2009 Tax Law Highlights

Tax Credit of Up to $8,000 for First-time Home Buyers.
If you purchased a primary residence in 2009 before December 1, 2009 and are a “first-time” home buyer, you can qualify for a tax credit.  The credit is equal to 10% of up to $80,000 of the purchase price.

Eligibility:

  1. You must not have owned a residence in the U.S. in the previous three years.
  2. The credit phases out between $150,000 and $170,000 of adjusted gross income for joint filers $75,000 to $95,000 for single filers.
  3. The credit is refundable to the extent it exceeds your regular tax liability — which means that if it more than offsets your tax liability, you’ll get a refund check — but it does not offset the alternative minimum tax.
  4. You can elect to claim the credit for a 2009 home purchase on your 2008 tax return. (If you filed for 2008 before buying — but before the November 30 deadline – you can claim your credit by filing an amended return using Form 1040-X. Doing so will guarantee you a refund check.)
  5. Unlike the credit for 2008 purchases, the credit for 2009 purchases doesn’t have to be paid back ratably over 15 years. But you will have to repay the credit if you sell the house within three years of the date you bought it.

Payroll Tax Credit.

For 2009 Congress gave workers a credit of 6.2% of their earned income:

Capped at $400 for single filers and starts phasing out at $75,000 of adjusted gross income and stops at $95,000.

$800 for joint filers.  The phaseout zone for couples is $150,000 to $190,000.

Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check.

Self-employed workers can reduce their quarterly estimated payments to get an advance benefit from the credit. The exact amount of the payroll tax credit for the year will be calcul