IRS touts free online filing services, and money back for property tax and home purchases.
This year more than ever taxpayers are looking to claim every penny the Internal Revenue Service owes them.
And with a multitude of new tax regulations gleaned from recent economic legislation, it could be a challenge to make sure each deduction and credit is accounted for.
The most important of these changes will affect homeowners, said IRS spokesman Gregg Semanick.
Taxpayers now can claim a deduction of up to $1,000 for property taxes paid, and those who purchased new homes in the second half of 2008 may be eligible for a credit of as much as $7,500.
The property tax deduction is unique, Semanick said, because it’s available to taxpayers who wouldn’t normally be eligible to file for itemized deductions.
“The real estate deduction is an additional standard deduction,” Semanick explained. “This year if you own property and pay real estate taxes a single filer can deduct up to $500, a joint filer up to $1,000 of property taxes paid. It’s right on the Form 1040 and you don’t have to be an itemized deduction filer, and it’s in addition to the standard deduction.”
The homebuyer credit, signed into law last fall by President George W. Bush and revised this month by President Barack Obama, is a big help to first-time homeowners, Semanick said.
“If you purchased a home between April 9, 2008, through Dec. 31, 2008, and it’s a primary residence you can receive a tax credit up to $7,500, however over the subsequent 15-year period, you have to pay it back,” he said.
The repayment process will be taken care of on future tax returns, Semanick added.
Those who purchase homes in 2009 will get a better deal courtesy of the hotly-debated economic stimulus package passed earlier this month, which increased the credit to $8,000 and eliminated the pay-back stipulation.
IRS claims faster refunds online
For filers willing to trade pencil and paper for keyboard and mouse, claiming that refund also could be easier than ever.
Taxpayers who earned less than $56,000 last year are eligible to file their tax return for free using IRS-approved online programs that walk filers through the process of completing a return, make the appropriate calculations and submit the return electronically.
Semanick said the initiative is intended to make sure taxpayers get the maximum refund they’re entitled to.
“The Internal Revenue Service encourages taxpayers to consider e-filing or free-filing their tax return to make sure they don’t miss out on tax credits, benefits and deductions,” he said.
Taxpayers can access approved free-file sites through the IRS website at www.irs.gov. Once connected to a secure free-file site, filers answer a series of simple questions with information from their W-2 forms and other documents. The programs also allow filers to have their refunds deposited directly into their bank accounts.
“With electronic filing, either e-file or free-file, coupled with requesting direct deposit into your bank account, you can receive your refund in as little as 10 days,” Semanick said.
More than 60% of Delawareans will be eligible to participate in the free-file program, he added.
Those taxpayers who choose to file with a paid tax preparer should use good judgment when selecting one, Semanick said.
No energy tax credit this year
In addition to measures that make it easier for taxpayers to obtain a bigger refund more quickly, there are a few other changes to the tax code that could cause headaches.
Many homeowners have been disappointed to learn that the government is not offering a tax credit for outfitting homes with energy-saving improvements, said Kelly Blair, a personal and business tax preparer with Tax Chicks in Dover.
“I’ve had a lot of customers come in and bring their receipts for the energy credits but we’re not allowed to use them for 2008,” she said. “The energy credit gave homeowners up to $500 for any energy improvements to their home, like new windows and doors, insulation, metal roofing that qualifies with Energy Star approval on it — new heating and air conditioning systems, solar panels.”
The energy tax credit will return, however, for 2009, she added.
Blair also said filers should be aware of rules that require itemized lists of any goods donated to charity for which they plan to claim deductions.
Email Doug Denison at firstname.lastname@example.org