It’s the same every year. Gather the W-2s and 1099s, and dig out the receipts. Figure out business expenses and deductions, and wade through ever-evolving tax laws. Get it all done by April 15 and ship it off to the Internal Revenue Service.
“Tax law is getting far more complicated than ever,” says Jack Cohen, a 33-year veteran of the IRS who now works as a certified public accountant in Las Vegas handling taxes for individuals and small businesses. “If you have a return beyond a plain W-2, you should think about using a [tax] preparer.”
This year, the top tax credits are geared toward new home sales, unemployment, low-income workers and the new-car sales-tax deduction, he says.
In 2009, the home credit was changed from its earlier structure of requiring first-time homebuyers to pay back the $8,000 over 15 years to a refundable credit. That means, Cohen says, if the taxpayer owes nothing on his or her taxes, the $8,000 credit is refunded to them in their tax return.
“You don’t have to pay it back,” Cohen says. “It’s free money.”
New this year, too, is a home credit for people who sold their old home and bought a new one. Like the first-time homebuyer credit, this $6,500 credit has income restrictions. Joint filers who earn $150,000 or less and individuals who earn $75,000 or less qualify for the full amount. As those income levels increase, the credit decreases.
For those who lost their home last year to foreclosure, although the tax law says a forgiven debt, such as a mortgage, is considered income, the first $500,000 will be forgiven in the case of primary residences, Cohen says.
Taxpayers will still need to file the 1099 form the bank that took the loss issues to them, he says.
Working-class taxpayers may qualify for the $400 work credit, depending on income, although if that worker also collects social security and was previously refunded $250, that person won’t qualify, Cohen says.
“Bottom line is, a lot of working class will get this,” he says.
For workers collecting jobless benefits, the first $2,600 in unemployment is not taxable, unlike previous years in which all benefits were taxed, Cohen says.
And job-hunting expenses—such as traveling for an interview, printing of résumés or moving for a job that is more that 30 miles away—all can be used for write-offs.
Purchases such as new suits, however, can’t be since they can be worn elsewhere (unlike formal uniforms, which can be written off). And for those who bought a new car last year—as many did thanks to the cash-for-clunkers deal—the sales-tax deduction no longer needs to be itemized.
Other credits to promote environmental consciousness were continued and, in some cases, boosted for 2009, including the purchase of alternative fuel systems, Cohen says. Energy Star-rated appliances also are eligible for credits or rebates.
Where to find free tax preparation:
Through April 15, United Way of Southern Nevada offers free tax prep for individuals and families who made less than $49,000 last year. Visit uwsn.org/EITC or nevada211.org, or call 211 for locations;
Also through April 15, AARP is offering free tax prep for people of all ages. Call (888) 227-7669 or visit foundation.aarp.org/GetTaxHelp for locations or to make an appointment.
Or do it yourself. The IRS offers free filing online to taxpayers with an adjusted gross income of $57,000 or less. Visit irs.gov/efile.