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It’s April Fools Day. That means you have only two weeks left before your 2009 taxes are due. If you’ve finished playing tricks on your friends, you may be able to make use of some last-minute items that can impact your tax filing for the year 2009. Here are a few we thought relevant and worthwhile.
2009 IRA and Roth IRA contribution limits
Contributions to certain retirement accounts, including IRAs and SEPS, can be made until April 15 and still be deducted for 2009. If you are less than 50 years old, the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2009. This limit can be split between a traditional IRA and a Roth IRA and is subject to limits based on your modified adjusted gross income. If you are 50 years or older, the maximum contribution to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2009.
Sales and excise taxes on purchase of new vehicles
If you purchased a qualified motor vehicle after Feb. 16, 2009 and before Jan. 1, 2010, you can deduct state and local sales or excise taxes on your federal tax return. The deduction is limited to the tax that is imposed on the first $49,500 of the purchase price, and is not allowed if your adjusted gross income is more than $135,000 ($260,000 if married filing jointly)
First-time homebuyer credit
The Worker Homeownership and Business Assistance Act of 2009, signed in November, extended the deadline for qualifying home purchases to April 30, 2010. Settlement must take place before June 30, 2010. The maximum credit remains at $8,000 for a first time homebuyer, defined as a buyer who has not owned a primary residence during the three years preceding the date of purchase.
There is now an additional $6,500 credit available for buyers who have been “long-time residents.” The IRS defines these as buyers who have owned and lived in the same home as their primary residence for at least five consecutive years of the eight years ending on the date of purchase of the new home.
If you buy or sign a contract to buy your home before April 30, 2010, and close by June 30, 2010, you have the option of claiming the credit on either your 2009 or 2010 tax return. There are also new income limits for this credit, so be sure you consult with your tax preparer or CPA. You will need to file a paper, not an electronic return, to apply for this credit. You must also attach IRS form 5405, and a properly executed settlement statement.
Unemployment compensation
While unemployment benefits are taxable, beginning in the tax year 2009 you can exclude up to $2,400 of the benefits received during the year from your gross income.
Long-term care benefits
The limits on exclusion from income for long-term care or accelerated death benefits, paid on a daily or per diem basis, has increased to $280 per day in 2009, and to $290 per day in 2010.
Charitable contributions for Haiti relief
Charitable contributions made to qualified Haiti relief organizations, if made by Feb. 28, 2010, can be deducted on your 2009 tax return. To qualify, the deductions must be made in cash or by credit card, (it doesn’t apply to gifts of property), and the gifts must be made to an organization, not an individual.
Need an extension?
Not ready? If you need an extension, the IRS and South Carolina are usually able to oblige. You will need to file form 4868 for federal tax and form SC4868 for South Carolina to obtain an extension until Oct. 15, 2010. Remember that an extension to file your return doesn’t extend the time to pay tax. You need to send in your income tax due with the extension, or face a penalty when you do file.
At the last minute
Be sure names and Social Security numbers match up for your personal exemptions. The IRS will disallow the exemption for any mismatch. (Hint: This occurs primarily to women who marry or remarry and change their last name without notifying the Social Security Administration.) Don’t forget to sign your return; consider using certified mail; and try not to be the last car in line at the post office at midnight April 15.Steven Weber is the registered investment advisor of the Bedminster Group, a fee-only advisor providing investment and financial counsel to clients in the low country since 1997. William Smith, from RC Jones, C.P.A., provided technical expertise and fact checking for this article. The information contained herein was obtained from sources considered reliable. Their accuracy cannot be guaranteed. Furthermore, the opinions expressed are solely those of the authors and do not necessarily reflect those from any other source.
