Changes abound for ’09 income tax

Tax forms and instructions for 2009 returns are seen at the Bangor Public Library on Tuesday, Feb. 2, 2010 in Bangor. (Bangor Daily News/Bridget Brown)
Tax forms and instructions for 2009 returns are seen at the Bangor Public Library on Tuesday, Feb. 2, 2010 in Bangor. (Bangor Daily News/Bridget Brown)
By Eric Russell, BDN Staff
Posted Feb. 02, 2010, at 7:39 p.m.

BANGOR, Maine — Mainers who are preparing to file their 2009 income tax returns might have to consider one or more new tax credits, exemptions or deductions that were part of the American Recovery and Reinvestment Act.

Peggy Riley, a regional spokeswoman for the Internal Revenue Service, said the biggest change for many is the first-time homebuyers’ credit of up to $8,000.

“One thing for people to remember is that if they are claiming the first-time homebuyers’ credit, they need to file on paper, not online,” Riley said Tuesday during an interview at the Bangor Daily News.

In addition to the first-time homebuyers’ credit, the recovery act has a credit of up to $6,500 for longtime homeowners who are looking to buy a new home. Those who have owned the same residence for five consecutive years out of the last eight years and are buying a new home are eligible for that credit.

Free tax help

Volunteers with AARP are offering free tax preparation services at the Bangor Public Library from 10 a.m. to 5 p.m. Tuesdays, Wednesdays and Thursdays through Feb. 23. After Feb. 23, the free tax help will be offered only on Wednesdays and Thursdays.

At the University of Maine in Orono, associate professor of accounting Steve Colburn supervises a group of UM accounting students who offer free help with tax preparation. The service is available from 10 a.m. to 3 p.m. Tuesdays in Room 312 of the Donald P. Corbett Business Building and from 11 a.m. to 2 p.m. on Fridays at the new Orono Public Library.

For more information about changes in tax laws, visit the IRS Web site at www.irs.gov.

More information about tax preparation services is available on the Better Business Bureau Web site, www.bbb.org.

“Those [credits] were designed to help people get back into the housing market and stimulate the economy,” Riley said.

As it does every year, the standard deduction has been adjusted for inflation. This year, that means $5,700 for a single filer and $11,000 for a married couple filing jointly. Riley said roughly 60 percent of filers use the standard deduction while the other 40 percent itemize deductions.

“For new homeowners, with the first-time homebuyers’ credit and mortgage interest, most would want to itemize,” she said.

One credit that is chronically underused, according to Riley, is the earned income tax credit, which is designed to help lower-income families.

“Twenty to 25 percent of people that qualify for it don’t claim it,” she said.

Another important new provision this year is the Making Work Pay Credit, which provides workers with a credit of up to $400, $800 if married filing jointly.

In 2009, taxpayers received the credit through a reduction in withheld taxes throughout the year. The credit represents 6.2 percent of income earned and phases out at modified adjusted gross income of $75,000 to $95,000 for singles or $150,000 to $190,000 for married people filing jointly.

Some taxpayers may need to make adjustments in their filing status to remedy having too much in income tax withheld in future years.

Consumers who bought new vehicles in 2009 can deduct both sales and excise taxes, which is something that hasn’t been offered before.

The most recent change approved by the IRS is allowing filers to deduct Haiti relief donations made from Jan. 11 through March 1, 2010, as part of their 2009 returns, provided the donations are cash and are made to an IRS-approved organization.

Riley said anyone who makes charitable donations needs to itemize deductions.

Riley said the numerous changes this year could allow many tax filers to get a bigger refund, but she cautioned taxpayers to consider everything before they file. Online filing is still the easiest and fastest way for people to do their taxes, she said.

Paula Fleming with the Better Business Bureau office in Boston said taxpayers should use caution when selecting tax preparation help.

“Even though the tax preparer completes the return, it’s the taxpayer who is ultimately responsible for the return’s accuracy and whether or not it’s filed on time,” she said. “The fines, fees and hassles can mount if you choose an unreliable tax preparer.”

http://bangordailynews.com/2010/02/02/business/changes-abound-for-rsquo09-income-tax/ printed on July 26, 2014