Free Movies...........Really!!!!!!!

If you have a high-speed Internet connection and a decent monitor, you can enjoy a wide variety of movies — all free — from the comfort of your personal computer.

At http://www.hulu.com , you don't need any special equipment and you can catch a great flick anytime online. There are literally HUNDREDS of movies to choose from. (And we're not talking low-budget B-movies either — you'll find Oscar-nominated and critically-acclaimed films, as well.)

And if you missed your favorite TV show this week, be sure to also check out Hulu's showcase of recently-televised shows, too. All free. (dolan)

The IRS is closly watching for...........

* Failing to Show All of Your Income

The worst mistake a taxpayer can make is to fail to report all of his or her income. In addition to your salary and any bonuses, make sure to include proceeds from sales of stocks and bonds, dividend earnings, brokerage and bank accounts and any other interest-earnings investments. Also, if you received unemployment income, that needs to be included, too.

Investors who sold stock, bonds or mutual funds in 2008 need to show how much they gained or lost between the date they bought and the date they sold their investments. Many brokerage firms don’t provide this information -- instead their statements will just include the price at which you sold your investment -- so the taxpayer will have to find the paperwork they received when they first bought an investment. Also, even if your investment declined in value, you may still have to pay taxable income, says Maureen McGetrick, accountant and partner at New York-based BDO Seidman. (See our story for more on investment gains and losses.)

*Failing to Pay Taxes on Forgiven Debt

Just because a credit-card company (or other lender) agreed to reduce your debt, doesn’t mean you’re off the hook from paying taxes on it. So, make sure to include the forgiven debt in your tax return. For example, a consumer who got his credit-card debt reduced from $10,000 to $6,000 will still be expected to pay taxes on that $4,000 of forgiven debt.

Debts are not taxable income in cases where the taxpayer proves that his debts surpass his assets or when debts get discharged through bankruptcy – be it Chapter 7 or 11.

*Filing a Small Business Loss

Small-business owners who report losses have been on the IRS’s audit radar in recent years, says McGetrick.

The IRS is often on the prowl for filers who report a loss for a business – from say breeding dogs, racing cars or painting houses – when in reality they’re living off other sources of income and claiming a loss on what turns out to be a hobby, says Kip Dellinger, senior tax partner at Los Angeles-based accounting firm Kallman and Company.

To avoid raising suspicions, small-business owners need to show proper documentation, including bank account statements (it’s always best if the business accounts are separate from the personal ones), receipts and invoices. So if you take a client out to dinner and foot the bill, don't write it off on your tax return unless you have the receipt to prove it.

If your small business shut down last year, be particularly careful to dot your i's and cross your t's. And make sure to be as accurate as possible when claiming that a fixed asset like a computer has depreciated in value, says McGetrick.
* Claiming a Home-Office Deduction

Home-office deductions are often abused and therefore big red flags for the IRS, says Brittney Saks, a partner at PricewaterhouseCoopers.

In order to qualify for this deduction, the office must be your principal place of business and used exclusively for business. So, you won't be eligible for a deduction if you use the office for business during the day and as a family room at night or if your employer is offering you work space at the company office.

Read our stories here and here for more tips on claiming the home-office deduction.
* Misreporting Real Estate Gains and Losses

Whether you lost your home to foreclosure or managed to eke out a gain on a sale, you'll need to include the transaction on your tax returns.

Because a primary residence is a personal asset, homeowners can’t claim a deductible on their tax return if they sold their home at a loss, says Saks. In many instances, the real estate investor who sold an apartment building at a loss will make off with more from the IRS. He or she can claim a deductible, but will need to show the price they bought and sold it for and the amount of money they pumped into the building, whether it be for maintenance or repairs.
Meanwhile, those fortunate few homeowners who made money on the sale of their home will need to report that gain.

There is some good news for those who underwent a foreclosure last year: The Mortgage Forgiveness Debt Relief Act of 2007 does not require homeowners who lost their home to pay taxes on the forgiven mortgage debt. This applies only to individuals who lost their primary residence due to foreclosures that occur through 2012. Individuals who lost a rental property to foreclosure will, however, have to pay taxes.




