Every year, the Internal Revenue Service enforces new tax laws. Most years there isn’t much actual change to report. Because of the economic crisis that began in 2008, however, there have been some notable changes to the 2009 laws. Let’s take a look at a few of these.
The low-income capital gains tax has been erased. It used to be that if you were single and earning under $32,000 annually or married, with a joint income under $65,000 a year, you could face a 5% capital gains tax. The new law removes it for 2008. Also, if you sold real estate, or stocks and bonds and made a profit during 2008, there is no capital gains tax.
There is a first time homebuyer tax credit. It is important to know that the Internal Revenue Service defines a first time homebuyer as someone who has not owned a principal residence for three years before the purchase of the new home. The credit is $7500. Of course, you must have bought the house within calendar year 2008. You can also deduct the PMI you pay on your mortgage 100% for 2008.
If you didn’t take advantage of last year’s economic stimulus rebate, you still might be able to get some money. You need to go to the Internal Revenue Service website and check out the Recovery Rebate Credit Calculator to determine if you are still eligible.
In bad news, the federal government has increased the penalty for paying your taxes late (60 days beyond deadline) to 100% of the amount owed or $135, whichever is smaller.
These are some of the more notable changes of 2009. To get a list and explanation of all the new laws, go to the Internal Revenue Service website. It’s important to keep abreast of the changes in tax laws. Not knowing about a new tax law, whether it is favorable to the taxpayer or not, can put you in a bad spot when you’re doing your income tax return.
In order to absolutely stay current with the shifting and changing tax laws enforced by the Internal Revenue Service, you might want to consult a tax attorney or tax professional. Such a professional can help by preparing your income tax return for you.
Tax professionals are accredited and trained on all the new laws. They know what to be wary of and what opportunities to avail you of in order to lower your tax liability. They stay current on all new exemptions, credits, and deductions, along with restrictions, regulations, and penalties. When tax time comes, a tax professional is best suited for making sure that you get all the breaks to which you are entitled, while avoiding all the pitfalls of the Internal Revenue Service system.
It is natural that tax laws will be amended almost every year to plug in the loopholes and to bring more and more people in the tax net. As an ordinary taxpayer, you are bound to take notice of them and reflect the amendments on your tax return. This is a bit complicated but there are simple ways to handle it. Chintamani Abhyankar provides useful tips.