New Tax Breaks For 2009

Like most folks in this recession, you’re probably hoping for a nice tax return for some extra springtime cash.  If you’re doing your own taxes – or even if not – there are some new tax breaks for 2009 you should know about that can reduce your tax liability or plump up your refund.

Most of them are applicable only if you itemize, but this year there’s something out there for just about everyone.

1. Haitian relief donations are deductible – Must be made between 1/12 and 2/28.  For donations under $250, you need a bank record or a receipt from charity as proof.  For donations over $250, a receipt from the charity is required.  For donations made by phone or text message, the IRS says a service provider bill showing the name of the charity, the donation date, and the amount will suffice. As usual, you must itemize your taxes in order to be able to deduct charitable contributions.
2. The Making Work Pay credit is even available for the self-employed - It can be as much as $400 for an unmarried worker or $800 for a married joint-filing couple.  You’ll need to fill out the new Schedule M, and file it with your 2009 Form 1040 (entering your eligible MWPC amount on line 63).  If your income is too high however, the MWP credit is phased out.
3. Non-itemizers get an extra standard deduction – If you don’t itemize deductions, you may still be entitled to an additional standard deduction amount.  (The standard deduction is $5,700 for singles and $11,400 for married joint-filing couples, and $8,350 for heads of households.) You’ll need to fill out the new Schedule L to claim the bonus.  Here’s how it works:
   • There’s an additional standard deduction of up to $500 for state and local real property taxes (or up to $1,000 if you’re a married joint filer). The extra deduction cannot exceed the real estate taxes you paid last year.
   • If you purchased a qualifying new vehicle between Feb. 17, 2009 and Dec. 31, 2009, you can claim an additional standard deduction for the state and local sales and excise taxes. You can only count taxes on the first $49,500 of a vehicle’s purchase price, but you can benefit more than once if you bought more than one vehicle during the window period. (This break is also phased out if your income is too high.)
4. You can claim an additional standard deduction for personal casualty losses in federally designated disaster areas.
5. Tax breaks for supporting struggling relatives – This good deed will not be punished by the IRS. In fact, you may benefit from helping out a financially struggling relative last year. The potential tax breaks range from being able to claim head-of-household filing status (if you’re single) to a $3,650 dependent exemption deduction, to a medical expense write-off.
6. Deduct job search expenses – This is not exactly new, but it may be for many unemployed Americans filling out tax forms this year.  If you itemize deductions, you may be able to write off expenses incurred for a job search on your Form 1040.