Liberty Tax Tips for filing a return

• First-Time Home Buyer Credit Is Extended Into 2010 
• First-Time Home Buyer Credit Is Also Expanded 
• Residential Energy Efficient Property Credit Continues 
• There's Extended Tax Relief For Some Financially Distressed Homeowners 
• Real Estate Tax Deduction For Non-Itemizers Extended 
• Tax Exclusions When Selling A Home
• Extension Of Unemployment Benefits 
• Temporary Suspension Of Taxation Of Unemployment Benefits
• Extension Of The NOL Carryback Gives Struggling Business A Break 
• The "Making Work Pay Tax Credit"
• Transit Benefits Parity Increased 
• Premium Subsidies For Cobra Continuation Coverage For Unemployed Workers
• Earned Income Credit Increases For Families With Three Or More Children 

The first-time home buyer’s credit has been extended into 2010, and more people will qualify for a tax break.  The qualification period for first-time home buyers to purchase a home and qualify for the credit will continue through April 30, 2010.  First-time home buyers who have not owned a principle residence for 3 years prior to the purchase of a new home will continue to be eligible for a credit of up to $8,000.  For homes purchased after December 31, 2008, the credit will not have to be repaid if the home buyer uses the home as their principal residence for 3 or more years.  Those serving in the military will not be penalized if they claimed the credit and then have to deploy and sell their home within three years. TOP 

The first-time home buyer’s credit has been expanded so that more homeowners now qualify for a tax break.  People who have owned a home and used it as a principal residence for a 5-consecutive-year period during the 8-year period ending on the date of purchase of a new personal residence may qualify as first-time homebuyers and receive a credit of up to $6,500.  To claim this credit, the taxpayer must have a signed purchase contract for a principal residence in force before May 1, 2010 and must close on their home purchase by June 30, 2010 (this also applies to the up to $8,000 credit). This credit is available for purchases of principal residents after November 6, 2009.  Taxpayers who make qualified purchases after December 31, 2008 do not have to repay the amount of the credit if they reside in the home as their principal residence for 36 months after the purchase. TOP

For eligible property placed in service during 2009 and 2010 you can claim a credit of up to $1,500 of the cost of certain energy efficient property. The residential energy credit may offer a tax break on a 2009 return if all installation is done and/or work was completed in 2009.  Residential energy credits apply to homes, houseboats, mobile homes, condominium, and qualifying manufactured homes.  The credit is for 2009 and 2010 and the maximum credit amount is $1,500 for both years. TOP

Homeowners experiencing “short sales” and foreclosures will get an extended break for “debt-forgiveness” tax consequences.  Instead of treating cancellation of debt as taxable income on the foreclosure of a principle home, no taxes will be levied on discharges of indebtedness of up to $2 million dollars for married taxpayers filing jointly and of up to $1 million dollars for a married taxpayer filing a separate return through tax year 2012. TOP

Homeowners who are not able to itemize deductions can deduct their real estate taxes as an additional standard deduction of up to $500 ($1,000 if MFJ) for tax year 2009. TOP

A home seller who is a single taxpayer has the opportunity to owe no tax on the first $250,000 of profit for the sale of a home owned and lived in for two of the last five years.  A married couple owes no taxes on the first $500,000 of profit for the same time period.  Homeowners reap annual tax benefits from the deductions allowed for mortgage interest and itemizing, which is usually more beneficial than taking the standard deduction.  When a main residence is sold after the death of a spouse, it must be sold within two years of the death date of death for the surviving spouse to claim the $500,000 exclusion. TOP

The “Worker, Homeownership and Business Assistance Act of 2009 provided a 14 week extension of unemployment benefits, and six additional weeks of unemployment benefits for those in states with unemployment rates of 8.5 % or more.  There’s no extension or increase in the provision for out-of-work Americans to exclude any more than $2,400 of unemployment benefits from total gross income in 2009. (This measure was a part of the American Recovery and Reinvestment Act of 2009). TOP

The American Recovery and Reinvestment Act provides that some taxes are waived for the unemployed.   For 2009, out-of-work Americans may exclude up to $2,400 of unemployment benefits when reporting the income for federal income tax purposes. Benefits exceeding that amount will still be subject to tax. TOP

The American Recovery and Reinvestment Act of 2009 provided that all businesses with average gross receipts of less than $15 million could elect to carry back net operating losses (NOL) from 2008 for 3, 4 or 5 years instead of the normal two years. The new act extends that option for taxpayers for an NOL incurred in 2009, but placed a 50-percent of taxable income limit on the NOL offsets in the fifth carryback year.  Struggling businesses can benefit by carrying back the NOL to a profitable year allowing the business to get a refund of much needed cash.  An NOL is the excess of the taxpayer’s business deductions over its gross income. TOP

The Making Work Pay economic stimulus credit is a refundable tax credit of up to $400 for working individuals and $800 for working married couples for 2009 and 2010. This credit resulted in a decrease in withholding for most taxpayers. As a result it may also cause a surprise for some taxpayers who discover that they need to adjust their withholding amounts, or owe at tax time.  Taxpayers who have more than one job and families with two working spouses may be having too little withheld.  Working dependents, pensioners who have earned income, and some employees receiving Social Security, SSI, Railroad Retirement or Veteran’s Disability payments may also be in this category, and find it beneficial to check their withholding amounts. TOP

Qualified transportation fringe benefits, such as transit passes, van pooling and qualified parking, are not included in an employee’s income up to a specified dollar amount.  The amount has increased from $120 per month income exclusion amount for transit passes and parking to $230 per month for 2009 (starting in March 2009).  This increase will be in effect through 2010 with an inflation adjustment. TOP

Recession-related job loss threatens health coverage for many families. To help people maintain coverage, there’s now a 65% subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated, and for their families. This subsidy also applies to health care continuation coverage if required by states for small employers. To qualify for premium assistance, a worker must be involuntarily terminated between September 1, 2008 and December 31, 2009. The subsidy would terminate upon offer of any new employer-sponsored health care coverage or Medicare eligibility. TOP

The earned income credit amounts will be temporarily increased for working families with three or more children.  This increases the earned income tax credit to forty-five percent of the family’s first $12,570 of earned income for families with three or more children, and increases the beginning point of the phase-out range for all married couples filing a joint return (regardless of the number of children) by $1,880. TOP