For those that have filed a 1040EZ tax return form in the past, you might benefit from filing a 1040 tax return or a 1040A tax return if you had one of a few events happen in 2009, due to tax law changes. You can claim a number of credits that a 1040EZ form doesn't allow and you may be entitled to a larger refund or receive a refund where you might not ordinarily be entitled to one.
If you are taking college courses, or have a child in college under the Hope education credit, there has been an increased credit for 2009. Under the American opportunity credit, part of the previous Hope education credit is refundable to most taxpayers. The credit has increased to $2,500 for most taxpayers and the name has been changed to the American opportunity credit, so you should be aware of this change to avoid confusion.
If you have purchased a new car after February 16th of 2009, you may deduct state and local sales taxes on the purchase. Even those that live in states that don't have sales tax might be able to deduct other fees or taxes by filing a Form 1040A or itemizing on a 1040 tax return.
The most advantageous credit for filing a 1040 tax return form in 2009 is the first-time home buyer credit. Not only has the credit increased to $8,000, or $4,000 if married and filing separately, for those that bought a home after 2008 and before May 1, of 2010, but it is an actual credit that is refunded and not an incentive that needs to be repaid like the previous first-time home buyer programs.
There are energy credits that you can take advantage of on a 1040 tax return form, including credit for non-business energy property and residential energy efficient property credits. If you bought energy saving items like heating systems and appliances or added energy efficient materials, such as insulation or thermal windows, you can take advantage of the tax credits. Electric vehicle credits are available for those that bought an electric drive motor vehicle or converted a vehicle into an electric vehicle for energy efficiency.
While these are the largest tax credits that are available, it is likely that those who purchased a home in 2008 and are paying mortgage interest might have paid enough interest to be able to itemize on a Schedule A. You would benefit by filing a 1040 tax return and Schedule A itemizing form in 2009 if your deductions equal more than the standard deductions of $5,700 for single people or $11,400 for married couples.
There are some cases where you must file a 1040A or 1040 tax return to get credits for the standard deduction real estate taxes or credits for excess social security or retirement savings contributions. If you can claim the additional standard deduction for net disaster losses, you will need to file a 1040 tax return. There are other cases where you may have to file a 1040 tax return form that don't necessarily offer any benefit, such as owing special taxes on tips or self-employment income of more than $400, but your CPA can advise you of the proper forms for your situation.
For more information on accounting and tax services, please visit Flowers Rieger & Associates.
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