U.S. Incomes Tumbled in 2009

From the Wall Street Journal:

Personal income took a hit in most of the U.S. last year with the only gains coming from government support, according to new data from the Commerce Department.

Income declined in 223 metro areas last year, increased in 134 and was unchanged in nine regions. Even though prices declined last year — down 0.2% from a year earlier as measured by the national price index for personal consumption expenditures — incomes fell even more. On average, personal income dropped 1.8% in 2009, following a 2.7% increase in 2007.

In areas that saw gains, most of the increases came from the government in one way or another. In 77 of the 134 regions that saw incomes increase, the growth came from transfer receipts such as unemployment benefits or Social Security payments. In most of the remaining 57 metro areas, the gains were concentrated in the government sector, the Commerce Department said, including strong growth in military earnings.

World's Rich Got Richer Amid '09 Recession

From MSNMoney.com:

The United States was home to the most millionaires in 2009 -- 2.87 million -- followed by Japan with 1.65 million, Germany with 861,000, and China with 477,000.

Switzerland had the highest concentration of millionaires: nearly 35 for every 1,000 adults.

Yet as portfolios bounced back, investors remained wary after a collapse that erased a decade of stock gains, fueled a contraction in the global economy and sent unemployment soaring.

The report, based on surveys with more than 1,100 wealthy investors with 23 firms, found that the rich were well served by holding a broad range of investments, including commodities and real estate.

"The wealthy allocated, as opposed to concentrated, their investments," Merrill Lynch head of U.S. wealth management Lyle LaMothe said in an interview.

Millionaires poured more of their money into fixed-income investments seeking predictable returns and cash flow. The challenge ahead for brokers is convincing clients to move off the sidelines and pursue riskier, more fruitful investments.

Nearly 1,400 O.C. Residents Miss IRS Refunds

Almost 1,400 residents of Orange County, California have not received their IRS refunds, reportedly because of a mailing error. The IRS is trying to identify and re-send the failed refunds, however many taxpayers from Orange County are apparently fed up with waiting. The Orange County Register posted a story on the ongoing problem; you can read a section below or the full story here.

Some 1,380 Orange County residents have yet to claim their 2009 IRS refunds for one simple reason -- the IRS can't find them.

They're not alone. This year, $123.5 million in 107,831 refund checks were returned to the IRS by the U.S. Postal Service due to mailing address errors.

To get the money, you need to update your mailing address with the Internal Revenue Service. The IRS will then send out all checks due.

Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Click here to jump to our database of U.S. residents who are missing checks.

Why You Shouldn't Convert to a Roth IRA

From the Wall Street Journal:

As 2009 came to a close, financial advisers geared up for an expected flood of clients looking to convert their traditional individual retirement accounts to Roth IRAs this year.

Conversions are indeed way up from previous years, thanks to the elimination of the income limit for those wanting to make the switch. But many clients who had expressed interest are deciding not to convert.

Conversion is attractive mainly because withdrawals from Roth IRAs, unlike those from traditional IRAs, are tax-free.

Moreover, Roth IRAs also have no withdrawal requirements; traditional IRAs require investors to begin making withdrawals at age 59½. Several brokerage firms saw conversions by their clients quadruple in the first quarter of 2010, compared with the year-earlier quarter.

However, financial advisers are finding that most clients wouldn't benefit, on balance, from a conversion. Here are the main reasons why:

1. The tax bite is too big.

Clients often come to advisers asking about the Roth IRA conversion opportunity without realizing the immediate tax implications: They will have to pay income tax on any money they move out of a traditional IRA into a Roth account.

Continue reading at WJS.com…

Tax Bills In 2009 At Lowest Level Since 1950

According to a new analysis of federal data, the average U.S. taxpayers paid less tax last year then they have since 1950. Federal, state, and local taxes, consumed about 9.2% of personal income in 2009, which is much lower then the 12% average we have seen for the past few decades.

The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

"The idea that taxes are high right now is pretty much nuts," says Michael Ettlinger, head of economic policy at the liberal Center for American Progress. The real problem is spending,counters Adam Brandon of FreedomWorks, which organizes Tea Party groups. "The money we borrow is going to be paid back through taxation in the future," he says.

Individual tax rates vary widely based on how much a taxpayer earns, where the person lives and other factors. On average, though, the tax rate paid by all Americans — rich and poor, combined — has fallen 26% since the recession began in 2007. That means a $3,400 annual tax savings for a household paying the average national rate and earning the average national household income of $102,000.

