This coming tax season features more changes, deductions, and credits than any other year I have seen in my nine year career.  For that reason, many people who do not know of all the possible deductions and credits they are eligible for will cost themselves a significant amount of money.  I have listed six of those tax law changes below and included a brief description. 

1. Energy Efficiency Credit. If you purchased windows, doors, a furnace, boiler, water heaters, or insulation you may be eligible for a deduction up to 30% of the costs up to $1,500. Energy star ratings apply and more information/qualifications can be found at http://www.energystar.gov/index.cfm?c=tax_credits.tx_index -or- http://www.irs.gov/newsroom/article/0,,id=211307,00.html

2. Sales Tax Deduction on a New Vehicle Purchase. If you purchased a new vehicle you can use the sales tax you paid as a deduction on your tax return. Previously, sales tax was deductible but only if it exceeded your state income tax, so most people did not benefit from it. At tax time: bring your sales receipt(vehicle price, sales tax paid, and dealership information.

3. Excluded Unemployment Benefits. If you received unemployment benefits in 2009 the first $2,400 received will be considered excluded from your 2009 federal return (not Minnesota return).

4. Increased Education Credit. If you or your dependent paid qualified education expenses this year you may be eligible for an increased maximum Hope education credit of $2,500. The Hope credit has now been made available for four years of higher education as opposed to just two in the past.

5. First Time Homebuyer Credit. This credit has been extended until April 2010 and offers first time homebuyers a tax credit of $8,000 on their taxes. In addition, taxpayers who have lived in a home for five of the past eight years are also eligible for a credit of $6,500. A frequently asked questions page regarding these credits are available at www.bergersontax .com or more information at irs.gov.

6. Making Work Pay Credit. Individual with earned income may have received a tax credit of $400 or $800 for married filing jointly. They received this credit through their employer throughout 2009. This will have a negative result for the taxpayers at tax time as their refunds will be reduced by this much or their balance due will be increased.

7.       Conversion of IRAs to ROTH IRAs allowed in 2010.  Some individuals are given the opportunity to convert their traditional or rollover IRAS into ROTH IRAS thus creating after tax dollars allowing for tax deferred and tax-free accounts.  More information on this great opportunity is available on our website at  http://bergersontax.com/tax-form/2009/10/21/great-opportunity-to-save-taxes-thanks-to-legislation-changes/