FAQs and New Provisions of special interest to taxpayers

CARS Cash for Clunkers credit is NOT taxable income. 
If you received a CARS credit, do not include it in income on your tax return.

First Time Homebuyer's Credit
To qualify you may NOT have owned a principal residence within the previous 3 years of purchasing a home.
The credit is 10% of the purchase price, up to a maximum credit of $8000 ($800,000 purchase price) for most taxpayers.
You must live in the new home as your principal residence for 36 months after the purchase. Otherwise the credit must be recaptured (repaid).
The following types of homes qualify: house, houseboat, mobile home, coop apartment, condominium.
The following do NOT qualify - homes acquired by gift, inheritance or from a related party (family member, business or business associate).

Modified AGI (MAGI) limits
Bought before Nov 7, 2009. Phaseout begins at MAGI $75,000 / $150,000 MFJ. No credit for MAGI $95,000 / $170,000 MFJ.
Bought after Nov 6, 2009. Phaseout begins at MAGI $125,000 / $225,000 MFJ. No credit for MAGI $145,000 / $245,000 MFJ.

Existing Homeowners may qualify for a reduced credit for purchase of a new home
The new home must be purchased between Nov 7, 2009 and May 1, 2010. 
Existing homeowners must have lived in their previous residence for 5 of the preceeding 8 years to qualify.
The credit is 10% of the purchase price, up to a maximum credit of $6500 for most taxpayers.
The same MAGI limits apply as above.

2008 Homebuyer Credit repayment
Taxpayers who claimed the 2008 Homebuyer Credit must start repaying the credit beginning on their 2010 tax return. 
The repayment period is 15 years, but the credit may be repaid sooner.

Making Work Pay credit- Sch M (Making Work Pay)
6.2% of earned income -- Max credit $400
MAGI up to $95,000 Single/ $190,000 MFJ
Can not be a dependent claimed by another taxpayer

Government Retiree Credit - Sch M (Making Work Pay)
$250 Single / $500 MFJ
Must have government pension or annuity
Not eligible if received $250 economic recovery credit
Determined separately for MFJ - one may quality even if the other does not

Sales tax on new motor vehicle - Sch A (Itemized Deductions) or Sch L (Standard Deduction)
Auto or truck under 8500lbs, motorcycle, motor home qualify
New vehicle must be purchased after Feb 16, 2009 and by Dec 31, 2009
Deduct sales tax up to $500 single taxpayers / $1000 MFJ
If Deducted on Sch L -  increases Standard Deduction

Personal Exemptions  $3,650 for each taxpayer and dependent claimed on the tax return

Standard Automobile Mileage Rates (per mile)

Type of mileage	2009	2010
Business	55 cents	50 cents
Medical	24 cents	16.5 cents
Moving	24 cents	16.5 cents
Charitable	14 cents	14 cents

Standard Deductions for 2009
New for 2009: Schedule L taxpayers who do not itemize may include real estate taxes and sales tax on new vehicles (see above) in their standard deduction. 

Filing Status	Standard Deduction	Add'l 65+/Blind (each)	Real Estate Taxes
Single/Married Filing Separate	$5,700	$1,400	up to $500
Head of Household	$8,350	$1,400	up to $500
Married Filing Joint/Qualified Widow(er)	$11,400	$1,100	up to $1000

Meal and Incidental Expense (M&IE) Per Diem amounts for business travel under qualified employer plans.

Travel dates	Per Diem amount
Jan 1 - Sep 30, 2009	$39 per day
Oct 1 - Dec 31, 2009	$46 per day
Jan 1 - Dec 31, 2010	$46 per day

Higher rates may apply for business travel to high cost cities. 
Deductible Lodging costs are amounts actually paid and must be substantiated with receipts.

Earned Income Tax Credit (EITC) income limits
To qualify for EITC, taxpayers must have earned income such as from wages, self employment or farming. 

Number of children who lived with taxpayer(s)	Single taxpayer income limit	Married taxpayers filing joint income limit
3 or more children	$43,279	$48,279
2 children	$40,295	$45,295
1 child	$35,463	$40,463
No children (low income taxpayers)	$13,440	$18,440

Educator Expense up to  $250
Applies to educators in grades K-12. If Married filing a Joint return, and both are educators, each may deduct $250 from AGI.

IRA retirement plan income and deductible contribution limits
Traditional IRA contributions may be deducted from AGI. Roth IRA contributions are not deductible.

	Traditional IRA	Roth IRA
Modified AGI limit - Single taxpayers	$65,000	$120,000
Modified AGI limit - Married taxpayers	$109,000	$176,000
Maximum IRA contribution, including spousal IRA	$5000	$5000
Maximum IRA contribution - over 50 yrs, including spousal IRA	$6000	$6000

Student Loan Interest
Student loan interest deduction is the actual interest paid up to $2,500 per student.Student must be the taxpayer or dependent claimed on the tax return.
Student loan interest deduction is phased out between $60,000 - $75,000 for single taxpayers, or $120,000 - $150,000 for married taxpayers.

Personal Casualty Loss deductions
There is a $500 floor per incident, and an overall floor of 10% of AGI for personal casualty losses, beginning in 2009.
Personal casualty losses may only be deducted on Schedule A.

Kiddie Tax
There have been some changes to the Kiddie Tax rules for 2009. The Kiddie Tax is expanded to include any dependent child up to 19 years of age, or dependent student up to 24 years of age. The child's investment income up to $1900 is excluded. If the Kiddie Tax rules apply, the child's income is taxed at the same maximum rate as the parent's. Parents may chose to report their child's income on the parent's tax return.

Residential Energy Efficiency Credits -- Form 5695
Tax credits are available for the installation of certain energy efficient home improvements.
30% credit of costs paid or incurred in 2009
Maximum credit is $1500 on qualified energy efficiency improvements
Total of $1500 credit for 2009 and 2010 combined

The following home improvements qualify for the credit:
Insulation, exterior doors and windows, skylights
Metal or asphalt roof material designed to reduce heat gain
Energy Star heat pump, furnace, water heater, central air, biomass fuel stove
Certain energy efficient main air circulating furnace fans
The home tax basis must be reduced by the amount of credit claimed

Mortage Interest Credit - Form 8396
Applies to lower-income individuals who receive mortgage credit certificate (MCC)
The credit reduces mortgage interest deduction on Schedule A
The credit is limited to $2000 if MCC is greater than 20% of the loan amount
Any unused credit may carry forward to 2010
You must recapture (repay) the credit if the home is sold at a gain in the first 9 years
You must proprate the credit if the total debt is more than the MCC

Plug-In Electric Drive Motor Vehicle Credit -- Form 8936
Credit of $2500 to $15,000 depending on battery capacity, weight and range of the vehicle

Plug-In Electric Vehicle Credit (Golf Cart Credit) -- Form 8834
This credit was initially aimed to help elderly taxpayers living in gated communities, but may be claimed by any taxpayer.
Some communities and towns now allow these vehicles to be driven on public streets. Check your local ordinances.
Vehicle must be purchaed after Feb 17, 2009 and before Dec 31, 2009
Any 2, 3 or 4 wheeled low speed vehicle may qualify, except self-constructed vehicles.
The credit is 10% of the cost up to $2500 per vehicle
No limit on number of vehicles