The Federal Tax Credits Blog

Archive for July, 2009

Question: Is Congress presently considering a bill to extend the $8000 first-time-homebuyer’s tax credit?

Or is it likely to expire before they start considering it?

Answer: yes
and
yes

Inlanta Mortgage Reminds Homebuyers about $6,500 Move-Up Tax Credit on Single-Family Homes

Move-up tax credit added in November and encourages homeowners to upgrade or move into another property. A signed contract must be completed by April 30, 2010 in order to qualify.

The Extended Homebuyer Tax Credit Spanish Language | WAHomeowners.com

Question: Could the first time home buyers’ credit for a home purchased in 2009 be based on 2008 taxes?

My fiance and I graduated from college in 2008 and are closing on a house this June 2009. But if we go based on the 2009 taxes, we don’t qualify because of income limit. In 2008 we would though, since we only worked half the year. Could we get this year’s credit based on last year’s taxes, or last year’s credit? How would we apply for it? (We already submitted 2008 taxes.) If you don’t know, who on earth would we talk to about this?? Thanks!
Would we get the $7500 deduction or the $8000 credit? And since we aren’t closing until June, would we need to file an extension request?

Answer: Once you close on the purchase you can amend your 2008 returns and claim the credit then. Assuming that you are both eligible, you can split the credit any way that you wish. This way it will be based upon your 2008 wages.

If your wages rise enough for 2009 that you become ineligible then it would only make sense to amend your 2008 returns and take it that way.

Edit: You are entitled to the $8,000 credit if you close prior to Nov 30, 2009. You can file Form 4868 to get an extension of time to file until Oct 15, 2009 if you wish. That will expedite the credit, as opposed to waiting 2 to 3 months for it by filing amended returns.

Time still remains to find a tax break

(MCT) — Christmas is past and preparations for celebrating the new year are next.

Ryan Raveis Summarizes the New Tax Credit for Home Buyers and Homeowners

Dual flush toilets have recently become incredibly popular in areas such as Asia, Europe and Australia and are currently rising in popularity in North America as well. Why are so many people turning away from conventional and low flow toilets to dual flush ones? Well, here are a few benefits to owning a dual flush toilet.

* The dual-flush technology – this toilet has been designed with two options for flushing: one for solid waste and one for liquid waste. Flushing liquid waste naturally will use much less water than flushing solid waste. * Efficient design – these toilets work differently from standard toilets. Where a standard toilet will use a siphoning method to get rid of the waste, a dual flush toilet has a larger trap way in the bottom of the bowl and pushes waste out. The latter uses much less water – under a gallon is used for a short flush and about 1.6 gallons for a long flush – and waste goes out more easily.

* Savings – with this design, you’re not only conserving water, but by doing that you’re also saving money on your utility bill. Dual flush toilet allows you to save almost 70% of the water that is typically required for a standard toilet, and replacing an older toilet would generate much more savings. With the rising cost of water and increasing concern for preserving our environment, it is easy to see why the dual-flush toilet is becoming so popular in our world today. Although these toilets do cost much more than standard toilets, you should find that the long-term savings will quickly add up. Some governments also offer tax rebates on the purchase of these toilets to bring the initial cost down significantly. With all the benefits, there is absolutely no reason for anyone to purchase Bathroom Furniture

California leaders continue budget struggle

Nearly a quarter of the way through California’s fiscal year, legislative leaders and Gov. Arnold Schwarzenegger still were struggling Monday to end the state’s record budget impasse and make long-term reforms.

Question: first time home buyer?

My boyfriend and I are looking to buy a house. He has excellent credit, mainly because everything we own is in his name, i.e. both cars, credit cards etc. our rental lease etc. etc. We both recently graduated college, and both have stable income. However I have yet to start paying back my loans as they are still in their grace period. Because of all the outstanding loans on my credit report I am considered to have basically no credit. Would he be able to get the mortgage loan on his own? If not what effect would my credit have on the loan. We live in Pa, and I have also heard that because we have been together so long that our relationship could be considered common law marriage, and my name may have to be on the loan, but I have no idea if there is any truth to that. Any help would be much appreciated?

