Tax tips that can help you save

null April Brown is an educator who spends quite a bit of her own money getting supplies for her students.

"I'm paying out of pocket weekly for things for the classroom," said Brown.

"This was a deduction that we thought might expire, but was extended this year," said IRS spokesperson, Jim Dupree.

Something else the IRS thought might be cancelled was the tuition and fees deduction, but it wasn't.

"Tuition and fees, up to $4,000, can be deducted for yourself or your spouse or your dependents," said Dupree.

First time home buyers can take advantage of a special tax credit, if they made their purchase after April of this year and meet certain income requirements.

"Up to 10 percent of the value of the home or up to $7500 is the credit amount and this is a refundable tax credit, which, it reduces the amount of taxes that you pay," said Dupree.

But remember, this is a credit, not a deduction, which according to the IRS means it's like an interest free loan, and has to be paid back in equal payments over the next 15 years.

Another real estate change: there is now help for people who pay property taxes, but don't typically get a break because they don't itemize.

"They will be able to write off or deduct the amount of real estate taxes that they pay, up to $500 for a single taxpayer or if you're married, it can be up as much as $1000," said Dupree.

There's a rebate recovery credit you might get to take advantage of. And remember those the economic stimulus payments that were issued last year? There's been an extension to help certain taxpayers.

"Those people who were not able to get the full amount will be able this year to apply for that credit," said Dupree.

April isn't eligible for the other breaks, but is excited to get the educators deduction the IRS is willing to offer, even if it only covers half of what she spends.

"It doesn't cover the cost of supplies and things that I buy necessary for the classroom, but it is nice to have a little deduction," said Brown.

On another note, the IRS wants to caution you that they never initiate contact through the Internet, so if you get an official looking e-mail, forward it to the IRS to report as spam.

It may contain malware and could be a tool to steal your identity, so do not open it.

Also, if you'd like help with your taxes and make under $56,000 a year, there's a service at IRS.gov that acts as an assistant, filling out your forms and figuring up your tax payment or tax return, based on the answers you give. That service is free.

Web Extra Information:

2008 Year End Tax Tips-Tax Changes

The IRS wants to remind taxpayers as part of their year end tax planning to be aware of recent tax changes as well as recently reinstated tax deductions.

Some tax breaks and a review of your current tax situation may result in a bigger refund or less taxes to be paid come tax time. The Internal Revenue Service offers these tax tips for you to consider.

First-Time Homebuyers Tax Credit

First-time homebuyers should begin planning now to take advantage of a new tax credit available for a limited time. The credit applies to primary home purchases between April 9, 2008 and June 30, 2009.

This tax credit must be paid back in equal payments over 15 years. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly.

First-time homebuyers are those who have not owned a home in the three years prior to a purchase. The full first-time homebuyers credit for married couples filing a joint return whose modified adjusted gross income (MAGI) is $150,000 or less and for other taxpayers whose MAGI is $75K or less.

For married couple filing a joint return, the phase-out range is $150,000 to $170,000 and for other taxpayers the phase-out range is $75,000 to $95,000.

Real Estate Tax Deduction

There is an additional standard deduction for those who don't qualify to itemize their tax deductions, but pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers.

This deduction is available for the 2008 and 2009 tax years. This property tax deduction is in addition to the standard deduction used by filers.

Tuition and Fees Deduction

You may be able to deduct qualified tuition and required enrollment fees up to $4,000 that you pay for yourself, your spouse, or a dependent. You do not have to itemize to take this deduction.

However, a taxpayer cannot take both the tuition and fees deduction and education credits (Hope & Lifetime Learning Credits) for the same student in the same year. Income limits and other special rules apply to each of these provisions.

Educators' Out of Pocket Expense Deduction

The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment and software used in the classroom.

Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. Worth up to $250, the educator expense deduction is available whether or not the educator itemizes deductions on Schedule A.

Recovery Rebate Credit

If you did not qualify or did not receive the maximum amount for the 2008 Economic Stimulus Payment you may be entitled to a Recovery Rebate Credit when you file your 2008 tax return. Review the tax return filing instructions including the Recovery Rebate Credit worksheet.


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