Tax Breaks

Second-Chance Tax Savings

If you missed any of these breaks on your 2009 return, you can claim them now.

Did you claim every tax break that you were entitled to when you filed your 2009 federal tax return this year? There are so many new tax breaks that it would have been easy to miss a few. But you can set things right by filing an amended tax return now, which could put more money in your pocket in a matter of months.

Making Work Pay credit. Many taxpayers were confused by the new form used to claim the Making Work Pay credit -- a 6.2% payroll tax credit worth up to $400 for individuals and $800 for married couples. (The credit is phased out for those with high income, starting at $75,000 for single taxpayers and $150,000 for couples filing a joint return.)

Although most employees received the benefit of the credit throughout the year in the form of lower tax withholding, you had to file Schedule M to claim the credit and adjust your tax bill accordingly. But millions of people who should have filed one didn't. The IRS tried to catch the error and adjust the returns to reflect the credit, reducing the final tax bill. (You would have received a notice from the IRS if it did.) Review your 2009 tax return and, if you didn't claim the credit but are eligible for it, amend your return.

Breaks for non-itemizers. Another new form -- Schedule L -- also caused some confusion. Taxpayers who didn't itemize their deductions could use this form to claim an enhanced standard deduction for net disaster losses, sales or excise tax paid on the purchase of a new car after February 16, 2009, and a property-tax deduction of up to $500 ($1,000 for married couples filing jointly). If you missed one of those tax breaks, file an amended return.

Home buyer's credit. Another case in which you may want to file an amended return: You bought a house this year and qualify for either the $8,000 first-time home buyer's credit or the $6,500 credit for longtime owners who bought another principal residence. But you don't have to wait until you file your 2010 tax return. Special rules allow you to claim it on your 2009 return as long as you signed a binding contract before May 1, 2010, and closed on the home before Sept. 30. You'll also have to file Form 5405, "First-Time Homebuyer Credit and Repayment of the Credit," and include a copy of your settlement sheet when you file your amended return.

Education breaks. If you paid college tuition and related expenses in 2009, you had several tax breaks to choose from to offset some of those costs. Did you pick the best one for your situation? For most people, the American Opportunity Credit, worth up to $2,500 per student, was the logical choice. But if you had a freshman or sophomore who attended school in one of the seven midwestern states that were declared federal disaster areas, you might be eligible for an enhanced Hope credit worth up to $3,600 (but lower income-eligibility limits apply).

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your second stimulus check.
January 18, 2021
Don’t Have a Pension? The SECURE Act Could Help
retirement planning

Don’t Have a Pension? The SECURE Act Could Help

If you’re worried about retirement, the SECURE Act has a lot to offer. It has several provisions to allow people to save more, for more years — and it…
January 22, 2021
When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

President Biden and others in Congress are pushing for a third-round of stimulus checks, but it might be a while before we get them.
January 20, 2021

Recommended

The 10 Least Tax-Friendly States for Middle-Class Families
state tax

The 10 Least Tax-Friendly States for Middle-Class Families

Failing to consider state and local taxes before moving your family to another state could cost you thousands of dollars each year.
January 25, 2021
The 10 Most Tax-Friendly States for Middle-Class Families
state tax

The 10 Most Tax-Friendly States for Middle-Class Families

If a move from one state to another is in your future, you could save big bucks by relocating to one of these states where the tax bite is light for m…
January 25, 2021
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
January 24, 2021
33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
January 24, 2021