So, there's been some discussion about the "new" credit for new car purchases. I love when urban legends get mixed up with tax law. Well, I'm going to go into a little more detail to give clarity to the matter.
As part of the American Recovery and Reinvestment Act (ARRA) of 2009, taxpayers who bought a new car this year may be entitled to a special tax deduction (not credit) on their 2009 return.
Let's look into the key pointers for this deduction:
--First and foremost, the purchase must occur after Feb. 16, 2009, and before Jan. 1, 2010.
--Qualified purchases new (not used) cars, light trucks, motor homes and motorcycles.
--Sales taxes (both state and local) paid on up to $49,500 of the purchase price of qualifying vehicle is deductible.
--This deduction can be taken whether you itemize or not. Typically, sales taxes can only be deducted under Schedule A Itemized Deductions.
--The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
Hopefully, this brings clarity to the subject and helps those who are wondering about the deduction and probably will count on unnamed boxed tax software to ask them the right yes or no question so that they're eligible. Yes, a shameless plug as to why you should use a professional preparer...
Remember, your questions and comments are what will make this blog more valuable and worthwhile! If you have any further questions on this topic or any other tax related issues, please contact us at info@proctortaxprep.com or call locally at 704-385-1040, non-local callers can call 866-510-5477.
TP
November 17, 2009
November 3, 2009
Filing Status? Which am I?
In preparation for the 2010 filing season, we want to ensure that everyone is educated and informed on the pros and/or cons of your filing status. Your filing status puts you in a certain tax bracket and allows you to claim certain credits and exemptions. So, let’s break them down shall we?
SINGLE: one of the following must be TRUE (has the highest tax bracket)
•You were never married
•You were legally separated from your separated from your spouse under a divorce or separate maintenance decree
•You were widowed before January 1, 2009 and did not remarry in 2009.
•Does not have any dependents
Married Filing Jointly: one of the following must be TRUE (has lowest tax bracket)
•You were married on the last day of the year even if you did not live with your spouse.
•You are living together in a common-law marriage that is recognized in the state where you now live where the common –law marriage began.
•You are separated under an interlocutory (not final) decree of divorce.
•Your spouse died during the tax year and you did not remarry during the year
Both parties are responsible for payments and or any correspondences from the IRS. There are exceptions and documents to file for a spouse not to be liable for their spouse’s tax issues. Please contact and inform your tax professional of your issue to claim the best Filing Status for you and your spouse.
Married Filing Separately: (has highest tax bracket)
•Married, but do not want to be responsible for spouse’s portion of the tax
•You cannot claim the standard deduction if your spouse itemizes deductions
•You cannot claim the EARNED INCOME CREDIT
•You cannot take the credit for adoption expenses
•You cannot claim the credit for child and dependent care expenses in most instances
•You cannot deduct interest paid on a qualified student loan
•You cannot claim education credits
Head of Household:
•Be unmarried or considered unmarried as of the last day of the tax year
•Have paid more than half the cost of keeping up a home for the tax year; and in most cases,
•Have a qualifying person who lived with you in the home for more than half the tax year.
Qualifying Widower with dependent child: all must be met (same tax bracket as MFJ)
•You could have filed a joint return with your spouse for the tax year he/she died
•Your spouse died in 2007 or 2008 and you did not remarry before the end of 2009
•You have a child or stepchild whom you can claim as a dependent
•You paid over half the cost of keeping up a home that is the main home for you and the dependent child for the entire year.
Remember, your questions and comments are what will make this blog more valuable and worthwhile! If you have any further questions on this topic or any other tax related issues, please contact us at info@proctortaxprep.com or call locally at 704-385-1040, non-local callers can call 866-510-5477.
VP
SINGLE: one of the following must be TRUE (has the highest tax bracket)
•You were never married
•You were legally separated from your separated from your spouse under a divorce or separate maintenance decree
•You were widowed before January 1, 2009 and did not remarry in 2009.
•Does not have any dependents
Married Filing Jointly: one of the following must be TRUE (has lowest tax bracket)
•You were married on the last day of the year even if you did not live with your spouse.
•You are living together in a common-law marriage that is recognized in the state where you now live where the common –law marriage began.
•You are separated under an interlocutory (not final) decree of divorce.
•Your spouse died during the tax year and you did not remarry during the year
Both parties are responsible for payments and or any correspondences from the IRS. There are exceptions and documents to file for a spouse not to be liable for their spouse’s tax issues. Please contact and inform your tax professional of your issue to claim the best Filing Status for you and your spouse.
Married Filing Separately: (has highest tax bracket)
•Married, but do not want to be responsible for spouse’s portion of the tax
•You cannot claim the standard deduction if your spouse itemizes deductions
•You cannot claim the EARNED INCOME CREDIT
•You cannot take the credit for adoption expenses
•You cannot claim the credit for child and dependent care expenses in most instances
•You cannot deduct interest paid on a qualified student loan
•You cannot claim education credits
Head of Household:
•Be unmarried or considered unmarried as of the last day of the tax year
•Have paid more than half the cost of keeping up a home for the tax year; and in most cases,
•Have a qualifying person who lived with you in the home for more than half the tax year.
Qualifying Widower with dependent child: all must be met (same tax bracket as MFJ)
•You could have filed a joint return with your spouse for the tax year he/she died
•Your spouse died in 2007 or 2008 and you did not remarry before the end of 2009
•You have a child or stepchild whom you can claim as a dependent
•You paid over half the cost of keeping up a home that is the main home for you and the dependent child for the entire year.
Remember, your questions and comments are what will make this blog more valuable and worthwhile! If you have any further questions on this topic or any other tax related issues, please contact us at info@proctortaxprep.com or call locally at 704-385-1040, non-local callers can call 866-510-5477.
VP
Subscribe to:
Posts (Atom)