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Top Tax Credits For Your Federal Tax Return

Some of the top tax credits such as the Child Tax Credit, the Hope Credit, and the Earned Income Tax Credit don’t apply to everyone but if you qualify for credits such as these you could save significant amounts on your tax bill.

Tax Refunds

While many people hope for a big chunk of money in the form of a tax refund each year, the best approach is typically to pay fewer taxes during the year and get a smaller refund so you have that money to use during the year.

If you received a huge return this year, be sure to re-evaluate the W-4 form that you filled out with your employer. If you’re withholding too much for federal taxes from your pay check you’re basically giving the government a free loan! Making this change is one of the easiest ways to give yourself a raise next year.

On the flip side, some of you may owe more taxes than you withheld, and no one wants to write an unexpected check in April. To avoid this, make sure you’ve researched the available tax credits offered in the federal tax code.

Tax Credit vs Tax Deduction

Credits are better than deductions. Comparing a $1,000 tax credit to a $1,000 tax deduction, assuming a person earns $60,000 a year and is in the 25% tax bracket, the credit will let you keep $750 more than the deduction.

Tax Credit
If you owe $15,000 in taxes a $1,000 credit will reduce the amount you owe to $14,000.

Tax Deduction
A deduction, on the other hand, only reduces the amount of your income that can be taxed. So a $1,000 deduction reduces your taxable income to $59,000 and you still owe $14,750

Bottom Line
Tax Credit - $14,000 owed
Tax Deduction - $14,750 owed

Here are some tax credits that can cut your tax bill if you qualify:

Earned Income Tax Credit

A previous contributor on this site, Tina, had a personal experience with the earned income tax credit, read it for some more detail on what the credit is all about. The IRS has an EITC Assistant program on their website to help you figure out if you qualify for the credit and how much you are entitled to receive.

The Child Tax Credit

You can receive a $1,000 tax credit for each child under the age of 17 born before the end of the year. See, having kids isn’t THAT harsh on your bank account! Keep in mind, this credit begins to phase out when your AGI exceeds $110,000 when filing married, jointly and $75,000 for single filers.

Hope Credit

This is eligible to students in their freshman and sophomore years of college at an accredited two or four year institution. You can receive up to $1,650 for the credit, and it is based on a percentage of the amount of tuition you paid throughout the year.

Lifetime Learning Credit

This credit is for any student past high school at any time of their life. You can use it if you are a junior or senior in college, or if you are just taking courses to improve job skills or personal knowledge.

You do not need to be working towards a specific degree to receive this credit. This is also based on a percentage of the total amount you paid for tuition throughout the calendar year. Remember, these credits also phase out depending on adjusted gross income, and you cannot claim the credit if you are still considered a dependent on your parent’s tax return or if you file married, separately.

Taxes can be Tricky

Always be sure to consult a tax professional such as a certified public accountant if you are unsure about qualifications of a tax credit before you claim it. We’re not tax professionals, we’re just offering up a review of tax credits, now it’s your job to follow up with some research. Don’t run the risk of taking a credit and then finding out later that the IRS wants the money back with fees and interest!

Happy tax credit hunting!

moneysmartax.com

Krispie Kream Free Donuts Today

In a press release the company announced that it will be "honoring American's sense of pride and freedom of choice on Inauguration Day, by offering a free doughnut of choice to every customer on this historic day, Jan. 20. By doing so, participating Krispy Kreme stores nationwide are making an oath to tasty goodies -- just another reminder of how oh-so-sweet "free" can be."

Whatever. It's surprising that Krisky Kreme even has the money to offer this promotion. The company has been bleeding cash for years and its stock currently trades at $1.50 per share. In 2003, it was trading at more than 30 times that price.

walletpop.com

"Yes We Can"....A Change Gonna Come!!!!!!!!!!!!!!!!!!!!!!

A "Dream" Come Trueeeeeeeeeee.........Yeah Baby!!!!!!!!!!

King Holiday!!!!!!!!!!!!!!!!!!Sing Celebrate!!!!!!!!!!!!!

