Today’s tax tip: First-time homebuyer credit

| 3/10/2009

Twice weekly on Tuesday and Friday from now until April 15, we will bring you tax tips from PBS Tax and Bookkeeping Service. Howard Abrams and PBS have been providing income tax and bookkeeping services to the trucking industry for more than 25 years. OOIDA features Howard’s column, “Tax Tips,” in each issue of Land Line Magazine.

Today’s tax tip is the first-time homebuyer credit.
First-time homebuyers should take advantage of the new tax credit. Available for a limited time, the credit:

1. Applies to home purchases after April 8, 2008, and before July 1, 2009;
2. Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar;
3. Is fully refundable, meaning that the credit will be paid out to eligible taxpayers even if they owe no tax or the credit is more than the tax that they owe.

The credit is repaid in equal installments over a 15-year period.

Previous tax tips
Earned income tax credit. If you are in a low tax bracket – that is, you did not earn a lot of money – you may qualify for the credit. There are many factors that determine whether you qualify, but primarily your total income must be below $15,880 if you have no children; less than $36,995 if you have one qualifying child; and not more than $41,464 if you have two or more qualifying children.

Get a jump on your taxes
Follow the checklist:
1. Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don’t forget to save a copy for your files.
2. Compare amounts on 1099s and W-2s with your records to make sure they agree.
3. If the amounts don’t agree call the payor or use the amount you think it is by doing an adjustment on your tax return.
4. You must have receipts and back up information for everything that appears on your tax return. Using an income tax organizer that outlines everything you need will be very helpful.
5. E-filing is easy. E-filing catches math errors and provides confirmation your return has been received and gives a faster refund.
6. Get the fastest refund. When you e-file early, you receive your refund faster. When you choose direct deposit, you receive your refund sooner than waiting for a check.