By now, you probably> have all your W-2s and 1099s in hand. So it s time to get serious about filing your 2009 Form 1040, especially if you expect a refund. In this article, I ll explain some little-known tax-saving goodies that could make your refund bigger or cut what you owe.
1. Deduct 2010 Haitian relief donations on your 2009 return
Once in a while, our beloved Congress actually does something good -- like changing the law to allow 2009 write-offs for cash donations to assist Haiti relief efforts. Specifically, you can claim 2009 deductions for Haiti relief donations made between Jan. 12 and Feb. 28, 2010, to help victims in areas affected by the Jan. 12 earthquake. For this purpose, cash donations include contributions made via check, money order, credit card, charge card, debit card, phone or text message. For donations under $250, you need either a bank record (like a cancelled check or credit-card statement) or a receipt from the charity to prove your generosity. For donations of $250 or more, you must have a receipt from the charity. For donations made by phone or text message, the IRS says a service provider bill showing the name of the charity, the donation date, and the amount is sufficient proof. As usual, you must itemize your taxes in order to be able to deduct charitable contributions.
2. Claim the Making Work Pay credit, even if you re self-employed
Part of the Stimulus Act is President Obama s signature Making Work Pay tax credit (MWPC). It can be as much as $400 for an unmarried worker or $800 for a married joint-filing couple. You may be unaware that the MWPC can be claimed by self-employed individuals as well as folks with regular jobs. In either case, you ll need to fill out Schedule M (Making Work Pay and Government Retiree Credits) and file it with your 2009 Form 1040. Schedule M is a brand-new form, so read the instructions carefully, and enter your rightful MWPC amount on line 63 of Form 1040. (The MWPC is phased out if your income is too high.)
3. One-time credit for government retirees
If you re a retired government employee who did not have Social Security taxes withheld from your wages when you worked, you are eligible for a one-time $250 credit. If you file jointly and your spouse meets the same criteria, the two of you can collect a $500 credit. To cash in, fill out the brand-new Schedule M (Making Work Pay and Government Retiree Credits) and file it with your 2009 return. Enter the credit amount on line 63 of Form 1040.
Note: If you qualify for both the MWPC and the government retiree credit, you must subtract the second credit from the first on Schedule M. As a result, the maximum amount you can collect from the two credits combined is $400 or $800 if you file jointly.
4. Extra standard deductions for non-itemizers
If you don t itemize deductions, you may still be entitled to some unexpectedly juicy extra write-offs. They come in the form of additional standard deduction amounts that get piled on top of your regular standard deduction, which is $5,700 for singles, $11,400 for married joint-filing couples, and $8,350 for heads of households. Since these extra standard deductions are new (or newish), you might not know about them. Here s the deal:
* You can claim an additional standard deduction of up to $500 for state and local real property taxes, or up to $1,000 if you re a married joint filer. The extra deduction cannot exceed the real estate taxes you actually paid last year.
* You can claim an additional standard deduction for state and local sales and excise taxes on the purchase of a qualifying new vehicle purchased between Feb. 17, 2009 and Dec. 31, 2009. You can only count taxes on the first $49,500 of a vehicle s purchase price, but you can benefit more than once if you bought more than one vehicle during the window period. (This break is phased out if your income is too high.)
* You can claim an additional standard deduction for personal casualty losses in federally designated disaster areas.
To cash in on any or all of these breaks, fill out the brand-new Schedule L (Standard Deduction for Certain Filers) and attach it to your return. Check the box on line 40b of Form 1040 and include the extra standard deduction amount(s), along with your regular standard deduction, on line 40a.
5. Tax breaks for supporting struggling relatives
If you helped out a financially struggling relative last year, you may qualify for some unexpected tax breaks. They can range from being able to use favorable head-of-household filing status (if you re single), to a $3,650 dependent exemption deduction, to a medical expense write-off. For more details, read my columns, "Tax Breaks for Helping Relatives," parts one and two.
6. Deduct job search expenses
If you itemize deductions, you may be able to write off expenses incurred to search for a new job last year on your 2009 Form 1040. For details, see my column "Deducting Job Hunting Expenses."
7. Deduct fees to charge taxes to your credit card
Surprisingly enough, the IRS says you can treat credit-card convenience fees paid to charge personal federal income tax bills (including estimated tax payments) as miscellaneous itemized deductions. However, you only get a write-off to the extent your total miscellaneous itemized deductions exceed 2% of adjusted gross income (other miscellaneous expenses include union dues, job hunting expenses, fees for tax preparation and advice, and investment expenses). Fill out lines 21-27 of Schedule A (Itemized Deductions) to see if you can benefit.