Started those taxes yet? Well, when you do, you're going to find some changes to the tax laws that will probably mean a lower tax bill. Money reporter Stacy Johnson begins his special tax series with some good news on income taxes.
The recent bad economy has been called the worst since the 30s. And Uncle Sam is stepping up to help taxpayers with a break or two this season.
2008 produced a bumper crop of changes to the tax law, the vast majority of which will lower your tax bill. For example, the $7,500 first-time home-buyer’s tax credit: which is called a credit but is actually more like a 15 year interest-free loan. Also of interest to homeowners, a new 500-1,000 deduction for property taxes: available even if you don’t itemize.
The deduction for sales taxes was scheduled to be gone this year, but Congress brought it back in the bailout bill… Ditto for the college tuition and fees deduction.
It’s easier to qualify for the the child care credit for 08. And limits were raised for the earned income credit too. Midwest flood victims and those who housed them are also getting some tax relief… And the mileage allowance also went up to 5o cents a mile for the first half of the year, and nearly 60 for the last half.
The IRS has also said they’ll be more willing to work with taxpayers who can’t pay. There’s no specific policy, but the commissioner has said he’s instructed his staff to be sensitive. You need to file a return, but if you can’t pay due to hardship, expect more flexibility.
Bottom line? If there’s a silver lining to a crummy economy, this is it. Lower taxes for last year…and maybe no tax increases this year either. All good news…as long as you can keep those paychecks coming in.