Continue reading at USA Today.com…

U.S. Minted More Millionaires In 2009

It should come as no surprise that the number of millionaires in the country decreased in 2008 due to the market meltdown, and poor economy. However, I was surprised when I read that the number of millionaires actually increased by around 16% in 2009, according to this article on CNN Money. As it explains, the number of households in the U.S. worth $1 million or more grew to 7.8 million in 2009.

The firm's report, "Affluent Market Insights 2010," also found that the number of ultra high-net-worth households, worth $5 million or more jumped 17% to 980,000 in 2009.

"This is largely attributed to the stock market rebound, since other assets including real estate and private businesses have not rebounded as dramatically," said George H. Walper, Jr., president of Spectrem Group.

The report comes one year to the day after the Dow and the S&P 500 closed at 12 year lows in the thick of the financial crisis.

Continue reading at CNN Money.com…

Questions for the Tax Lady: January 11th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: What is the Taxpayer Advocate Service

Answer: The Taxpayer Advocate Service (TAS) describes itself as “an independent organization within the IRS,” that helps mediate the resolution of tax debts. It is a free service offered by the Federal government, but not every taxpayer with back taxes will qualify for TAS assistance. You must meet certain income requirements and be able to prove that you are experiencing an economic burden because of the IRS collections. You can contact the TAS by calling 1-877-777-4778.

Question #2: What is the Earned Income Tax Credit, and how do I know if I qualify for it?

Answer: The Earned Income Tax Credit is a tax credit available to low income workers who may or may not have qualifying children living with them. It was designed to encourage low wage workers, while offsetting the burden of payroll taxes. Since it is a credit, not a deduction, the Earned Income Tax Credit can be subtracted directly from what you owe. For more information, including rules about qualifying, check out this article on bankrate.com.

Top 10 Tax Stories of 2009

Now that the year 2010 has begun, I figured it would be interesting to look back at the most popular tax stories covered in my blog last year. Listed below are the top 10 tax stories of 2009, along with links to the various entries I posted on each topic. If you can think of another story that should be on the list, then send me a message on my Twitter profile.

1. The Housing Marketing and Homebuyer's Credit

The U.S. housing market keeps financial bloggers – like myself – captivated throughout the year. Back in early February, newly inaugurated President Obama launched a $75 billion foreclosure rescue plan to help American’s stay in their homes. However, foreclosures continued to trouble the country and drastically reduce home values across the country. In January the housing market began to show signs of recovery, and as the November 30^th deadline for the first-time homebuyers credit loomed, home sales rose to a two-year high. However, before it expired Congress passed the Worker, Homeownership, and Business Act that extended the credit, and also created a lesser credit for taxpayers seeking to purchase a second home.

2. Auto Bailouts, Cash for Clunkers, and Special Deductions

Early in 2009 there was criticism of Obama’s plan to help General Motors and Chrysler stay afloat. It was even reported that taxpayers could lose up to $80 billion dollars in the automobile industry bailouts. However, taxpayers seem to forget about their concerns when Congress launched the Cash for Clunkers program, that gave Americans a credit to trade in old gas guzzlers for new, energy efficient vehicles. Even though the enormously popular program expired, there were still plenty of tax incentives to buy a car in 2009, including the ability to deduct sales tax paid on new vehicle purchases.

3. Joe Francis' Tax Problems

2009 was the year of celebrity tax problems. From former boy band member Lance Bass, to actor Nicolas Cage, to California's Governor Arnold Schwarzenegger, no one was exempt from having to pay the taxman. However, one celebrity tax evader seemed to generate more media attention than the rest, Joe Francis (creator of the Girls Gone Wild pornographic video series). Initially Francis blamed his financial woes on former employees, but later in the year he grabbed headlines again with his intent to sue the IRS.

4. Health Care Reform

Along with many other tax bloggers, I have discussed the topic of health care reform on my blog dozens of times throughout 2009. Improving the country’s health care was one of Obama’s campaign promises and is one that has captured the attention of Americans. While we will have to wait until Congress returns from their winter break to see if any legislation becomes law, you can check out this entry on the House of Representative’s Paying for the Affordable Health Care for America Act, or this entry explaining the Senate’s Patient Protection and Affordable Care Act.

5. California's Budget Problems

Between furlough days, and tax increases, California’s budget problems have become one of the major tax stories of the past year. In February the state legislators passed a budget, with billions of dollars in spending cuts, and over $12 billion in new state tax increases. Unfortunately, the cuts – especially furlough days – have had a drastic affect on Sacramento’s economy, where many of the capitol city’s workers are employed by the State. Additionally, later in the year it was reported that California’s revenue is falling short of what was expected, which will undoubtedly lead to budget problems in 2010.