" The Dream" Comes True 01/20/2009..........

In Celebration of Dr. Martin Luther King Jr.

The Deductions you may not know about!!!!!!!!!!

A New Deduction:
If You Don't Itemize ...

If you don't itemize deductions on your income tax return, you’ll want to pay attention to this one: It's brand new for 2008! Until now, if you wanted to deduct your home's property taxes from your income, you had to itemize (using Schedule A) to do it. As a result, if you didn't itemize, you couldn't take the deduction. There's a new law that lets you increase your standard deduction by the amount of real property tax you could have claimed if you did itemize -- up to $500 ($1,000 on a joint return).

Special Tax Deduction for Refinancers

If you refinanced your home last year, you can deduct your "old' unamortized points from your previous (now paid off) loan. Just how does this work? Suppose you bought a house in August 2007 and you secured a 30-year loan for $300,000 that cost 2 points (2% of the loan amount). That's $6,000 in points for that year. Then in August of 2008 -- one year later -- you refinanced and paid new points for the new loan. Your old loan only amortized 1/30th of those points, or $200, so you now have unamortized points from the original 2007 loan in the amount of $5,800.

Take Your Losses:
If You're an Investor ,,,

If you sold any stocks at a loss in 2008 (and with the market down over 33% in 2008, who didn't?) the good news is that you'll get a deduction for it. You have to use the loss to first offset any capital gains that you might have enjoyed, but after that you can take a deduction against your ordinary income in future years -- up to $3,000 per year. We know, it's not as good as actually making money in the market, but at least it'll help soften the blow.

If You're a Working Parent ...

This one is a tax CREDIT, not a deduction. (A tax credit actually reduces your tax bill dollar for dollar.) If you pay for childcare, including daycare or nanny services, you can reduce your taxes up to $3K for a single child or up to $6K for two or more children under the age of 13. The amount of the credit ranges from 20 to 35% of your child care costs, depending on your gross income. For example, if your income is $43K or more, you can claim a 20% credit on your childcare costs. So if you have one child and you spend $8K a year in childcare costs, you can save 20% off the first $3K -- or $600. As always, certain "rules" apply.

If You're Going Green ...

If you made an effort to go "green" in 2008, Uncle Sam wants to put a few extra dollars in your pocket. Unlike deductions against your income, these are actual tax credits ... so again every penny ends up in your pocket. Probably the biggest tax credit -- between $200 and $3,500 -- comes from purchasing a new hybrid vehicle. The weight of the vehicle and how much fuel it saves will have an impact on the size of your tax credit. A new energy-efficient roof for your home can also generate a tax credit of up to $500. If you bought new energy-efficient appliances for your home, these can generate tax savings, too.

If Your Child Is in College ...

If you have a child in college and you bought him a new computer as a present, you can get a sizeable tax credit through the Hope and Lifetime Learning Credit program. There are some provisions, though. (Aren't there always?) And they've changed a bit for 2008. First, your income can't exceed $58,000 ($116,000 for joint returns). Second, you must actually OWE tax on your return. The amount of the credit depends on your income, how much you’ve paid in tuition and fees, and the amount of scholarships and other deductions from tuition.

If You Travel for Medical Treatments ...

This one's tremendously helpful if you need frequent medical treatments outside the home, such as physical therapy, regular blood work, or even chemotherapy. The IRS allows you to deduct mileage if the drive is "primarily for, and essential to," medical care. The IRS evaluates the standard cents-per-mile allowance each year. For 2008, it was 19 cents a mile between January and June, and 27 cents a mile between July and December. If this little-used tax break applies to you, take advantage of it!

If You Pay PMI ...

When you take out a first mortgage with less than 20% down, you pay a monthly private mortgage insurance (PMI). If you took your mortgage on or after January 1, 2007, that PMI expense is now deductible. Simply use Line 13 on Schedule A -- the same form that you use to deduct mortgage interest and property taxes. Your lender should make this easy by telling you the amount of your PMI premium in Box 4 of your Form 1098. This deduction is scheduled to disappear after 2010, so make the most of it while it lasts!

