4 Tax Topics to Consider for 2010
It’s tax time again. Too many people will neglect to take advantage of the tax laws they could use to their benefit. Focusing on one or more of these four areas could make your next tax refund much more rewarding.
1. Itemize
Choosing the standard deduction makes filling out your tax forms easier, but it could also cost you money that is rightfully yours. By itemizing your deductions instead, you can fill out a more detailed and potentially money-saving tax return.
2. Children
Having children is a big responsibility and can put a strain on the family finances. Fortunately, the tax codes acknowledge this fact. There are three core credits available to parents:
The Newborn Credit: A new baby born during the tax year makes the parents eligible for a $1,000 Child Credit as well as a Dependency Exemption worth $3,650.
Child Credit: Each child under 17 years qualifies the parents for an additional $1,000 credit.
Child and Dependent Credit: Money spent toward child care while the parents work can qualify parents for a tax credit from $600 to $2,100.
3. Buying and Owning a Home
The purchase and ownership of a home can be one of the most important and rewarding decisions a person ever makes. Even in the current financial climate, taxpayers are missing opportunities to save themselves money and get the home they really want.
First-Time Homebuyer Credit: Buying a new home can bring up to an $8,000 tax credit, even if the home is not your first. If you have not owned a home for the previous three years, you qualify as a first-time homebuyer. If you lived in and owned the same home for five out of the last eight years and you buy a new home, you can qualify for up to $6,500.
Mortgage Payment Interest Credit: The interest accrued on loans up to $1.1 million can be deducted if the loans are used to purchase, construct or improve a home.
4. Buying and Owning a Car
Buying a new car can stimulate the economy. It can also lighten the burden on your wallet.
Cash for Clunkers: The $3,500 to $4,500 payment the government gives for trading in an old vehicle for a more environmentally friendly one is tax free and does not need to be reported as income.
Car Purchase Sales Tax Credit: The sales tax paid on your new vehicle can be included in your state sales tax deductions as long as you itemize.
Take your time, check every entry on your tax forms and make sure you are getting the tax returns you deserve. This could be the year you look forward to April 15.
Tom Haring is a Central Penn Parent intern, a husband and the father of a 21-month-old son.