6. USB Settlement and Taxpayer Amnesty Program

Shortly after taking office President Obama announced his intention to crack down on offshore tax evaders, and his administration certainly delivered. After months of negotiations, the U.S. Treasury Department reached a deal with UBS – the largest Swiss Bank – to turn over the names of thousands of taxpayers that had illegally avoided paying income taxes. The IRS then created an amnesty program allowing taxpayers to turn themselves in to avoid harsher punishment.

7. Ongoing Unemployment Rate Increases

Unfortunately, high unemployment rates have been an ongoing problem in 2009. In November, President Obama even announced that there would be even more job losses before the unemployment rates would improve. The Obama administration does assert that their programs have helped saved nearly 700,000 jobs this year. However, in December a study from UCLA suggested that unemployment rates could stay above 10% throughout 2010.

8. TARP Funds, Executive Bonuses, and Repayment

Early in 2009, taxpayers across the country were angered upon reports that AIG, a company that had recently received billions of dollars through the TARP Program, was giving out million dollar bonuses to dozens of executives. The U.S. Senate even considered taking action such as a new bonus tax. However, as the year continued the TARP Program began to create positive headlines when in June ten banks began paying the federal government back. Later in December, Bank of America even announced its intentions to repay TARP funds it had received.

9. Tax and Spending Protests

On April 15^th, thousands of American taxpayers reportedly participated in the T.E.A. parties. Afterwards the GOP was quick to plan additional protests. Then, on July 4^th dozens of taxpayer protests took place across the country, and months later in September thousands of taxpayers marched to the U.S. Capitol to protest the federal government’s spending.

10. Lack of Action on the Estate Tax

Towards the end of the year the estate tax became a very popular topic in the tax blogosphere. As I explained in this blog entry, Congress failed to pass any legislation on the estate tax, meaning it will not be in effect for the year 2010. However, on January 1^st, 2011 it will return at rates higher than in the early 90’s. Although the House of Representatives passed legislation creating a permanent solution, the Senate did not follow suit. As the year came to an end, there were even reports of ill taxpayers clinging to life, while their families debated the tax consequences of keeping them on life support for a few extra days.

Happy New Years Eve!

Have fun, but be safe. See you all in 2010!

Latest Good Reads

2009 - The Tax Year In Review – Part I

2009 - The Tax Year In Review – Part II

Mistake in WSJ Front-Page Estate Tax Article

What’s Good for the Goose Is Good for the Gander

A Tax Lesson to be Learned

IRS Reminds Car Shoppers about 2009 Tax Break

In their new press release, the IRS reminded taxpayers looking to buy a car before the year is over that they still have time to take advantage of a 2009 tax break that may not be extended next year.

Taxpayers who buy a qualifying new motor vehicle this year after Feb. 16 can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price. Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.

Individuals who itemize and those who take the standard deduction can benefit from this tax break. In states without a sales tax, other taxes or fees can qualify if they are assessed on the purchase of the vehicle and are based on the vehicle’s sales price or as a per unit fee.

The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

Taxpayers who take the standard deduction need to complete Schedule L and attach it to Form 1040 or Form 1040A to increase the standard deduction by the allowable amount of state or local sales or excise taxes paid on the purchase of the new vehicle. Also, check the box on line 40b on Form 1040 or line 24b on Form 1040A. Individuals who itemize should include the allowable amount of state or local sales or excise taxes from the purchase of the vehicle on Form 1040, Schedule A.

Questions for the Tax Lady: December 7th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: My boss usually gives me a present for the holidays, but this year she gave me a bonus check. Will I need to include these funds on my next tax return?

Yes, any cash gifts or items that are “easily exchangeable” for cash that you are given by an employer should be reported to the IRS. However, since your employer printed you out a check then odds are that she intends to include it on your W-2 form, but if you want to be extra cautious then you can always ask her. For more information on the tax implications of holiday presents from employers check out this entry on the RDTC Tax Help Blog.

Question #2: What is the 2009 standard deduction amount?

According to this IRS press release, for the 2009 tax year “the new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.”

The Great Tax Drought of 2009

Recently the media has been given a lot of attention to job losses, and the ongoing health care debate, but one topic that has seemingly fallen off the radar is falling tax revenue. According to CNN Money, decreased federal tax revenue affect nearly all Americans.

Through the end of August, Uncle Sam collected 25% less in tax revenue for the year than during the same period a year earlier. The two biggest culprits were a 56% drop in corporate income tax revenue and a 20% drop in individual income tax revenue.

