Tax Laws Under New President

The American Recovery and Reinvestment Act made the Homebuyer’s Tax Credit retroactive, so anyone who had purchased a home since January 1, 2009, was eligible. Right now, unless the date is extended, it applies to any first-time homebuyers through the end of December of this year.

If you’ve ever considered buying a home instead of renting, the Homebuyer Tax Credit does give you incentive. Right now, real estate is a buyer’s market, with housing prices lower than they’ve been in years. Add on top of that the whopping $8000 tax credit you’ll get with this new tax law under the new president, and the deal is considerably sweetened. You can even claim the credit on your 2008 taxes.

If you signed the papers on a first time home purchase on December 31, 2008 or before, however, you won’t be getting that $8000 credit. Also, if you make more than $75,000 (or more than $150,000 for a couple) annually then the $8000 credit is lessened, and you won’t be able to get it at all if you make over $95,000 (or $170,000 for a couple) in a year.

Don’t rush into a decision to get the tax credit. A restriction in the law requires that you keep the home for a minimum of three years. Break that rule, and you could have to pay back the $8000.

Have a job?  You’ll probably be able to get the $400 tax credit ($800 for a married couple) called the Making Work Pay provision. Most people with income, even self-employment income, will be able to claim that from one of the tax laws under the new president in 2009 and 2010. The income caps for the $8000 first time homebuyer credit applies to this one, too.

Employers may just take less tax from your paycheck to provide you this credit, so if you’re married or you have more than one job, watch your taxes carefully to make sure you’re not paying too little, or you could end up with a huge bill and penalties at tax time in 2009.

A new tax law under the new president also accounts for a $250 payment to those who get Social Security as well as Social Security disability payments, government pensioners, and veterans. It’ll arrive over the summer automatically for all but government retirees, who must file in 2010.

College students can deduct some of their college bill in the coming year, car buyers can deduct the sales tax paid on the purchase, and you can even claim deductions on certain “green” and environmentally friendly purchases thanks to some tax laws under the new president.