IRS gives year-end tax tips
2009 has been a tough year for many taxpayers. There are several tax breaks and deductions that may be taken advantage of before year’s end, however.
New car buyers may deduct taxes up to $49,500 for vehicles purchased after Feb. 16, 2009, and by Dec. 31, 2009.
“If you’re thinking about buying a new car this week, you may be able to deduct the sales and excise taxes you pay,” Internal Revenue Service spokesman Dan Boone said. “A new car, light truck, motorcycle or even a motor home will qualify.”
A vehicle’s cost may exceed the maximum amount, but in this case the buyer will have to prorate the amount of taxes deducted. The good news is taxpayers do not have to itemize to take the deduction, Boone said.
“It does have to be a new vehicle. It cannot be a used vehicle to qualify,” he noted.
Also, certain higher income people cannot take the deduction. For more information, refer to the IRS Web site, www.irs.gov.
A tax credit for energy efficient home improvements does not expire by year’s end, but those who want to claim improvements on their 2009 tax returns need to make them by Dec. 31.
Exterior doors, windows, hot water heaters, air conditioning units, heating units and insulation may qualify.
“The credit is a maximum of $1,500 for 2009 and 2010 combined,” Boone said. “It is 30 percent of the cost of equipment and sometimes includes installation costs.”
A complete list of qualifying items and repairs may be found at www.irs.gov.
Senior citizens age 70 and a half may transfer up to $100,000 tax free from an IRA account to a recognized charity.
Those who wish to benefit must make the transaction by Dec. 31.
“Not all charities are eligible, so I would advise anyone who’s doing this to check the IRS Web site,” Boone said.
Donations to charities must be made by Dec. 31 to count on this year’s tax returns. Also, cash donations require a receipt from the organization, and any clothing or household items must be in at least good condition to be tax deductible.
Donations made by credit card may count for 2009 as long as the card is charged by Dec. 31, although the bill may not be paid until 2010.
“Make sure it is a recognized charity,” Boone said, adding that most churches are not listed on the IRS database even though they are exempt in most cases. “Typically, churches are tax exempt but they are not required to apply for an exemption.”