On balance, the Congressional Budget Office expects that tax receipts will be 14.9% of gross domestic product this year, well below the historical 18.3%average.

While revenue forecasts for next year are better, the CBO estimates tax receipts will only make up about 15.7% of GDP.

But two factors could lower that estimate. The first is whether or not the projections for economic growth and the unemployment rate prove too optimistic. If they do, that would reduce how much tax revenue Washington collects.

Continued at CNN Money.com…

Special Sales Tax Deduction for Car Purchases Available through End of 2009

In their newest press release, the IRS is reminding taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns.

Purchases made before Jan. 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).

The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.

The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.

For those that have questions about the deduction for sales tax and other fees, these questions and answers might help. A video on the IRS Youtube.com channel and audio podcasts in English and Spanish are also available to help taxpayers take full advantage of the deduction.

Get The Most Out of Your Homebuying Tax Credit

MSNBC.com recently posted a helpful article on how new homebuyers can get he most out of their home buying tax credit. You can find a segment of their article below, or check out the full story here.

When it comes to the $8,000 tax credit for first-time homebuyers, it seems there's a new program every week to help tap that money today.

The credit can be claimed on 2008 or 2009 tax returns. Homebuyers who get a loan backed by the Federal Housing Administration can use the money to cover closing costs and other fees, and at least 10 states offer ways to use the tax credit faster.

"There are some real neat tax planning strategies you can apply now," said Bob Meighan, vice president of TurboTax.

To be eligible, a buyer cannot have owned a home in the past three years. So if you're ready to buy, here are some tips:

INCOME CONSIDERATIONS: The tax credit, for home purchases made through end of November, comes with income thresholds, $75,000 for individuals and $150,000 for joint filers. After those limits, the credit begins to phase out. If you bought a home this year and expect your 2008 income to be lower than next year's, it makes sense to file for the credit this year using a 2008 amended return.

However, if you think your income will decrease, due to job loss, wage cuts or hour reductions, it makes more sense to file for the tax credit on your 2009 tax returns to get the most out of the credit, Meighan said.

TAX WITHHOLDING: Another benefit to waiting until 2009: You can increase your take-home pay. By taking the credit next year, you can change your tax withholding status with your employer now and get more on a paycheck-to-paycheck basis, Meighan said.

You'll be giving up a "fatter" tax refund next year, but each month you'll have more change in your pocket.

Also, don't forget to reduce your federal and state tax withholding to account for the tax deduction you can take on the mortgage interest and property taxes you pay.

PRO and CON: Should I Buy a House in 2009?

The real estate industry in this country is in shambles. It has created a great opportunity for any one that can afford to purchase a home. Not only have prices plummeted over the past five years, but both Federal and State agencies are also providing incentives to help taxpayers make the big leap. Although there are plenty of good reasons to buy now, getting into a mortgage during a nation-wide recession might not be in the best interest of every single American. To help those of you trying to decide if you should buy a home this year, I have put together the following list of reasons TO and NOT TO buy a house in 2009.

PRO: Tax Credits

To encourage home buying, the Federal government is offering all taxpayers a one-time tax credit for first-time buyers who purchase a home before the end of 2009. The credit is for $8,000 (or 10% of the sale price), and—unlike last year’s incentive—it is a direct credit and does NOT need to be repaid.

In addition to the Federal tax credit, numerous state and local government agencies are also offering incentives. For example, here in California there is a $10,000 credit for the purchase of a new construction home. The specific rules and amounts will vary by your location, so be sure to ask your agent and/or lender for more information on the incentives you might qualify for.

CON: Prices still dropping

Although some experts predict the economy will begin rebounding at the end of 2009, many are saying that the real estate market will not follow as quickly. Real estate prices are actually still dropping. Financial analysts insist they may continue to drop for another year, which could lower the value of any home you might buy. However, if you are looking to buy a house in the near future, then make sure you do not wait too long. Also, remember that can take months to complete the purchase of a home.

PRO: Population Demographics

Some economists are looking past the economy towards population demographics to predict the housing market. Many believe the "Baby Boomer" generation’s children are beginning to become of-age to purchase homes, which could contribute to the increased activity in real estate industry. Called "Generation Y," they are typically between the ages of 20 and 30, with well paying jobs in the technology field. As the real estate industry begins to bottom out, experts are predicting that Generation Y will begin purchasing homes at a rapid rate.

