Every year, wage earners and tax filers may be eligible for a number of different tax credits, which can vary from year to year. Below, you will find a listing of tax credits that are available for Tax Year 2009. Even if you have not yet filed your taxes for 2009, you may still be able to qualify for these credits. Generally, you can receive credits for up to three years past the original date your taxes were due. Alternately, if you have filed your taxes but did not receive credits your were eligible for, you may file an amended return to receive the credits.
Increase in Earned Income Tax Credit
The American Recovery and Reinvestment Act (ARRA) temporarily increased the earned income tax credit for working families with three or more children. Now families can claim up to three children and receive as much as $5,657.
Making Work Pay Tax Credit
Most wage earners have already benefited with a larger paycheck as a result of the changes made to federal income tax withholding. This change created a refundable tax credit, which is calculated at a rate of 6.2% of earned income of up to $400 for working individuals and $800 for working families. This credit is available for both Tax Years 2009 and 2010.
The “American Opportunity” Education Tax Credit provides financial assistance for individuals seeking up to four years of college education. For tax years 2009 and 2010, you can receive a tax credit of up to $2,500 off the cost of tuition and related expenses (including books) paid during the taxable year. This credit basically extends the Hope Credit to cover four years of education, as opposed to two.
Qualified Higher Education Expense (529 Accounts)
Section 529 Education Plans are tax-advantaged savings plans that cover all qualified education expenses, including tuition, room & board, mandatory fees and books. In 2009, computers, computer technology, and Internet access are qualified education expenses.
First-Time Homebuyer Credit Expands
Taxpayers who purchased a home between Dec. 31, 2008 and Dec. 1, 2009 can get a credit for up to $8000 with no payback requirement ($4,000 for taxpayers who are married filing separately). The taxpayer must remain owner of the new home for at least 36 months after the purchase date.
Money Back for New Vehicle Purchases
Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax. Qualified vehicles include: passenger car or light truck, a motorcycle, or a motor home. The vehicle must have been purchased after Feb. 16, 2009.
Increased Eligibility for the Refundable Portion of Child Credit
ARRA increases the eligibility for the refundable child tax credit in 2009 and 2010. Families must have at least $3,000 in earnings in 2009 to qualify. This credit is worth up to $1,000 per child.
Child and Dependent Care Tax Credit
This credit offsets some of the child and dependent care costs that families pay in order to work. This credit is worth up to $2,100.
Temporary Suspension of Tax on Portion of Unemployment Benefits
ARRA has temporarily suspended federal income tax on the first $2,400 of unemployment benefits per recipient. Those who receive unemployment benefits in 2009 should check their withholding to ensure unnecessary tax is not withheld.
One-time payment of $250 for Social Security Recipients, Veterans and Railroad Retirees
Retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration, Railroad Retirement beneficiaries, and disabled veterans receiving benefits from the U.S. Department of Veterans Affairs are eligible for this payment.
Residential Energy Credits
ARRA provides many tax incentives for individuals to invest in energy-efficient products. Tax credits are issued for home improvements such as: adding insulation, energy-efficient exterior windows, and energy-efficient heating and conditioning systems. Taxpayers receive 30 percent of the cost of all qualifying improvements. The maximum credit limit also increased to $1500 for improvements made in 2009.
COBRA Health Insurance Continuation Premium Subsidy
Workers who have lost their jobs between Sept. 1, 2008 and Dec. 31, 2009 may qualify for a 65 percent subsidy for COBRA continuation premiums for themselves and their families. Eligible workers will have to pay 35 percent of the premium to their former employers.
For more information on available tax credits, check out the American Recovery and Reinvestment Act info center on the IRS website.