6 New Changes You Need To Be Aware of For 2010
January 25, 2010
#1 – Making Work Pay Credit
Part of Obama’s stimulus plan, this is a refundable credit that will show up on your return IF you had EARNED income in 2009 such as from a W2 or self employment. The credit is equal to 6.2% of your earned income up to a maximum of $400 if you are single or $800 if you file a joint return. For example, if you earned $10,000 on a W2 in 2009 you would be eligible for the full credit of $400 if you file as single. The same married couple would be eligible for a $620 credit.
#2 – Tax Free Unemployment
For this year only, up to $2400 of unemployment benefits will be tax-free when you file. This is a per person exclusion. This means if you are married, both you and your wife are eligible to exclude a full $2400 from their respective unemployment income for 2009.
#3 – Energy Credits
A 30% credit is allowed on certain energy efficient property purchased in 2009 and/or 2010. The maximum credit is capped at $1500. Windows, Exterior Doors, Furnaces, Water Heaters, Insulation, Central A/C all may qualify for this credit assuming they meet certain minimum energy efficiencies. Check with your tax advisor to see if yours will qualify. Also for the first time, you can claim this credit if you purchased a biomass stove for 2009/2010. This means those corn burners or wood pellet burners now qualify! Unfortunately it is no help for those of us who purchased these in prior years.
#4 – Energy Star Appliances Credit
Michigan, for the first time, is now allowing an energy credit on the purchase of certain energy star appliances. These appliances are a clothes washer, dishwasher, or refrigerator. Michigan also allows a credit for energy efficient windows, furnaces, insulation or water heaters. Michigan will give you a credit of 10% of the purchase price. You may claim the 10% credit for each category of energy efficient property. However, the amount of the credit is capped at $75 per category for a single taxpayer or $150 per category for married taxpayers. For example, if I am married and purchase an energy star dishwasher for $800 and put in some new energy star windows for $1000, I would be able to claim a credit on my Michigan return in the amount of $180($80 for the dishwasher and another $100 for the windows).
#5 – New Vehicle Sales Tax Deduction
If you purchased a brand new vehicle in 2009 after February 16, you will be eligible to deduct the sales tax you paid on it without having to itemize deductions. The deduction is capped at a purchase price of $49,500.
#6 – 3 Kids allowed for the Earned Income Credit
Families that have more than 2 kids and are eligible for the EIC will be able to claim up to 3 kids for the EIC now! The maximum Earned Income Credit is now up to $5657 if you have 3 children!
All of these changes mean more money in your pocket this year. Be aware of all of them so you don’t short yourself when you file.