We are in the midst of tax season, which means that now is a good time to understand the deductions you can take and any important changes to filing that are applicable to you. When you file a tax return, you become eligible to receive tax credits, and if you’re a homeowner, you are entitled to homeownership tax benefits. Here are some tax time tips to help you prepare your taxes:
- If you did not receive the 2008 Economic Stimulus Payment in its entirety, or if you did not meet the requirements to receive the payment, you may be eligible for a Recovery Rebate Credit when you file for your 2008 tax return. In order to claim the Recovery Rebate Credit, you need to know the amount of your 2008 Economic Stimulus Payment so it can be determined if you are eligible to receive this credit.
- If you are a homeowner, you are entitled to homeownership tax benefits. Deductions can be taken from a buyer’s or seller’s personal income on a tax return or can be used to adjust the basis of the home to reduce the capital gains. In most cases, you can deduct mortgage interest and property taxes. Depending on your tax rate, these homeownership tax benefits help you in lowering your federal income tax.
- You could be eligible for a Health Coverage Tax Credit if you receive certain forms of assistance or payments, such as Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation.
- Other credits that may be applicable to you include the Child and Dependent Care Credit and Flexible Benefit Plans, Child Tax Credit, Credit for the Elderly or the Disabled, Hope and Life Time Learning Educational Credits, and Work Opportunity Credit plus other credits that could affect how you file.
- There are important tax changes that you should be aware of when preparing to file for your 2008 tax return. Some of these tax law changes that can affect how you file are an increase in the 2008 basic standard deductions for most taxpayers and a rise in contribution limits for IRAs and other retirement plans. This change in contribution limits will allow more people to make a tax-deductible contribution to a traditional IRA.
- Other deductions that can affect how you file include deductible educational expenses, child care deductions, and deductible charitable contributions. There are other itemized and standard deductions that may be applicable to you.
Speak to your tax advisor to confirm the deductions and credits that are applicable to you. When you are informed on what is deductible, what changes affect you, and how to prepare your taxes, you have greater ability to influence the outcome of your return.
