In 2009, you can deduct the state or local sales and excise taxes imposed on the purchase of a qualified motor vehicle after February 16, 2009, and before January 1, 2010. A qualified motor vehicle includes a passenger automobile, light truck, or motorcycle, the original use of which begins with that purchaser and that has a gross vehicle weight rating of 8,500 pounds or less. A qualified motor vehicle also includes a motor home, the original use of which begins with that purchaser. The amount of tax you are able to deduct is limited to the tax that is imposed on the first $49,500 of the purchase price of the vehicle. The deduction is phased out over a $10,000 range that begins when modified adjusted gross income is more than $125,000 ($250,000 if married filing a joint return). No deduction is allowed when modified adjusted gross income is equal to or more than $135,000 ($260,000 if married filing a joint return). The new deduction can be used to increase the amount of your standard deduction or you can take it as an itemized deduction (if you are not electing to take the state and local general sales tax deduction).
Archive for the ‘Federal Tax News’ Category
Deduction for Sales and Excise Taxes Imposed on Purchase of New Motor Vehicles
Friday, January 22nd, 2010Standard Mileage Rates for 2010
Saturday, January 16th, 2010Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pick-ups or panel trucks) will be:
50 cents per mile for business miles driven by a self-employed individual or employee
16.5 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
The new rates for business, medical and moving purposes are lower than rates for 2009. The rate for charitable purposes is set by law and is unchanged from 2009.
The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Residential Energy Tax Credits
Friday, January 15th, 2010Nonbusiness Energy Property Credit
You may be able to take a credit of 30% of the costs paid or incurred in 2009 for any qualified energy efficiency improvements and any residential energy property. The credit is limited to a total of $1,500 for tax years 2009 and 2010.
Qualified Energy Efficiency Improvements
Qualified energy efficiency improvements are the following building envelope components installed on or in your main home that you owned during 2009 located in the United States if the original use of the component begins with you and the component can be expected to remain in use at least 5 years.
● Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home when installed in or on such a home.
● Exterior windows (including certain storm windows and skylights).
● Exterior doors (including certain storm doors).
● Any metal roof with appropriate pigmented coatings, or asphalt roof with appropriate cooling granules, that are specifically and primarily designed to reduce the heat gain of your home, and the roof meets or exceeds the Energy Star program requirements in effect at the time of purchase or installation.
Residential Energy Property Costs
Residential energy property costs are costs of new qualified energy property that is installed on or in connection with your main home that you owned during 2009 located in the United States. This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property. Qualified residential energy property is any of the following.
● Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heaters; and stoves that use biomass fuel.
● Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers.
● Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces.
The Homebuyer Tax Credit – Expanded
Saturday, January 9th, 2010Amount of the Credit
Generally, the credit is the smaller of: • $8,000 ($4,000 if married filing separately), or • 10% of the purchase price of the home.
Long-time resident of the same main home. Generally, the credit is the smaller of: • $6,500 ($3,250 if married filing separately), or • 10% of the purchase price of the home.
Who Can Claim the Credit
In general, you can claim the credit if you are a first-time homebuyer or a long-time resident of the same main home (defined below).
First-time homebuyer. You are considered a first-time homebuyer if you meet all of the following requirements.
1. You purchased your main home located in the United States:
a. After December 31, 2008, and before May 1, 2010, or
b. After April 30, 2010, and before July 1, 2010, and you entered into a binding contract before May 1, 2010, to purchase the property before July 1, 2010.
2. You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
3. Additional Conditions Apply.
Long-time resident of the same main home.
You are considered a long-time resident of the same main home if you meet all of the following requirements.
1. You (and your spouse if married) previously owned and used the same main home as your main home for any 5-consecutive-year period during the 8-year period ending on the date you purchased your new main home.
2. You purchased your new main home located in the United States:
a. After November 6, 2009, and before May 1, 2010, or
b. After April 30, 2010, and before July 1, 2010, and you entered into a binding contract before May 1, 2010, to purchase the property before July 1, 2010.
3. Additional Conditions Apply.
Phase-out of the credit for homes purchased before November 7, 2009.
You are allowed the full amount of the credit if your modified adjusted gross income (MAGI) is $75,000 or less ($150,000 or less if married filing jointly). The phase-out of the credit begins when your MAGI exceeds $75,000 ($150,000 if married filing jointly). The credit is eliminated completely when your MAGI reaches $95,000 ($170,000 if married filing jointly).
Phase-out of the credit for homes purchased after November 6, 2009.
You are allowed the full amount of the credit if your modified adjusted gross income (MAGI) is $125,000 or less ($225,000 or less if married filing jointly). The phase-out of the credit begins when your MAGI exceeds $125,000 ($225,000 if married filing jointly). The credit is eliminated completely when your MAGI reaches $145,000 ($245,000 if married filing jointly).
