Alliance Tax Service Blog » American Recovery and Reinvestment Act of 2009 [H.R. 1] Updated tax news and information from Alliance Tax Service Sun, 31 Jul 2011 12:35:51 +0000 en hourly 1 2011 Residential Energy Credit Sun, 10 Jul 2011 00:29:29 +0000 Administrator This credit is available for property placed in service in 2011, but with
new limitations. The credit now has a lifetime limit of $500, of which
only $200 may be used for windows.

This credit still consists of qualified energy efficiency improvements and
residential energy property costs, but it is figured differently. Subject to the lifetime limits, only 10% of qualified energy efficiency improvements is allowed. Subject to the lifetime limits, the residential energy property costs are limited to $300 for energyefficient building property, $150 for any qualified natural gas, propane, or oil furnace or hot water boiler, and $50 for any advanced main air circulating fan.

Exterior windows, doors, and skylights must now just meet or exceed the Energy Star program requirements. Wood stoves must have a
thermal efficiency rating of at least 75%. Natural gas, propane, or oil
furnaces or hot water boilers must achieve an annual fuel utilization
efficiency rate of not less than 95.

Expenditures which are made from subsidized energy financing cannot be used to figure the credit.

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American Opportunity Credit / Hope Credit Sun, 10 Jul 2011 00:16:13 +0000 Administrator The Hope credit is modified and renamed the American Opportunity tax credit for tax years beginning in 2009 through 2012. The credit equals the sum of:

• 100% of the first $2,000 of qualified tuition and related educational expenses, plus
• 25% of the qualified tuition and related educational expenses over $2,000 but not more than $4,000.

Take a minute and view this video from I.R.S.

The maximum credit a taxpayer may claim for 2009 or 2010 is $2,500 and is allowed for the first four years (used to be 2 years) of the student’s post-secondary education in a degree or certificate program. (Doesn’t have to be college, can be most Vocational Technical Schools or Cosmetology Schools.)

The definition of qualified tuition and related expenses is modified to include tuition, fees, and course materials. The credit is phased out for taxpayers with modified AGI between $80,000 and $90,000 ($160,000 and $180,000 for joint filers). Up to 40% of the credit is refundable (meaning after you use the credit to zero out your income tax, you get the rest of it back in your pocket). Effective for tax years beginning after December 31, 2008, but only for tax years beginning in 2009 and 2010.

Whoever claims the student is allowed the credit.

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Making Home Affordable – Refinance and Modification Sat, 29 Aug 2009 17:53:26 +0000 Administrator The Treasury Department has introduced a program called Making Home Affordable, which is intended to stabilize the housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

There are two parts to the new program, the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP). The Home Affordable Modification Program gives homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. Qualifications for eligibility for HARP, which expires on June 10, 2010, can be found on the program’s website. A refinance under HARP must have a mortgage note date on or before that date.

The Home Affordable Modification Program commits $75 billion to preventing avoidable foreclosures. Only loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible. Qualifications for HAMP, which expires on December 31, 2012, can be found on the program’s website.

More information is available at the Making Home Affordable website, which provides homeowners with self-assessment tools and calculators to help determine whether they might be eligible for a modification or a refinance under the program.

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Sales Tax on New Vehicle Sun, 03 May 2009 22:56:55 +0000 Administrator Qualified motor vehicle taxes are deductible either as part of the standard deduction or as an itemized deduction. This means that you can take the sales tax you paid on a new vehicle even without itemizing your deductions. Qualified motor vehicle taxes are any state or local sales or excise tax imposed on the purchase of a qualified motor vehicle. The deduction is limited to the amount of taxes attributable to the first $49,500 of the purchase price.

Here is an explanation from the I.R.S.

The deduction is phased out for a taxpayer with modified adjusted gross income between $125,000 and $135,000 ($250,000 and $260,000 on a joint return). A qualified motor vehicle is:
• A new passenger automobile or light truck, or motorcycle with a gross vehicle weight rating of 8,500 pounds or less and the original use of which begins with the taxpayer, and
• A new motor home of which the original use begins with the taxpayer.

NEW means the first owner, not used and not just new to you.

In order to get this deduction you have to purchase the vehicle described above on or after February 17, 2009, and before January 1, 2010.

If you purchase a new vehicle during this period of time, be certain to save the document that shows the amount of sales tax that you paid and bring it when you come in to have your 2009 income tax return filed.

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