Tax Planning
Highlights of the American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 provide several new or enhanced tax credits and other incentives. As with most tax provisions, tax credits begin to phase out at certain income levels. For complete information follow the more information link or see the link below at the IRS’s Recovery Act Information Center.
- First-Time Homebuyer Credit - a refundable credit of up to $8,000 for homes purchased through November 30, 2009. If the homebuyer stays in the home for three years, the credit does not have to be repaid. More information
- Economic Recovery Payment - a one-time payment of $250 to disabled veterans, railroad retirees and Social Security recipients. More information
- Deduction for Car Purchase Taxes - a deduction for state and local sales taxes and excise taxes paid on the purchase of a new vehicle. Taxpayers in states with no sales tax may deduct any fees or taxes that are based on the purchase price of the vehicle. Qualifying taxpayers may take the deduction even if they do not itemize deductions. More information
- American Opportunity Tax Credit (Hope Credit) - This new credit modifies the Hope Credit for 2009 and 2010, making it available to more taxpayers. The maximum per student has increased to $2,500, and the credit will now apply to all four years of college. More information
- Qualified Tuition Programs ("529 Plans") - For 2009 and 2010, a beneficiary can use distributions to pay for computers and related technology (including internet access). Distributions will be tax-free. Previously, these expenses were not tax-free and were included in the beneficiary's income and subject to penalty. More information
- Earned Income Tax Credit - For 2009 and 2010, the credit will be increased to 45% of the first $12,750 of earned income for taxpayers with three or more qualifying children. (Prior to the new law, the credit percentage was 40% of the first $12,750 for taxpayers with two or more qualifying children.) In addition, the phase-out range has been adjusted upward by $1,880 to eliminate any marriage penalty for joint filers. More information
- Child Tax Credit - For 2009 and 2010, the refundable part of the credit will be increased. The income threshold will now be set at $3,000. More information
- Unemployment Compensation - For 2009, up to $2,400 of unemployment compensation will be excluded from gross income on federal returns. More information
- Transportation Benefits Increase - Through 2010, up to $230 per month for transit passes and van pooling is excluded from employee income (up from $120). More information
- AMT Patch - The alternative minimum tax (AMT) is patched for 2009. For 2009, the exemption amount for joint filers increases to $70,950 ($1,000 more than 2008). For single and head of household filers the amount is $46,700 ($500 more than 2008). More information
- Energy Incentives - Several credits related to energy efficiency and alternative energy have been increased, extended or otherwise enhanced. This includes the Residential Energy Property Credit, the Residential Energy-Efficient Property Credit, the Renewable Electricity Production Credit, the Alternative Fuel Pump Tax Credit, and the credit for plug-in electric vehicles, among others. More information
- Health Coverage Tax Credit - increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible. More information
Need More Time to File?
If you can't meet the April 15 deadline to file your tax return, you can get an automatic six-month extension of time to file from the IRS. Here is what you need to know about filing an extension:
- An extension will give you extra time to get your tax return to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by April 15, plus a late payment penalty if you have not paid at least 90 percent of your tax by then.
- If your tax return is completed but you are unable to pay the full amount of tax due, don't request an extension. File on time and pay as much as you can. The IRS will send you a bill or notice for the balance due.
- Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS by April 15, or make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see Form 4868.
To obtain a copy of Form 4868 or other forms and publications use e-file 411 tax preparation software.
Payment Options
If you cannot pay the tax you owe in full by April 15, you should still file your tax return on time and pay as much as you can to avoid penalties and interest. There are also other payment options to consider:
- Additional time to pay - Depending on your circumstances, the IRS sometimes allows a brief additional amount of time to pay. Request this through the Online Payment Agreement (OPA) application at IRS.gov or call 800.829.1040. If you get an additional 30 to 120 days to pay the tax, you'll usually pay less penalty and interest than if you paid by installment agreement over a longer period.
- Installment agreement - You can apply for an IRS installment agreement using the OPA application on IRS.gov. This is for taxpayers who owe $25,000 or less in combined tax, penalties and interest. You can find out immediately if you're approved. The OPA option gives you a simple and convenient way to set up an installment agreement eliminates the need for personal interaction with IRS and reduces paper processing.
- Credit or debit card - You can pay your taxes with your MasterCard, Visa or Discover credit card, or your debit card. The debit card must be a Visa Consumer Debit Card, or a NYCE, Pulse or Star Debit Card.
Please go to our e-payment center at www.payusatax.com/1040 and you will receive a confirmation of payment. Our partner is 1 of only 3 Companies that is IRS approved for credit or debt card payments
- Bill Me Later- Now we have partnered with Bill Me Later so that you can have the convience of paying your taxes at a later date, however, if you choose pay after the April 15th deadline you will be assessed late payment penalities and interest.