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Tax breaks offer savings

| March 28, 2010 9:00 PM

COEUR d'ALENE - Looking for extra credit? New and extended tax credits for 2009 give taxpayers more opportunities to save on their tax bills - if they qualify. From credits for higher education and car purchases to home-related savings, here's a rundown of what's new for your 2009 return.

Home owners, or prospective home buyers, are among the main recipients, but families and individuals can reap benefits from other programs as well.

Home Energy

There are two new energy-related tax credits for 2009:

• Non-business Energy Property Credit. If you installed energy-efficient windows or doors or added high-efficiency heating or cooling equipment to your home in 2009, you may be eligible for a new credit. You can get back up to 30 percent of the cost for the home improvements up to $1,500 for 2009 and 2010 combined.

• Residential Energy Efficient Property Credit. Alternative energy equipment such as solar electric systems, solar hot water heaters, geothermal heat pumps and wind turbines may give you another credit. You can get back up to 30 percent of the cost of these items, but make sure you know the rules about the type of residences and costs that qualify.

Other examples of home improvements that could qualify for tax credits include, skylights, insulation, central air conditioning and heating, and asphalt roofs with cooling granules. For more specifics on this and existing alternative energy credits, visit the Energy Star Web site and watch the IRS YouTube video on alternative energy credits.

Home Buyers

Through the expanded First-Time Homebuyer Credit, you may be eligible for a credit worth 10 percent of the purchase price of your new home, up to $8,000. You must sign a settlement document - commonly a Form HUD-1 - for the purchase of your first home on or before April 30, 2010, and close the deal on or before June 30, 2010. For 2010 purchases, you can take the credit on either your 2009 or your 2010 return.

Even those who have lived in the same home for many years may be entitled to a break. New legislation extends a tax credit to longtime residents of the same principal residence if they purchase a new main home. To qualify, you must show that you have lived in your previous home for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home (e.g. for a 2010 home purchase, you must have lived in your current home five consecutive years between 2002 and 2010). The maximum credit for longtime residents is $6,500 or $3,250 for married individuals.

For more information, click here or check out the IRS YouTube video for clarity. More details on the First-Time Homebuyer Credit can be found at IRS.gov/recovery or by calling the IRS at (800) 829-3676.

For more tax changes, click here.

Whether you're an early-bird filer or an April procrastinator, there's a lot to be aware of this tax season. Changes in your life and alterations to the tax laws will affect how you file. Stay up-to-date by visiting us each week throughout March. Visit NEFE's tax series at www.smartaboutmoney.org.

Education

More families than ever will qualify for new education tax credits under the American Opportunity Credit, a renamed expansion of the Hope Credit. The IRS has increased its payback to $2,500 - a $700 increase from the previous Hope Credit - for tuition and certain fees individuals pay for the first four years of college. To qualify, you must have a modified adjusted gross income of less than $80,000 if you're single or less than $160,000 for those married and filing jointly. And even if you owe no tax, you can receive up to $1,000 for each eligible college student.

For more information, visit the IRS Web site or watch an IRS YouTube video about education tax credits. And learn about other education tax benefits detailed in IRS Publication 970.

Automotive

If you bought a new vehicle, you might qualify to deduct state or local sales or excise taxes. The deduction for new cars, light trucks, motorcycles or motor homes purchased between Feb. 17, 2009, and Dec. 31, 2009, is offered to single taxpayers who earn less than $125,000 or joint filers who earn less than $250,000. Learn more at the IRS Web site or watch an IRS YouTube video about the credit.

If you traded in your old car as part of the Cash for Clunkers program, you received a $3,500 or $4,500 credit - depending on the new vehicle you purchased. These credits are free of federal tax, but they might be taxed by your state. Check with the state tax department to check rules.