PAY STUB TAX FILING
Your pay stub may not reflect all income and withholding amounts on your W-2. If you file from your last pay stub and it does not match your W-2, you are liable to the IRS for additional taxes and possible penalties. This requires an amended return on IRS Form 1040X to correct the problem which is also an additional expense to you.

The IRS urges taxpayers to avoid companies who encourage filing from a final pay stub. Employers are required to mail W-2's to their employees by January 31. The IRS will not even accept electronic tax filing until January 15. To avoid penalties, wait for your W-2 and see a professional tax consultant at Larrison's!

 

HOME BUYER TAX CREDITS
First Time Buyers: The 2009 Worker, Homeownership and Business Assistance Act has been extended for first time home buyers purchasing a principle residence on or after January 1, 2009 and on or before April 30, 2010. This year, the tax credit of up to $8,000 does NOT need to be repaid. This is a fully refundable credit which will be paid out to eligible taxpayers even if they owe no tax or the credit is more than the tax owed. The first time home buyer's tax credit also applies if you have a binding sales contract signed by April 30 and your home purchase is completed by June 30, 2010.

First time home buyers of homes purchased after November 6, 2009, must have incomes of $125,000 or less for single taxpayers and $225,000 or less for married filing joint returns. Income limits for homes purchased on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married filing jointly.

Repeat Buyers: The 2009 Worker, Homeownership and Business Assistance Act established a tax credit of up to $6,500 for qualified move-up/existing homeowners who purchase a principal residence after November 6, 2009 and on or before April 30, 2010. (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010.)

Income limits for repeat buyers are $125,000 for single taxpayers and $225,000 for married filing jointly.

To see if you qualify, please consult a tax professional at Larrison's Tax Service.

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STUDENT FILING STATUS
Students pay taxes the same as anyone else. However, if you are being claimed as a dependent of your parents, you can earn up to $5,700 and when you file your taxes, you'll receive all the federal income tax withheld as a refund. You may receive part of your state withholding as a refund or you may owe more tax to the state; but Social Security and Medicare payments are not refundable.

Indiana requires anyone who makes $1,000 or more to file a state income tax return but the first $1,000 earned are tax exempt. Also, Indiana allows all filers to claim their own exemption on their state return (even if your parents or guardians claimed you, too.)

If you are not being claimed as a dependent, you can earn up to $9,350 as a single taxpayer and get all your federal withholding back.

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2009 TAX FILING INCOME BRACKETS
The IRS requires the filing of a federal income tax return based on income and other conditions.
The 2009 income requirements are:

SINGLE
Up To Age 64 $ 9,350
Age 65 & Up $10,750

MARRIED FILING JOINTLY
Both Up To Age 64 $18,700
(1) 65 or Older $19,800
Both Age 65 & Up $20,900

HEAD OF HOUSEHOLD
Up To Age 64 $12,000
Age 65 & Up $13,400

WIDOW OR WIDOWER
Up To Age 64 $15,050
Age 65 & Older $16,150

OTHER CONDITIONS
If a dependent received more than $950 in unearned income or more than $5,700 in earned income, they must file a return. If you earned income and owe FICA or Medicare taxes, you must file a return. If you receive advance earned income credit payments from your employer, you must file a return.

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EARNED INCOME CREDIT
This is a refundable credit where low income taxpayers can actually receive a refund check, even if they have no tax liability. This credit applies to singles, married couples, and married couples with children.

# Children Maximum Credit Maximum Income Single Maximum Income Joint

0	$457	$13,440	$18,440
1	$3,043	$35,463	$40,463
2	$5,028	$40,295	$45,295
3 or more	$5,657	$43,279	$48,279

If you qualify for Earned Income Credit, you can receive part of the credit during the year with your paycheck instead of waiting until tax time to receive the entire amount. To request Advance Earned Income Credit payments, you must file Form W-5 with your employer. But use caution. If later you do not qualify for EIC, the advance payments need to be repaid when you file your tax return.

A qualifying child must be a son, daughter, stepchild, eligible foster child or grandchild. It can also be a brother, sister, half-sibling, step-sibling or a descendant of any of them. A qualifying child must be under the age of 19 at the end of the tax year or be a full-time student under the age of 24. The dependent may also qualify if he/she is permanently and totally disabled at any time during the year regardless of age. The qualifying child/dependent must have lived with you in the United States for more than half of the year.

Taxpayers with investment incomes of more than $3,100 are not eligible for this credit.

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EDUCATION CREDITS (Hope & Lifetime Learning)
For 2009, a new education credit, the American Opportunity Tax Credit (AOC) is available. This is a modification of the Hope Credit.

The maximum amount of the AOC is $2,500 per student. The credit is phased out (gradually reduced) if your modified adjusted gross income (AGI) is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). The credit can be claimed for the first FOUR years of post-secondary education. Previously the credit could be claimed for only the first two years.

Generally, 40% of the AOC is now a refundable credit for most taxpayers, which means that you can receive up to $1,000 even if you owe no taxes. The term "qualified tuition and related expenses" has been expanded to include expenditures for "course materials" such as books, supplies, and equipment needed for a course of study.

The Lifetime Learning Credit is also available for post-secondary tuition and qualified expenses. It may be partially refundable with a maximum of $2,000.00 per student each year. This credit is different than the Hope Scholarship credit, as it can be used for an unlimited amount of tax years, and is available to just about anyone wanting to expand their education or job skills.