Good News for Investors

Funny how so many investors can be SO careful with what they put in their portfolio, yet can be almost careless when it comes to deducting investment-related expenses on their taxes. Don't let that be you! Be sure to write off any and all investment publications you subscribe to. And don't forget other expenses, such as your broker's annual fees, mileage for visits to your broker, safety deposit boxes and other investment fees you may pay directly.

If You Lost Your Job ...

Did you look for a job in 2008? If you looked for a job in the same field and at the same level as the one you left, you might be able to deduct your job search expenses as "miscellaneous itemized tax deductions." And even if didn't get the job, your expenses may still be deductible. Possible deductions include agency fees, resume preparation, advertising, postage, long-distance phone calls, and travel. You can claim these job-seeking expenses as long as the amount of all miscellaneous itemized tax deductions is more than 2% of your adjusted gross income (AGI).

If You Have Child Under Age 17 ...

Here's another tax credit if you have children under 17 living at home: You can reduce the amount of taxes you owe by up to $1,000 for each qualifying child under the age of 17 through the Child Tax Credit. The amount of this credit begins to reduce once your income reaches $75,000 or more ($110,000 for married, filing jointly and $55,000 for married, filing separately). The credit does not affect the exemptions you take for dependents -- in fact, you can take it in addition to your exemptions. So if you have two children under 17, you can take up to a $2,000 tax credit.

Miscellaneous Medical Expenses

If you have chronic bronchitis or asthma and your physician has told you that you need to add an air conditioner or a humidifier to your home, this type of equipment can be partially deductible. Also included are specialty beds or mattresses, portable oxygen tanks, heaters and even special telephones. You can even deduct the additional electricity costs needed to operate these prescribed necessities. Remember that as far as ANY medical expenses go, only the amount over 7.5% of your income is deductible. Also make sure that the medical expenses are for you, your spouse, or any dependents for whom you paid more than half the support.

Still Time for an IRA Contribution

Investing in an IRA is not only great for your future, but also eases the pain when it comes time to pay the piper on April 15th. You can contribute up to $5,000 into an IRA before taxes ($6,000 if you're over 50), and deduct every penny from your taxable income. Best yet, there's still time to make your 2008 IRA contribution! You have until April 15, 2009 or the date you file your return to contribute and make the claim on your 2008 taxes.

And Don't Forget ...

ANY costs pertaining to tax planning. These are easy to forget because they really fall under the category of "miscellaneous" itemized expenses. You can write off your tax preparation fees, plus portions of any legal or accounting fees related to your taxes. Meaning if you sat down with an attorney to review your estate, and you spent a part of that time reviewing the tax implications, that time would be tax deductible.

Courtesy of walletpop.com

Who is required to file a tax return?

