The theme of the most recent presidential election was change. That's something that's a constant when it comes to taxes. Every year, taxpayers must deal with different tax laws. As the new year rolls in, here are nine new, renewed or slightly altered tax situations that could help you lower your tax bill.
1. Claim your stimulus rebate. If you didn't qualify for an economic stimulus payment in 2008, or got less than the possible maximum amount, you get a second chance in 2009. The rebates actually are credits against your 2008 taxes that must be filed by April 15, 2009. In 2009, you'll find the official Recovery Rebate Credit on whichever 1040 form you file. However, this time you won't get a separate cash payment. Rather, your credit amount will be used to offset any tax you might owe. If your IRS bill happens to be less than your rebate credit and other tax payment amounts you've made, then any excess will be issued as a refund check.
2. Become energy efficient at home. In 2005, a new federal energy bill created tax savings for various ways to improve a home's energy efficiency. Unfortunately, the tax breaks for the improvements that are easiest to implement and least costly expired at the end of 2007.
The good news is that the credits, along with some new ones, were reinstated effective Jan. 1, 2009. On that date, installation of added insulation, storm windows and doors or an energy-efficient furnace or air conditioner could get you a tax credit of up to $500. However, as with many -- OK, most -- tax laws, the credit is not that cut-and-dried. Some improvements have specific credit limits. Energy Star has compiled a comprehensive chart of available home improvement tax credits.
And the $500 limit applies to the total credit you can claim for all the years the credit is available. So if you put in $200 worth of windows in 2007, then you only have $300 left on your possible credit claim for 2009.
3. Expand energy efficiency to the road. Gasoline prices dropped at the end of 2008, but you don't really expect them to stay under $2 a gallon, do you? You can get a head start on potentially rising pump prices by buying a hybrid or other alternative-fuel vehicle. Even better, such an auto could provide a tax credit to boot. Although the tax breaks in 2009 for popular Toyota and Honda hybrid vehicles no longer exist, other auto manufacturers still offer a wide variety of fuel-efficient cars, trucks and SUVs that could increase your gas mileage and save you tax dollars.
4. Keep an eye on extenders. For the last few years, the tax code has offered filers an array of tax deductions. The only problem with these tax breaks is that they are temporary, requiring Congress to annually reauthorize, or extend, them. Several of these so-called extenders were approved for the 2009 tax year as part of the economic bailout bill. They include an additional standard deduction amount for real estate taxes, as well as deductions for college tuition and fees, state and local sales taxes and teachers' classroom expenses. If you can claim any of these extended tax breaks, be sure to do so in 2009. There's no guarantee Congress will keep them around for another year.