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FIRST-TIME HOMEBUYER CREDIT

*Extended through April 30, 2010*

*Existing-home sales surged 10.1% in October in response to this credit and low interest rates- National Association of Realtors*

The Worker, Homeownership, and Business Assistance Act of 2009 has set the credit amount at $8,000 and has extended the credit to higher income taxpayers. It also allows a reduced credit to some non-first-time homebuyers, aimed at individuals upgrading from their first home, as well as retirees who are moving to more manageable living arrangements. Contact our offices if you believe you may qualify.

2010 MILEAGE RATES

The rates for business purposes will be 50 cents per mile (a 5 cent per mile decrease from the 2009 rates). When the standard business mileage rate is used for vehicles owned by the taxpayer, depreciation will be considered to have been allowed at a rate of 23 cents per mile, 2 cents more per mile than in the previous two years.

The standard mileage rate for medical and moving expenses will be 16.5 cents per mile. This represents a 7.5 cent per mile decrease from 2009. The standard mileage rate for charitable purposes will be 14 cents per mile, the same as in 2009.

NOL CARRYBACK

The American Recovery and Reinvestment Act of 2009 allowed small businesses to elect to carry back net operating losses (NOLs) from 2008 for three, four, or five years rather than the standard two. New law makes this available to businesses of all sizes and is available for NOLs incurred in 2008 or 2009. This may provide additional cash that businesses can use to pay expenses or maintain operations and make new investments.

INCREASE OF PENALTIES

For tax years after December 31, 2009, new law increases the penalties for taxpayers who fail to file a partnership return from $89 to $195. Similarly, the penalty for failure to file a S corporation return increases from $89 to $195 as well. The combined increases are expected to raise approximately $1.2 billion over the next 10 years.

 NONBUSINESS ENERGY PROPERTY CREDIT

By installing eligible energy-saving home improvements, a taxpayer can save up to $1,500 on their 2009 federal tax return, in addition to any energy savings that can result! The cost of certain high-efficiency heating,air conditioning, and water heater systems may qualify for the credit, as well as the costs of labor and installation. The cost of energy-efficient windows and skylights, doors, insulation, and roofing may also qualify, however the cost of the installation does not. This credit is up to 30 percent of what a homeowner may spend on these improvements.

RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT

Homeowners may also be interested in checking out another tax credit regarding alternative energy equipment. The Residential Energy Efficient Property Credit, equals 30 percent of what a homeowner spends on qualifying equipment such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit, and there are no limitations on amount that can  be taken. 

 

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