Three things must be considered when determining whether you have to file a return: your age, your filing status and your income. Generally, once you reach a certain income level, the law requires you to file. The amounts are adjusted annually for inflation.
For 2008 tax returns, individuals younger than age 65 must file if they make at least:
- $8,950 as single filers.
- $11,500 as head of household filers.
- $17,900 as married couples filing jointly and both husband and wife are younger than 65.
The earnings threshold amounts go up a bit for older (65-plus) individuals:
- $10,300 for single filers.
- $12,850 for head of household filers.
- $18,950 for married couples filing jointly where one spouse is age 65 or older.
- $20,000 for married couples filing jointly where both partners are 65 or older.
The earnings target is the same -- $3,500 -- for married couples filing separately, regardless of age.
Special circumstances
Speaking of age, the IRS has a filing gift for you if your 65th birthday was Jan. 1.
In most situations, your age for tax purposes depends on how old you were on the last day of the year. But when it comes to determining whether you have to file a return, the IRS says if you turned 65 on New Year's Day 2009, you are considered to be 65 at the end of 2008. That one-day grace period allows you to use the higher income thresholds to determine whether you must file a return this year. And that means you can have earned hundreds more last year and still not have to send in a return this April.
There also are separate income thresholds for taxpayers who have special filing considerations.
In some cases, widows or widowers younger than 65 who care for a dependent child can make up to $14,400 and not have to file a return. Individuals age 65 and older in this situation can earn up to $15,450. In the year a husband or wife dies, the surviving spouse still files a joint return (married filing jointly status). Then, if caring for a dependent child, he or she can use this status (rather than head of household with its lower earning limits) for two subsequent years as long as he or she does not remarry.
The IRS also has different rules for dependents who earn money. And even though it's children we're usually talking about, the IRS doesn't make it easy, setting different earning standards for the two types of income, unearned or earned, that trigger filing requirements.
Generally, a child must file a return and pay tax due. But the amounts that trigger the filing depend on the type of income:
- Earned, generally characterized as a salary, wages or tips.
- Or unearned, which includes investment interest or dividends, capital gains, unemployment benefits and some trust distributions.
If a child (or any unmarried dependent younger than 65) has unearned income of more than $900, that person has to file. A return is also required if the dependent's earned income is more than $5,450.
What if a dependent has both earned and unearned income but doesn't reach the required filing amount for either? In this case, you must look at the gross income, that is, the total of both earned and unearned amounts, and make a couple of evaluations.
In these cases, a dependent has to file if his or her gross income exceeds either $900 or if the dependent's earned income (up to $5,150) plus $300 is more than that $900 amount. For example, Jim, a 15-year-old who lives with his parents and is claimed as a dependent on their tax return, received $700 in interest last year and was hired to do odd jobs at his local youth center, for which he earned $850. When Jim's gross income, the total of his earned and unearned money, is considered, he must submit a return because the total came to $1,550 and that is more than $1,150, the filing trigger established by adding the $850 earned income plus $300.
While young Jim's income only had to be more than one trigger to require that he file a return, his gross earnings actually exceeded both the $900 unearned income filing amount and the earned income amount ($850 plus $300, or $1,150).
Don't forget about self-employment earnings, whether you're a teenager running a lawn service or an adult with a 10-person manufacturing operation. This money counts toward determining if you have to file a return, regardless of whether it was your sole source of income or just an occasional side job to make a little extra cash.
If your annual gross self-employment income is at least as much as the income level for your filing status, you have to send in a 1040 and Schedule C or C-EZ reporting your earnings. And remember to file a Schedule SE to pay self-employment tax if your net earnings exceed $400.
When it pays to file
For those few who don't legally have to file, it sometimes pays to send in a return anyway.
This is the case for individuals who don't earn much but might be eligible for the earned income tax credit. This benefit is available to qualified individuals even if they owe no tax, meaning they would get money back from the federal government. Many people think the credit is available only to parents. It's not. But the credit amount is greater for eligible low-wage taxpayers with children.
Plus, the IRS says that most individual taxpayers are due a tax refund. But the only way they can get that cash is to send in a 1040, 1040A or 1040EZ.
You can check out the filing requirements section of IRS Publication 17 for more details on specific filing circumstances.
Freelance writer Kay Bell writes Bankrate's tax stories from her Austin, Texas, home. She also writes two tax blogs, Bankrate's Eye on the IRS, and Don't Mess With Taxes. Bankrate.com

Taxman still wants his cut if you're unemployed

It's unfortunate, but even the unemployed have to pay taxes.

With 2.6 million jobs lost last year, a lot more unemployed people have tax problems to deal with when filing their taxes this year and face questions they probably haven't had to deal with before, as CNNMoney.com reports.

You'd think that not having a job and trying to get by on unemployment insurance would keep your earnings low enough to not have to pay taxes, but you may have to, depending on your income, no matter how limited it was in 2008.

Anyone who got a W-2 form from their employer and made at least $8,950 if single and under 65 years old, or made at least $400 if self-employed, must file a tax return, as must anyone expecting a tax refund.

Income includes a severance package, although some employers take out federal and state taxes before cutting the check. If it's a large amount, that could push you into a higher tax bracket for awhile, meaning more taxes are deducted, although some of that could be refunded when you do your taxes.

Other income includes dividends and interest from investments, and unemployment compensation. Some states, such as California, don't tax unemployment benefits, but the federal government does. When applying for unemployment, you can choose to withhold income taxes at a 10% rate.

