TAX CREDITS

Once again, politicians are talking about doing away with – or at least limiting – the mortgage interest deduction. Yanking the deduction away suddenly would be disastrous for people who bought houses figuring the interest deduction as part of the equation. Many middle class families would suddenly owe $5,000 or more per year in additional taxes. The housing market, already reeling, would fall farther. As these hard-hit families have less to spend elsewhere, the economy would dive.

You can stop worrying about a sudden elimination of the deduction altogether. It’s not going to happen – it would be political suicide. That won’t keep the government from tinkering with the rules, however.

If you claimed the First Time Home Buyer tax credit in 2008, you will soon receive a friendly reminder from the IRS to begin repaying your debt, starting with your 2010 tax return. That’s right. If you didn’t know or remember that your tax credit–unlike the ones provided after your year–wasn’t free, Uncle Sam is eager to be the messenger.

2008 Home Buyer Tax Credit Wasn’t Free

Drivers who opted for a hybrid or other energy efficient vehicle could experience even greater savings thanks to a Michigan senator who’s pushing for a new electric vehicle tax rebate. The rebate would offer a $7,500 tax credit to those who purchase electric cars, as well as extend some previously-expired credits for hybrid vehicle buyers.

Electric and Hybrid Vehicles Could See Tax Breaks

A new college tuition tax credit is expected to help 9.4 million American families this year, U.S. Treasury Secretary Timothy F. Geithner said on Thursday. This credit is known as the American Opportunity tax credit, a relief program designed to ease the cost of college tuition and fees.

Tax Credit to Offset Rising Tuition Costs

It’s already the end of the year (where did the time go, right?), which means it’s also time to put together some year-end tax strategies that will help place you in a good financial position for when it’s time to file for the 2010 tax year. There are so many considerations, including how your taxes will be affected if Bush tax cuts expire on Dec. 31, 2010. That’s why it’s good to do your tax planning now.

To help you get started, we will first look at some general year-end tax strategies that would apply according to current tax standards. Then we can zero in on how your taxes might be affected (and what strategies you could consider) if the Bush cuts actually do expire.

The Bush Tax cuts have finally received their first official proposal for an extension–along with a 13-month extension of jobless benefits–by President Barack Obama. While taxpayers and jobless workers are bound to be excited about the prospect of having extended tax breaks and unemployment benefits, Democratic lawmakers are not exactly pleased with his recommendations.

Proposals on the Table

Overhauling the tax code is on the minds of lawmakers now that the Bush Tax cuts are set to expire, but while some adjustments are applauded, members of the housing industry are up in arms regarding the proposal to adjust the mortgage interest tax deduction. Being in the middle of an incredibly fragile housing market, proponents of the tax deduction feel that homeowners need as many breaks as possible. In other words, now is not the time to make changes to a successful deduction.

The Tax Overhaul Proposal

An important tax credit offered by the Federal government may expire at the end of December if it isn’t extended. Also known as the Making Work Pay tax credit, it has given workers up to $33 extra in their paychecks each month and could be dearly missed by employees if allowed to expire.

Making Work Pay Tax Credit Has Been Beneficial

The possible Bush tax cut extension may finally receive a vote in Congress in a couple of weeks if House Speaker Nancy Pelosi is able to schedule a meeting as planned. There have been talks about whether to extend the Bush tax cuts fully or in part before their expiration at the end of the year. It looks like Congress may actually have a decision made by then.

Legislation on the Table

The Bush tax cuts debate waged on in Congress on Tuesday with two senators proposing that a limited-time extension be considered. In this scenario, the extension would only last until Congress was able to secure an overhaul of the U.S. tax code or pass policies that would directly address the budget deficit.

Tax Ideas Keep Rolling In