If you own property, added a child to the family or bought your first home recently, you could be in line for a tax break.
New credits and deductions will ease some of the sting associated with the 2009 income-tax filing season, which the Internal Revenue Service officially kicked off this week.
There's no doubt that tax season has started for local tax preparation offices, which have been fielding phone calls, setting up appointments and arranging to file returns.
"Some people are already ready to file their tax returns," said David Lakefield, part owner of Liberty Tax Service. "What we have been doing is having people come in if they are ready to go and getting things started for them to kind of get ahead of the game a little bit."
The IRS will begin accepting electronic tax returns Jan. 16.
Lakefield said one of the new tax credits getting attention is the Recovery Rebate Credit.
Taxpayers might qualify for the credit if they didn't get an Economic Stimulus Payment or received less than the maximum amount last year.
Sherri Peterson, office manager for H&R Block, said the biggest challenge for tax preparers this season will be ensuring that people get any rebate to which they are entitled. A tool on the IRS Web site enables people to check how much they received in 2008 either directly or indirectly as a payment toward child support or federal loan obligations. A change in financial status in 2008 could enable a taxpayer to claim a rebate or larger stimulus payment now.
Also, a child added to the family in 2008 will bring a $300 rebate. Peterson said a divorced parent with shared or new custody can obtain the rebate for a child claimed on the other parent's return last year.
The rebate will be included in refunds rather than mailed as separate checks.
The most common question that H&R Block has been getting so far is whether last year's stimulus payment is taxable, Peterson said. It is not.
Another change that will affect many area taxpayers is the real-estate tax deduction that now is available without having to itemize. People can deduct property taxes of up to $500 for single filers or $1,000 for joint filers as part of their standard deductions.
In addition, Congress approved a tax credit for first-time homebuyers that is worth 10 percent of the purchase price of a house, up to a maximum credit of $7,500. However, the credit is more like a no-interest loan because it must be repaid to the government over 15 years. Loan repayments begin the second year after obtaining the credit.
Homes purchased or built between April 8, 2008, and July 1, 2009, are eligible for the credit. A first-time homebuyer is one who hasn't owned a main home during the previous three years. Income limits and other special rules also apply.
A change in the way the child tax credit is figured will be significant for low- to moderate-income families, Peterson said. More families will qualify for the full amount of the credit with the change in the earned income rules. The maximum per child is $1,000, which is in addition to the regular exemption claimed for each dependent.
The personal exemption amounts for taxpayers and dependents is up $100 this year. In addition, the standard deductions for taxpayers who don't itemize is up $200 for a joint return, $100 for singles and $150 for heads of households. The maximum credit allowed under the Earned Income Tax Credit also is higher for eligible taxpayers.
Peterson said self-employed taxpayers or others who claim the standard mileage rate will have to calculate two figures, although both are increased from last year. The mileage rate for the first half of 2008 is 50.5 cents per mile. For the second half of the year, it is 58.5 cents.
Congress renewed some expiring tax breaks, including those for sales taxes paid, tuition and energy-efficient property. The credit for energy-saving improvements to a home is not available in 2008 but will return in 2009.
Taxpayers with adjusted gross incomes up to $56,000 are eligible for free electronic filing through Free File. This year, taxpayers of any income level can use fillable forms from Free File to complete their tax forms on-screen and then file electronically through IRS.gov.