Taking money out of a 401(k) retirement plan to supplement your income may also lead to a tax bill, in addition to a 10% penalty on early withdrawals if below age 59-1/2.

Freelance and consulting work is also taxable and is included on a Schedule C with your income tax return. An employer will give you a 1099 form if you earned more than $600 from them. If less than that, you won't get the form but must still report anything you made as taxable income.

Job search costs, such as printing resumes, are deductible, and it's best to check with your tax preparer for details of other deductions.

With all of the tax changes the newly unemployed are going through, another thing to consider is hiring a tax professional to prepare their tax returns, or whether to go with a computer program to do them.

Source
Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.talesofanunemployeddad.blogspot.com

Get Rid of 10 friends from Face Book and Get a Free Whopper

Free Whopper...if you don't mind getting rid of some friends

Burger King has an interesting promotion going on, as Ad Week reports, and I'd certainly call this the advertising gimmick of the week: If you're willing to remove 10 friends from your Facebook page, you can have a free Whopper.

www.whoppersacrafice.com

IHOP giving away pancakes on Feb. 24

IHOP is offering free pancakes on Feb. 24 in celebration of National Pancake Day.

This will be the fourth year that IHOP has celebrated the national event, with nearly 1,400 IHOP restaurants throughout the United States giving guests a free short stack of buttermilk pancakes from 7 a.m. to 10 p.m. Find the restaurant in your area here, and WalletPop also has a list of special restaurant deals.


Diners will be asked to donate what they would have paid for the free pancakes, or more, to their local children's hospital or another charity. IHOP is hoping to raise $1 million for Children's Miracle network, a nonprofit helping children's hospitals and other causes.

Last year, IHOP gave away more than 1.5 million pancakes and raised more than $875,000 for charities.

National Pancake Day is also knows as Fat Tuesday or Mardi Gras, and dates back several centuries to when the English prepped for fasting during Lent. Strict rules prohibited the eating of all dairy products during Lent, so pancakes were made to use up the supply of eggs, milk, butter and other dairy products.

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IHOP giving away pancakes on Feb. 24

IHOP is offering free pancakes on Feb. 24 in celebration of National Pancake Day.

This will be the fourth year that IHOP has celebrated the national event, with nearly 1,400 IHOP restaurants throughout the United States giving guests a free short stack of buttermilk pancakes from 7 a.m. to 10 p.m. Find the restaurant in your area here, and WalletPop also has a list of special restaurant deals.


Diners will be asked to donate what they would have paid for the free pancakes, or more, to their local children's hospital or another charity. IHOP is hoping to raise $1 million for Children's Miracle network, a nonprofit helping children's hospitals and other causes.

Last year, IHOP gave away more than 1.5 million pancakes and raised more than $875,000 for charities.

National Pancake Day is also knows as Fat Tuesday or Mardi Gras, and dates back several centuries to when the English prepped for fasting during Lent. Strict rules prohibited the eating of all dairy products during Lent, so pancakes were made to use up the supply of eggs, milk, butter and other dairy products.

walletpop

IHOP giving away pancakes on Feb. 24

IHOP is offering free pancakes on Feb. 24 in celebration of National Pancake Day.

This will be the fourth year that IHOP has celebrated the national event, with nearly 1,400 IHOP restaurants throughout the United States giving guests a free short stack of buttermilk pancakes from 7 a.m. to 10 p.m. Find the restaurant in your area here, and WalletPop also has a list of special restaurant deals.


Diners will be asked to donate what they would have paid for the free pancakes, or more, to their local children's hospital or another charity. IHOP is hoping to raise $1 million for Children's Miracle network, a nonprofit helping children's hospitals and other causes.

Last year, IHOP gave away more than 1.5 million pancakes and raised more than $875,000 for charities.

National Pancake Day is also knows as Fat Tuesday or Mardi Gras, and dates back several centuries to when the English prepped for fasting during Lent. Strict rules prohibited the eating of all dairy products during Lent, so pancakes were made to use up the supply of eggs, milk, butter and other dairy products.

walletpop

Hyundai's Got your back---lose your job and return the car, no strings attached!

