The holidays are bearing down, but to make sure you don't overpay the IRS when you file your 2009 return next year, you need to make time for some year-end tax tasks.
"There is the list of usual suspects that are out there to be considered," says Stephen Kunkel, director of taxes at CBIZ MHM in Los Angeles. "Then there's the real swamp of legislation with a lot of special considerations you don't have every year. Some are broad-based; others more narrow."
Some of the tax breaks will expire Dec. 31, so this could be your last chance to use them. Others will be around awhile longer, but it might make sense to claim this year. And some have been helping folks cut their IRS bills for ages and likely will be around for many tax years to come.
Regardless, check out these seven tax moves. If some or all of them apply to your personal tax situation, take advantage of them before 2009 is over.
1. Buy a houseHomeownership is a proven tax saver. Thanks to the expanded first-time homebuyer credit, even more people might soon be claiming these many breaks on their returns.
But the IRS definition of first-time, says Kunkel, is not exactly the same as Webster would view it.
Under the Worker, Homeownership, and Business Assistance Act of 2009, folks who haven't owned a home in the last three years might be able to get an $8,000 credit toward the purchase of a residential property. Even longtime residents, those who've lived in their current home for five of the last eight years, are considered first-timers under the law and might be eligible for a $6,500 credit.
For 2009, the $8,000 credit applies to qualifying home purchases that closed during the calendar year. The $6,500 tax break is a bit more limited; in these cases, the purchase must be on Nov. 7 or later.
2. Improve your current homeYou say you don't want to move? Then let Uncle Sam help pay for energy-efficient improvements to your current home.
The stimulus bill enacted in February, officially known as the American Recovery and Reinvestment Act of 2009, or ARRA, expanded and simplified tax breaks for many residential energy upgrades. Now, improvements ranging from the replacement of drafty windows and doors to new heating or air conditioning systems could net tax savings for up to 30 percent of the improvement's cost, up to a maximum $1,500 in tax credits. Homeowners who decide to make even more advanced energy saving moves, such as installing solar heating systems, could get even bigger tax breaks.
The federal government's Energy Star program tracks qualifying improvements and tax credit requirements.