The tax filing deadline is not too far and you must be looking for all possible options of saving tax. The good news is that because of the stimulus package, there are many ways of reducing your tax liability. Here are some of the options available that you might not be aware of.
The Residential Energy Property tax credit, which was to expire in 2007, is now valid until 2010. This means that you can save up to 30% of the costs that you incur in making environment friendly improvements to your home. The limit for tax savings has been set at $1,500. The credit applies to improvements in the heating or cooling system installed in your home. So if you have made these systems more efficient or have added insulation to your home, then you qualify for this benefit.
Buying a House
If you have already bought a house in this financial year or are going to buy one soon, then the government is ready to fund some of your expense. If this is your first home purchase and your income is less than $125,000, you can claim up to $8,000 as tax credit. Even if this is not the first time you are buying a house, you can still claim up to $6500 as credit. The deadline for availing this credit is April 30. If you file your taxes before making the house purchase, you can claim this benefit by filing an amended return.
If you had bought a car or motorcycle in 2009, you can claim a tax credit against all the local and state taxes that you paid on that vehicle. However, there are a few caveats that you should be aware of:
The vehicle purchase should have been made after Feb 17, 2009 and before the year ended.
You should have purchased a new vehicle and not a used one.
The credit can only be applied on a maximum of $49,500 from the purchase amount
Benefits for Students
If you are a student and earn less than $80,000 a year, you can claim up to $2,500 as tax credit. This credit applies to your expenses on tuition fee and other important items like text books and computers.
So go ahead and take advantage of these schemes. Filing taxes is never a pleasant experience, but with these credits, it might just be a little better.