CON: You may get stuck

If you are the type of person who only wants to occupy their home for a few years or do not like to feel tied down, then now may not be the best time to invest in a new home. The value of any home purchase in the immediate future is likely to depreciate over the next year. Then add in closing costs and agent fees, and you might be stuck unable to sell your home. Remember, that purchasing a house is a big investment, and you may have to hold onto it for five years or so to turn a profit.

PRO: Recession’s End

As I mentioned before, many analysts are predicting that the economy will begin to rebound at the end of this year. Although the real estate market is not expected to bounce back quite as fast, this does mean your chances of getting a loan may increase. When the economy begins to improve more and more banks will feel more comfortable lending, and home loans will become more accessible to Americans again.

CON: Loan Qualification

Getting a loan for a new home is not as easy as it used to be. Banks are lending more than they were six months ago, but they now include harsher credit checks, more paperwork, and un-estimated deadlines. Paired up with ever-dropping prices, this can be a huge incentive to wait another year or so, when loan qualification is supposed to become somewhat easier.

IRS Announces Tax Deduction For New Cars

The Daily Journal recently posted an article announcing and discussing the new IRS auto tax break. You can find the text of their post below, thanks to the Daily Journal.

The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.

“For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”

The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

“The vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction,” said New Jersey’s IRS Spokesperson Gregg Semanick.

The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.

For more information, go to the IRS.gov Web site home page and access the Update on Recovery Tax Provisions for Individuals and Businesses.

Taxpayers Filing Earlier and Banking Larger Refunds in 2009

The IRS recently published a new press release discussing the recent statistic of taxpayers who file earlier receiving bigger refunds. You can find part of the release below, but the full post can be read here.

Taxpayers are filing earlier and receiving larger refunds so far this year, according to early filing season statistics released today by the Internal Revenue Service.

As of Feb. 27, 2009, the IRS had received 56 million individual tax returns, a slight increase over the previous year. And, the average individual refund was $2,869, a 9 percent increase or $232 more than the same time last year.

The IRS notes that possible reasons for the larger refunds may include taxpayers benefiting from the recovery rebate credit and other tax breaks such as the first-time homebuyer credit and the additional standard deduction for real estate taxes. The average refund amount generally will decrease slightly as the filing season progresses.

More taxpayers choose to receive their refunds through direct deposit each year. As of Feb. 27, more than 84 percent of all refunds were issued through direct deposit, up from 81 percent for the same period last year.

While the IRS has issued almost 3 percent more refunds this year compared to the same time last year, the number of taxpayers who choose to receive their refunds quickly and safely through direct deposit is up almost 7 percent compared to the same time last year. On Feb. 27, the average direct deposit refund totaled $3,063.

The IRS cautioned that year-to-year analysis of total returns filed will be an anomaly this year because last year’s results include those returns filed for the economic stimulus payment. As the year progresses, the IRS expects to receive and process more individual income tax returns during 2009 than in 2007 but fewer than in 2008.

Expanded Tax Break Available for 2009 First-Time Homebuyers

According to their newest press release, the IRS has announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

10 "Green" Tax Credits and Deductions for '08 and '09

The Roni Deutch Tax Center® recently published a press release titled "Tax Lady" Educates Taxpayers on 10 "Green" Tax Credits and Deductions for '08 and '09 Tax Years, so I wanted to also make sure and share them with the readers of my blog. Check out the top 10 tips below!

• New Roof: Investing in a new roof can also give you up to $500 in tax credits.

• Solar Panels: You can receive huge tax breaks for installing a working solar panel system or photovoltaic system. Both receive a deduction for up to 30% of the total cost.

• Fuel Cells: There is a consumer tax credit for installing fuel cell and micro-turbine systems, as long as they meet the government's qualifications. The credit is for 30% of the total cost, up to $1,500 for each half kilowatt.

• Bio-Diesel: Similarly to hybrid vehicles, you can receive more federal benefits for having a bio-diesel vehicle than a hybrid, and some states even offer state tax breaks for bio-diesel powered cars.

• Energy Efficient Appliances: Appliances that meet "efficiency" qualifications can see deductions.

• Business Credits: You can get business tax credits for providing an eco-friendly work environment, hybrid vehicle company cars, or purchasing energy-saving appliances.

• Wind Energy: You can receive a 30% tax credit for the cost of a wind energy system once you have installed it.

• New Windows: Installing energy efficient windows can provide you with a tax credit of up to $200.

• Plug-in Hybrids: Effective January 1, 2009, there will be a huge new tax incentive for the first 250,000 plug-in hybrid vehicle buyers. Buyers will receive a credit from $2,500 to $7,500 for both cars and trucks following the plug-in hybrid standards.