2009 deadline to 05/01/2010. Also, if a taxpayer or spouse maintained a principal residence for 5 consecutive years during the 8 years immediately prior to the new home purchase, they qualify as a first time homebuyer and the credit. There are limits for purchase price of new home and there is a phase out if taxpayers adjusted gross income exceeds $125,000 individual, $225,000 married filing joint.

Tax tip: the law does not say the old home must be sold! A taxpayer could convert old home into a rental and and still qualify for this credit.

New motor vehicle deduction for non-itemizers
For those taxpayers who do not itemize, they may be able to increase their standard deduction by state & local sales and excise taxes imposed by purchase of new passenger car or light truck, motor home or motorcyle. Purchases that were made between Feb 17, 2009 and 12/31/2009 qualify and for vehicles sold at $49,500 and below.

Making Work Pay Credit - 2009
Up to $400 for individuals/ $800 for Up to $400 for individuals/ $800 for married taxpayers may be claimed on tax returns
for 2009 & 2010. The purpose is for 2009 & 2010. The purpose is to put more money in people's pockets now and sounds wonderful, but in fact, this credit may cause problems next year at tax filing time. Federal withholding tables were changed in February meaning less Federal Taxes were withheld (and in many instances less state taxes too). The problem is, this credit is phased out for single taxpayers with adjusted gross income (AGI) over $75,000 or married taxpayers with AGI over $150,000 per year. Also, taxpayers collecting private pensions may have less taxes withheld but may not be eligible for this credit causing a shortfall. Therefore a smaller refund or larger tax bill may be a reality next April 15th.

Mileage Rates for 2009
Standard mileage rate for business travel is 55 cents/mile. Medical and moving rates are 24 cents/mile. Keep those mileage logs up to take advantage of this deduction!

No RMD required for 2009
One component of the Worker, Retiree and Employer Recovery Act of 2008, allows for a reprieve from those required to take Required Minimum Distributions from IRA's or 401k for calendar year 2009.

Real Estate Tax Deduction - non itemizers
Part of the Housing Assistance Act of 2008 passed in July includes a provision that is beneficial to those taxpayers who do not itemize deductions (usually because mortgage is paid off). Real estate taxes up to $500 filing single or $1,000 filing joint are added to the standard deduction for 2009.