Tax Loopholes For Honest Tax Payers - Ways to Save Tax Dollars
Special Tax Deduction on New Car Purchase in 2009
If you purchase a new passenger car in 2009, you might be able to deduct state and
local sales and excise taxes from that purchase on your 2009 tax return due in 2010.
To qualify for this deduction, the new vehicle must be purchased between Feb. 16,
2009, and Jan. 1, 2010.
This deduction is not eligible for your 2008 tax return.
The deduction is limited to the state and local sales and excise taxes paid on up
to $49,500 of the purchase price of a qualified new car, light truck, motor home,
or motorcycle.
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.
This special deduction is available to taxpayers regardless of whether they itemize
deductions on their return.
Saving on the Price of Giving
When calculating income during the 2009 tax season, make sure to include donations
that you gave to charities or gifts extended to family members. During the 2008
tax year, an individual could have given up to $12,000 individually or $24,000 jointly
to children or grandchildren without any gift tax. Any gift over that amount is
subject to a gift tax, which is incurred by the giver not the recipient.
Saving Capital Gains and Inheritance Tax
To take advantage of the current battered market, you can create a personal residence
trust that transfers ownership of your home to your children but allows use of the
home for the life of the trust, usually 10-20 years. Creating the trust now allows
your inheritors to gain your property at the currently depressed values while you
still retain the property as your residence. The home’s estate tax value is
locked in at the beginning of the trust, taking advantage of the currently depressed
housing market. If you live longer than the trust, the home is no longer in your
estate.
Don’t let Unused Spending Accounts go to Waste
Flexible spending accounts are an enticing employer offer but do not roll over to
the next tax year. Any money that was left in an employer provided flexible spending
account was forfeited on December 31, 2008. However, your employer may have been
granted a two and a half month extension. In that case, check with your employer
for more details and use the remainder of your benefits before they disappear.
Deduct Now and Pay Later
Deductions apply to more than the cash or debit purchases you made in 2008. You
can also take deductions for the tax year in which you charged goods or services
with a bank issued credit card even though you may pay for those charges after the
tax year. This can be useful to small business owners or self-employed service providers
that can claim depreciation on business property purchased on credit.
Long Term Asset Sales
There is a great benefit for low to middle income families that sold any type of
asset during the 2008 tax year. In 2008, 2009, and 2010 all profit from the sale
of assets, owned for more than one year, plus dividends, are tax-free if you are
in the 10% or 15% tax brackets. The 0% rate no longer applies if you have over $32,550
in taxable income for 2008.
Convert Your IRA and Save
Consider converting your IRA to a Roth account if your IRA was negatively affected
by the stock market dive. This may decrease your tax bill and bypass paying income
tax on future appreciation of your Roth IRA. If you act soon, the conversion may
still be applicable to your 2008 tax return.
Tax Tips for 2009
Educate and Save
A great way to lower your taxable income is by donating to college savings plans
for your children or grandchildren. Up to $60,000 can be sheltered from gift taxes.
When your children or grandchildren finally go to college, payouts from the accounts
that are used for tuition, fees, and books are income tax-free.
Mileage Rates
There are mileage rates change for 2009 and other important vehicle depreciation
information.
More information about mileage rates
Find out about income the IRS can’t tax. Are you taking too much taxes out
of your paycheck?
More tax saving tips and loopholes