Last Minute 2009 Tax Tips

Finally got cracking on your 2009 taxes and need some tips? Read below for a few of our favorites from our Super Tax Saving Secrets book!

• Did you buy a car, light truck, motor home, or motorcycle in 2009? You can deduct the sales and excise taxes for up to $49,000 of the purchase price as long as you purchased it after February 6, 2009 and before January 1, 2010. By utilizing this deduction you will get cash back on your tax return, kind of like a delayed rebate. Enjoy!

• If you think you may qualify for interest deduction from your home equity loan, it’s important to know that it is not unlimited. You can generally deduct interest you pay on the first $100,000 of a home equity loan. After that, it depends. If the home equity loan was used to improve your first or second home—or to purchase a second home—you can probably take the deduction on an amount up to $1 million or the value of the home. IRS Publication 936 Section 2 contains more detail. If you use the alternative minimum tax (AMT) on your 1040, your home equity loan deductions will only help you if you used the money for home improvements.

• Should you use the American Opportunity Credit or the Lifetime Learning Credit? Both are credits you can take if you, your spouse, or your dependents were enrolled at an eligible educational institution and you were responsible for paying their college expenses in 2009, but you can't take both (for the same person) during the same year. The American Opportunity Credit, which is scheduled to expire after 2010, provides up to $2,500 for the first $4,000 of qualifying educational expenses.

• Need to file an extension? An extension will give you extra time to get your paperwork to the IRS, but it doesn’t extend the time you have to pay any tax due. You’ll also owe interest on any amount not paid by the April deadline, plus a late payment charge if it amount already withheld doesn’t cover at least 90 percent of your total tax. To request an extension, you’ll still need to submit Form 4868 by April 15. You can also e-file an extension request using tax preparation software such as TurboTax.

• If you finished filling out your return, but are unable to pay the full amount of tax due, don’t request an extension. Instead, go ahead and file your return on time and pay as much as you can. The IRS will send you a bill for the balance due. To apply online for a payment agreement, click here for more info and to set up a payment plan. If you are unable to make payments, call the IRS at 800-829-1040 to discuss your payment options.

• Need a little break while doing your taxes? Check out this page of tax humor.