More Buyers Qualify for the Home Buyer's Tax Credit

On Friday President Obama signed the extension to the First Time Home Buyer's Tax Credit. The program was set to expire this December 1st, but was given a six-month reprieve and will now end June 30, 2010.

To receive the $8,000 contract buyers must sign a contract by April 30, 2010 and close on the home by June 30, 2010. All of the requirements from the bill's first round still apply, however, now even more homeowners will be eligible. The bill now includes buyers who want to trade up.

The tax-credit for current home owners who sell their home to buy a new one is up to $6,500. This portion of the tax-credit has been deceptively referred to as the "trade up" credit, but actually you don't have to purchase a bigger or more expensive home to qualify.

Who qualifies?
You must have owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. The bill states that the law tests home ownership for both home buyer and his/her spouse.

How much is the credit?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.

Is any home eligible?
Purchases of homes priced above $800,000 are not eligible for the tax credit.

As for first-time buyers there are income limit restrictions:
The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

New Construction counts too. If you are having a home built both the first-time or the repeat, can apply for the tax-credit as long as the closing date is by the June 30, 2010 deadline.

For more details regarding the Home Buyers' Tax Credit for both first-time buyers and repeat buyers go to Home Buyer's Tax Credits.

Little Known Education Tax Credits

Every little bit counts especially when it comes to saving on taxes. Here are two education related tax credits that you may not know about. For more specific information check out National Association of Student Financial Aid Administrators (NASFAA).

The Hope Scholarship Tax Credit
This is nonrefundable tax credit, not a scholarship or tax deduction. To receive the Hope tax credit, a family or student must file a federal tax return and owe taxes. Families and students that don't pay taxes cannot receive money are not eligible.

For 2008, the amount of a Hope or Lifetime Learning Credit is phased out for those with a modified adjusted gross income (AGI) between $48,000 and $58,000 ($96,000 and $116,000 for joint returns). Those with a modified AGI of $58,000 or more ($116,000 for joint returns) are not eligible.

Beginning in 2008, the amount of the Hope credit (per eligible student) is the sum of:

• 100% of the first $1,200 ($2,400 for students in a Midwestern disaster area) of qualified education expenses paid for the eligible student, and
• 50% of the next $1,200 ($2,400 for students in a Midwestern disaster area) of qualified education expenses paid for that student.
• The maximum amount of Hope credit in 2008 is $1,800 per student ($3,600 for students in Midwestern disaster areas).

Tuition and Fees Tax Deduction

This tax deduction was set to expire in 2008, but Congress extended it until Dec. 31, 2009 as part of the $700 billion economic stimulus package.

The Tuition and Fees Tax Deduction can reduce taxable income by as much as $4,000 for 2008. This deduction may benefit taxpayers who do not qualify for either the Hope or Lifetime Learning Education Tax Credits.

It is taken as an adjustment to income, which means you can claim this deduction even if you do not itemize deductions on Schedule A of Form 1040.

An eligible taxpayer must file a federal tax return to claim the Tuition and Fees Tax Deduction. The taxpayer must also claim an eligible student (an individual enrolled in one or more courses at an eligible educational institution) as a dependent on the tax return. The deduction may also be for the taxpayer or the taxpayer's spouse.

Lifetime Learning Tax Credit
This tax credit for 2008 is gradually phased out for those with modified AGI between $48,000 and $58,000 ($96,000 and $116,000 for joint returns). The Lifetime Learning Credit is a nonrefundable tax credit available to individuals who file a tax return and owe taxes.

An eligible student may be enrolled in an eligible program leading to an undergraduate or graduate degree at an eligible school during the calendar year OR may be enrolled in any course of instruction at an eligible school to acquire/improve the student's job skills during the calendar year. Students may claim the credit themselves if they are not claimed as a dependent by another taxpayer.