The clock is ticking on some lucrative tax breaks, rebates and other government-sponsored benefits set to expire this year.
Several of these provisions were designed to fight the recession by stimulating certain kinds of spending (for homes and cars, particularly). Others were instituted to help people cope with layoffs (subsidized health insurance and a tax break on unemployment benefits).
Still others were intended as temporary breaks that may or may not prove popular enough to get renewed. Since there's no predicting Congress or tax law, your best bet may be to take advantage while you can.
The list of disappearing goodies includes:
1. First-time-homebuyer tax credit
Applies to: purchase of a primary residence before Dec. 1.Details: This fully refundable credit of up to $8,000 is available to those who purchase a home in 2009 and who have not owned a home in the previous three years. Unlike a $7,500 credit that was available in 2008, this year's credit does not have to be paid back. You can claim the new credit on your 2009 return, to be filed by April 15, 2010, or -- if you want the cash sooner -- on the 2008 return that was due this year, said Mark Luscombe, the principal tax analyst for tax publisher CCH.
If you've already filed last year's return, Luscombe said, you can file an amended return to get the money.
To learn more: Read the Internal Revenue Service's First-Time Homebuyer Credit Questions and Answers: Homes Purchased in 2009, or see "Got $2,500? Buy a house."
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2. Sales tax deduction on new-vehicle purchases
Applies to: purchases of new cars between Feb. 17 and Dec. 31.Details: You may be able to deduct state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. In states with no sales tax, you may be able to deduct other taxes and fees. You can add the deduction to the amount of your standard deduction or take it as an itemized deduction if you are not electing to take the state and local general sales tax deduction (see below).
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The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.
If the vehicle cost more than $49,500, you can deduct the tax only up to that amount.
To learn more: Read the IRS' Seven Facts About the New Tax Deduction for Vehicle Purchases and Special Tax Break on New Car Purchases Available in States With No Sales Tax.
3. 'Cash for clunkers' rebate
Applies to: vehicles that get 18 miles per gallon or less (as rated on www.fueleconomy.gov) that are traded in for the purchase or lease of a new vehicle before Nov. 1, or when the rebate funds run out, whichever comes first.Details: To get a rebate of up to $4,500, you must have owned your clunker (had it registered and insured) for at least a year on the trade-in date, and the car must be less than 25 years old. The dealer will apply the appropriate rebate to your purchase or lease of a new replacement vehicle.
To learn more: Full details of the program are expected to be announced around July 23, according to the official Car Allowance Rebate System site. Also, read "'Cash for clunkers': Scammers are out."
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First-time-homebuyer creditIn the market for a new home? If you buy before Dec. 1 and qualify for the rebate, the government will cut you a check for up to $8,000.
4. Property tax write-off with standard deduction
Applies to: taxpayers who don't qualify to itemize their deductions but who pay state or local real-estate taxes.Details: You can add an amount to your standard deduction equal to the amount of property taxes paid this year, up to $500 for single filers and $1,000 for joint filers. The deduction applies to property taxes based on assessed value. Local benefit assessments for street improvements, sidewalks and sewer lines typically can't be deducted.
To learn more: Read the IRS' Additional Standard Deduction for Real Estate Taxes.
5. Sales tax deduction
Applies to: those who itemize their deductions and paid sales taxes.Details: If you itemize your deductions on Schedule A, you have the option of writing off either state and local income taxes or state and local sales taxes, but not both. If you opt to write off sales taxes, you can use your actual receipts to determine the total or choose to claim a standard amount using the IRS' sales tax deduction calculator. The sales tax deduction was reinstated in 2006 and has been extended through the end of 2009. It has not been extended for 2010, though there are several proposals to do so.
To learn more: Read IRS Publication 600, State and Local General Sales Taxes.
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