6. Deduction for tuition and related expenses
Applies to: parents or students who pay tuition and fees for post-secondary education (college or technical school).Details: You don't have to itemize to claim this deduction, which reduces your taxable income by up to $4,000. You can't claim the deduction if:
- You can be claimed as a dependent on anyone else's return.
- You're married and filing separately.
- Your modified adjusted gross income exceeds $80,000 for single filers or $160,000 for joint filers.
- You or anyone else claims the Hope or Lifetime Learning credit for the same student.
To learn more: Read IRS Publication 970, Tax Benefits for Education.
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7. Out-of-pocket expenses for teachers
Applies to: the cost of books, supplies, equipment and software used in class by educators who work at least 900 hours during the school year.Details: Teachers don't have to itemize to deduct up to $250 of eligible expenses.
To learn more: Read IRS Publication 970, Tax Benefits for Education.
8. IRA distribution requirement suspended
Applies to: those who would otherwise be required to take minimum distributions from their traditional individual retirement accounts this year.Details: Tax law requires people to begin taking money out of their IRAs, usually based on their previous year-end balances and life expectancy. But the recent market turmoil meant many savers faced oversized withdrawals on now-shriveled nest eggs. This temporary waiver allows IRA contributors and beneficiaries to forgo their 2009 distributions. If you already received your 2009 minimum distribution, you can roll that money into another IRA or eligible retirement plan within 60 days of the payment and not owe tax on the distribution.
CCH analyst Luscombe points out this tax break is rather too little, too late, because most 2009 distributions will be based on the already-hammered balances shown in IRAs on Dec. 31, 2008. But if you don't need your IRA distribution to live on, you could still save some bucks.
To learn more: IRS Publication 590, Individual Retirement Arrangements.
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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.
9. IRA distributions to charities excluded from income
Applies to: IRA owners age 70 1/2 or older who can transfer up to $100,000 from their IRAs tax-free directly to eligible charitable organizations.Details: Whether they itemize or not, eligible IRA owners can direct that a distribution from their accounts go directly to an eligible charity. The contribution counts toward their required minimum distribution, but the amount isn't added to their taxable income.
For some taxpayers, that's better than taking the distribution and then making the donation, Luscombe said. Some taxpayers can't itemize, and others will be eligible for other tax breaks if the distributions aren't included in their taxable income.
Distributions must be from IRAs; those from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible. Also, donor-advised funds and supporting organizations are not eligible recipients of such transfers.
This particular tax break has been extended before, Luscombe said, and may be again.
"It might become one of those continually expiring provisions," Luscombe said. "It's fairly popular with the senior set."
To learn more: IRS Publication 590, Individual Retirement Arrangements, has more information on qualified charitable distributions.
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