Answer: PA outlawed common law marriage in 2005, so you would have had to be living together, declaring yourself man and wife since 2004.

Here is how PA defines common law marriage, it is the same as other states, as far as it is not simply living together, but declaring yourself to be man and wife.

Pennsylvania: A common-law marriage was established if, before 1/1/2005, a man and woman exchanged words that indicated that they intended to be married at the present time and they also held themselves out to the community as married (introducing eachother as husband and wife, filing joint taxes, etc.).

So, basically, if you started living together and presented yourself to the world as husband and wife prior to 1/1/05 you are in fact married. After that date you are just shacking up, and even prior to 1/1/05 you are just shacking up if you have not been living as man and wife. The joint income tax returns would be your proof.

If he applies alone only his credit, debts and income will matter. To include any of those from you, including income, you have to include all of it, your debt and your income.

It sounds like your debt might prevent you from buying, you might be better off having this in his name only.

Pawnshops see uptick in new customers

Since Hurricane Ike and the economic meltdown, more people are going to pawnshops to get needed cash.

$8,000 First Time Homebuyer Tax Credit for 2009!

The Federal Government introduced the tax free savings account in their last budget. Basically any Canadian citizen over the age of 18 can open an account and is allowed to deposit $5,000 per year. Any unused portion of the $5,000 in a given year can be carried forward. The account has no impact on RRSP yearly contribution eligibility. All income earned by the funds in the account are tax free and can be taken from the account at any time.

RRSPs have been the most widely used form of saving for retirement. People like you and I blindly scramble towards the end of February each year to purchase RRSPs from our bank or financial planner so that we can get a small tax break. The majority of people investing this way do not have any idea what their RRSPs are actually being invested in. In many cases when the funds actually do show a return, that return sits idly in the RRSP account and is not put back to work earning more dollars for the investor. Many people are in for a shock when they retire as taxes can reduce the face value of the RRSP account by as much as 39%. Imagine planning to have a million dollars to carry you through your retirement years only to find out that after taxes you actually have $610,000. The other consideration that one must look at is the fact that the RRSPs are usually purchased with after tax dollars and those same dollars are taxed again when the account is liquidated.

Bankers are programmed to sell RRSPs and are generally quite good at it. They however, have failed miserably in selling the tax free savings account product. The returns offered on tax free savings accounts by the banks are nominal at best and in many cases just cover the bank fees on the account. A number of investment companies offer products with higher yields and should be considered as a legitimate alternative.

The best way to compare RRSPs to the tax free savings account is by way of an example:

The client has decided to invest $5,000 per year for the next 5 years at which point the investment will be cashed in. The rate of return for both products is 7.0%. The example assumes that the client will reinvest yearly earnings. The tax rate used is 39%.

RRSP TFSA
Year 1 $5,350 $5,350
Year 2 $11,075 $11,075
Year 3 $17,200 $17,200
Year 4 $23,754 $23,754
Year 5 $30,767 $30,767

Taxes on the RRSP balance will be $11,999 leaving the client with $18,760 for his 5 year investment of $25,000. As there is no tax on the tax free savings account the ivnestor will have $30,767 from his $25,000 investment. One might argue that the tax deduction created by purchasing an RRSP should be part of this equation. However, then one would have to calculate the initial income tax paid to earn the investment funds. These numbers basically cancel each other out.

The bottom line is that the federal government has provided Canadians with a way to accumulate tax free dollars. In order to take full advantage of this product the general public will have to consider alternative investments offered by private investment companies.

Money-saving moves to make before the new year

DENVER – As the recession just began easing up, 2009 still meant tough economic times for many of us. But financial advisor Gary Wagner says it’s not too late to save yourself some money before January 1st.

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