I wanted to provide a few updates on some of the more popular topics on this site given recent developments. You can click on the topic header to get more details.
Home Buyer Tax Credit Extension (again) and Claiming It : One of the most popular topics on this site, the many articles I have written on this credit are heavily commented on given the big money – up to $8,000 - on offer for home buyers. This credit has been extended 4 times already on increasingly favorable terms, dating back to the Bush presidency, and has helped thousands of families buying homes. While there has been some degree of fraud, this credit has been one of the most successful stimulus payments the Obama administration has implemented to stem the housing and financial crisis. With home prices stabilizing in most markets it is highly unlikely the credit will be extended again into 2011, despite the pleas of many home buyers who just missed the cut-off (April 30th to qualify, Sep 30th to claim). Some groups like Armed forces members and certain state department employees are still eligible for the credit into 2011, but for most home buyers going forward the credit is gone for good. One credit that is still available though is the $1500 home energy efficiency credit which can lead to lower energy cost savings over the medium to longer term.
Another challenge around the home buyer credit has been claiming it. With the flood of claims and various other stimulus driven credits and tax breaks the IRS has been slow in processing this credit. 2-3 months is the average wait for most people. But you can save yourself some time by submitting the right documentation when you adjust your 2009 or file your 2010 tax returns (in 2011). Form 5405 is the official IRS form required to claim the credit and all eligible home buyers must also include with their tax return one of the following documents (better to include more than less documentation if you are unsure):
- A copy of the settlement statement showing all parties’ names and signatures if required by local law, property address, sales price, and date of purchase (before April 30th 2010 to be eligible for the credit). Normally, this is the properly executed Form HUD-1, Settlement Statement. For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy (from the county/city office) showing the owner’s name, property address and date of the certificate.
- Existing Home Buyers who qualify for this credit must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. This can be done by providing Mortgage interest statements, Property tax records or Homeowner’s insurance records
If claiming the credit in your 2010 tax returns (filed in 2011), most of the leading tax software like Turbo Tax will have step by step guides on claiming the credit in your return.
$250 SSI Payment – Unlike the similar $250 Medicare “doughnut hole” payment, this Social security payment has fallen by the wayside with no payment planned in 2010. As the year draws to a close and mid-term elections loom the chances of a 2010 payment are getting slimmer. Further, with the likelihood of no or marginal 2011 COLA increase, our senior citizens are seeing little benefit of the economic stimulus payments. With the hundreds of comments on this topic, people are clearly upset about not receiving the payment and there is still a lot of confusion on past payments. The ssa.gov site is responsible for making this payment, so that should be where you check the official status of your missing or late payment.
Small Business Jobs and Tax Bill – This week small business owners got some good news with approval of Obama’s Small Business Jobs Bill ( H.R. 5297) to cut taxes, provide more SBA funding and ease credit for small businesses. The legislation creates a $30 billion lending program to help smaller local and community banks make more loans and provide small businesses with $12 billion in tax breaks, including more generous write-offs for equipment purchases (bonus depreciation). The new law also allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax – a big help to many solo and freelance proprietors.
Also don’t forget that a number of new health care provisions became active this week as outlined in this article. And finally, see what impacts the bush tax cuts expiry may have on your taxes next year. If you haven’t already, I also encourage you to join (free) over 8000 subscribers by RSS or Email to get the latest updates on government provisions that could impact your bottom line.