A decade ago Hyundai pioneered America's Best Warranty™. Now they are providing another kind of confidence. Finance or lease any new Hyundai 2008-2009 models, and if in the next year you involuntarily lose your income and they will let you return it. No Joking!
If you find that you cannot make your payment because of a covered life changing event, they will allow you to return your vehicle and walk away from your loan obligation - and in most cases we will cover most, if not all of the difference.

This is an effort to inform prospective customers that Hyundai has your back in time of need, despite the pitfalls during this recession.
Starting today you can feel good about buying a car, despite these current times.

This is the Hyundai Assurance as they call it....keep an eye open, I hear GMC is following the footsteps!

Tax Credits Provide Funds for First-Time Homebuyers, Childcare, Education and More

FS-2009-2, January 2009 Tax credits can help pay the cost of raising a family, going to college, saving for retirement or getting daycare for dependents. But each year, many taxpayers overlook these credits, even though they often qualify for one or more. While tax deductions and tax credits can both save money, they are fundamentally different. A deduction lowers the income on which the tax is figured, while a credit lowers the tax itself. The popular credits listed below can help either lower a taxpayer’s bill or increase a refund. First-Time Homebuyer Credit Those who bought a main home recently or are considering buying one may qualify for the first-time homebuyer credit. Normally, a taxpayer qualifies if she didn’t own a main home during the prior three years. This unique credit of up to $7,500 works much like a 15-year interest-free loan. It is available for a limited time only –– on homes bought from April 9, 2008, to June 30, 2009. It can be claimed on new Form 5405 and is repaid each year as an additional tax. Income limits and other special rules apply. Earned Income Tax Credit (EITC) The Earned Income Tax Credit (EITC) helps people who work but do not earn a lot. Working families with incomes below $41,646 and childless workers with incomes under $15,880 often qualify. Generally, you must have earned income as an employee, independent contractor, farmer or business owner to qualify. Taxpayers under the minimum retirement age who receive disability payments from an employer plan may also be eligible. The EITC Assistant, available in mid-January, can help you see if you qualify. Child Tax Credit A taxpayer who has a dependent child under age 17 probably qualifies for the child tax credit. This credit, which can be as much as $1,000 per eligible child, is in addition to the regular $3,500 exemption claimed for each dependent. A change in the way the credit is figured means that more low- and moderate-income families will qualify for the full credit on their 2008 returns. The child tax credit is not the same as the child care credit. Details on figuring and claiming the child tax credit can be found in IRS Publication 972 (PDF format). Credit for Child and Dependent Care Expenses An individual who pays for someone to care for a child so he or she can work or look for work probably qualifies for the child and dependent care credit. Normally, the child must be the taxpayer’s dependent and under age 13. Though often referred to as the child care credit, this credit is also available to those who pay someone to care for a spouse or dependent, regardless of age, who is unable to care for him- or herself. In most cases, the care provider’s Social Security Number or taxpayer identification number must be obtained and entered on the return. Form 1040 filers claim the credit for child and dependent care expenses on Form 2441. Form 1040A filers claim it on Schedule 2. IRS Publication 503 (PDF version) has more information. Education Credits The Hope credit and the lifetime learning credit help parents and students pay for post-secondary education. Normally, a taxpayer can claim both his or her own tuition and required enrollment fees, as well as those for a dependent’s college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. A taxpayer can also choose the lifetime learning credit, even if she is only taking one course. In some cases, however, she may do better by claiming the tuition and fees deduction, instead. The education credit and the tuition and fees deduction cannot both be claimed for the same student in the same year. Special rules, including income limits, apply to each of these tax breaks. Education credits are claimed on Form 8863. Details on these and other education-related tax breaks are contained in Publication 970 (PDF version). Saver’s Credit The saver’s credit is designed to help low- and moderate-income workers save for retirement. A taxpayer probably qualifies if his income is below certain limits and he contributes to an IRA or workplace retirement plan, such as a 401(k). Income limits for 2007 are: $26,500 for singles and married taxpayers filing separately $39,750 for heads of household and $53,000 for joint filers Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply. There is still time to put money into an IRA and get the saver’s credit on a 2008 return. 2008 IRA contributions can be made until April 15, 2009. Form 8880 is used to claim the saver’s credit. Other Credits Available IRS.gov has information on these additional credits: Recovery Rebate Credit, claimed on Form 1040 Line 70, Form 1040A Line 42 and Form 1040EZ Line 9. FS-2009-3 has further details District of Columbia first-time homebuyer credit, claimed on Form 8859 Foreign tax credit, claimed on Form 1040 Line 47 Credit for the elderly or the disabled, claimed on Form 1040 Schedule R Adoption credit, claimed on Form 8839 Residential energy efficient property credit, claimed on Form 5695 Alternative motor vehicle (including hybrids) credit, claimed on Form 8910 Credit for prior year minimum tax, claimed on Form 8801 Credits Save Taxpayers Money These credits can increase a refund or reduce a tax bill. Usually, credits can only lower a tax liability to zero. But some credits, such as the EITC, the child tax credit, the Recovery Rebate Credit and the first-time homebuyer credit, are refundable –– in other words, they can make the difference between a balance due and a refund. Although some credits are available to people at all income levels, others have income restrictions. These include the EITC, the Recovery Rebate Credit, the saver’s credit, the first-time homebuyer credit, the education credits and the child tax credit. A taxpayer who qualifies can claim any credit, regardless of whether he or she itemizes deductions. Any credit can be claimed on Form 1040, sometimes referred to as “the long form.” Alternatively, many credits can also be claimed on the 1040A “short form.” The EITC and Recovery Rebate Credit can even be claimed on Form 1040EZ. The instruction booklet for each of these forms contains information about these and other tax credits.

