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LEWISBURG, Pa. – Are you getting ready to file your 2008 income tax return, or already planning for the year ahead? Taxpayers should be aware of some changes in the law that could reduce their tax liability in both 2008 and 2009. 

 

        “The tax credit of $7,500 for first-time homebuyers that was put into place last year has been improved for those who are closing on a house during the first 11 months of this year,” said Rich Barlett, partner and certified public accountant in the Lewisburg office of Lewis Barlett Klees, PC. “If you purchased your first house in 2008 and met income guidelines, you could get a maximum credit of $7,500 added to your tax refund, if filing jointly. It was essentially an interest-free loan because it has to be paid back over a 15-year period, or sooner if you sell your house before then.”

 

        The new American Recovery and Reinvestment Act of 2009 signed into law by President Obama on February 17, creates an even better incentive for first-time homebuyers. “The tax credit goes up to $8,000 for those who purchase their first home this year, as long as it’s by the end of November and they meet the income guidelines,” Barlett explained. “They don’t have to pay it back either, so it’s an improved device to help stimulate the housing market. As long as people can qualify for home loans, it will help first-time homebuyers.”

 

        People who paid their 2008 real estate property taxes and who do not itemize their deductions can claim an extra standard deduction, up to $500 for a single person or up to $1,000 if married filing jointly. “This can help people who don’t have a home mortgage, maybe because they already paid it off, if their other itemized deductions are not higher than the standard deduction,” Barlett added.

 

        In response to higher gasoline prices, the business mileage rate set by the IRS was 50.5 cents per mile for the first six months of 2008 and then increased to 58.5 cents per mile for the second half of the year. For someone driving 5,000 miles a year on business, that could mean an additional $2,725 that can be counted toward travel expenses on their 2008 tax return.

 

       

        “A new law passed at the end of 2008 provides some good news for retirees,” Barlett said. “It suspends the required minimum distribution from retirement accounts in 2009. Retirees understandably may be reluctant to withdraw funds that might have lost value over the past year, especially knowing they’ll have to pay tax on it. A lot of people can take advantage of this change.”

 

        Some additional improvement in 2009:

 

        -- The state and local sales tax on new car purchases can be deducted even for those who don’t itemize deductions.

 

        -- The new law creates a $2,500 higher education tax credit that is available for the first four years of college. It temporarily replaces the Hope credit.

 

        -- Some relief for the unemployed comes with the temporary suspension of federal        income tax on the first $2,400 of unemployment benefits received in 2009.

 

        For information about these and other changes in the 2008 and 2009 tax laws, please call toll-free 866-494-9501 or visit www.LewisBarlettKlees.com. With offices in Lewisburg, Milton and Bloomsburg, Lewis Barlett Klees is one of Central Pennsylvania's leading accounting and business development firms. They offer auditing, accounting, tax, and management advisory services to government, non-for-profit agencies, and private businesses, in addition to tax preparation for individuals.