Tax Year 2009: What's New

Tax Year 2009 has ended. With a few exceptions (IRA contributions), there is nothing more you can do to reduce your taxes for 2009.

However, you should be aware of recent tax changes as well as recently reinstated tax deductions that may result in a bigger refund or less taxes to be paid April 15. The IRS offers these tax tips for you to consider:

Economic Stimulus Payments: Economic stimulus payments are not taxable, and they are not reported on 2009 tax returns.

Educators' Out-of-Pocket Expense Deduction: If you are a teacher or other educator, you can deduct up to $250 for the purchase of classroom supplies, including books, equipment and software. To be eligible, you must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. You do not have to itemize to take this deduction. More information from the IRS

CONTRIBUTION DEADLINES It's not too late to contribute to an IRA. You have until April 15, 2010, to make your 2009 contribution. However, the deadline for contributions to your employer-sponsored retirement plan — 403(b) or 401(k), for example — ended December 31, 2009.

Tuition and Fees Deduction: Depending on your income, you can deduct up to $4,000 for qualified higher-education expenses, such as tuition and fees, for yourself, your spouse or your dependent at a college, university, vocational school or other post-secondary educational institution. You do not have to itemize this deduction. Note: you cannot take this deduction and education credits (Hope and Lifetime Learning Credits) for the same student in the same year. More information from the IRS

New Rules for "Cash" Charitable Contributions: To claim a deduction for a charitable donation of money, you must have a bank record, credit card statement or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. This rule has been in effect since tax year 2007. More information from the IRS

IRA charitable contribution: If you are age 70½ and older, you can donate up to $100,000 per year directly from an IRA to an approved charity. This counts toward your required minimum distribution (RMD) and removes up to $100,000 from your taxable estate. More information from the IRS

First-Time Homebuyers Tax Credit: First-time homebuyers can, for a limited time, take advantage of this credit, which acts much like an interest-free loan. The credit is 10% of the home's purchase price, with a maximum available credit of $7,500 for single taxpayers or married couples filing jointly. The credit applies to primary home purchases between April 9, 2008, and June 30, 2010. In most cases, you must repay the credit in equal payments over 15 years. You are considered a first-time homebuyer if you have not owned a home in the three years prior to the purchase. There are income and other limitations. More information from the IRS

Get the advice of a tax professional

These are just a few of the tax deductions and credits that you may be eligible to take. For more information, go to the IRS website or go directly to Publication 17: Your Federal Income Tax for Individuals.

None of the information on this website should be considered tax or legal advice. You should consult your legal or tax advisor for information concerning your individual situation.