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What is the Recovery Rebate Credit ?

The Recovery Rebate Credit is a one-time benefit for people who didn't receive the full Economic Stimulus Payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion. Generally, a credit adds to the amount of a tax refund or decreases the amount of taxes owed. Therefore, the amount you receive for the Recovery Rebate Credit will be included as part of your refund, as shown on your tax return. Unlike the 2008 Economic Stimulus Payment, it will not be issued as a separate check. You May Be Eligible People who fall into the categories described below may be eligible for the Recovery Rebate Credit this year: Individuals who did not receive an Economic Stimulus Payment. Those who received less than the maximum Economic Stimulus Payment in 2008 — $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low. Families who gained an additional qualifying child in 2008. Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008. Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008. How to Get the Recovery Rebate Credit You need to claim the Recovery Rebate Credit on Form 1040, 1040A or 1040EZ. The instructions for these forms will show you which lines to use. Unlike the Economic Stimulus Payment, the Recovery Rebate Credit will be included in your tax refund for 2008 and will not be issued as a separate payment. The IRS Will Figure the Credit for You in Most Cases You can choose to let the IRS do the work when you file your 2008 Form 1040, 1040A or 1040EZ. If you're filing on paper, simply follow the line-by-line instructions to choose this option. If you're filing electronically, the software will figure the credit for you. Or You Can Figure It Yourself Likewise, you can figure and claim the Recovery Rebate Credit on your 2008 Form 1040, 1040A or 1040EZ. Two interactive online tools will be available to help you with the calculation: The Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment? The Recovery Rebate Credit Calculator will help you figure the amount you should claim on your 2008 tax return. Or, you can use the worksheet in the Form 1040 instruction booklet to help you figure your credit by hand. To use the Recovery Rebate Credit Calculator or complete the worksheet, you'll need the amount of the Economic Stimulus Payment you received in 2008, if any. This amount was provided on Notice 1378, Economic Stimulus Payment Notice, sent by the IRS to taxpayers who received a payment. You can use How Much Was My 2008 Stimulus Payment? to determine the amount you already received, if you don’t have or didn't receive Notice 1378. Find the Answers to Your Questions You might find what you're looking for on our question and answer page. Related Items: Economic Stimulus Payment Information Center