It’s tax season, and it can be a very stressful time. H&R Block has provided some tax time tips to help you take the guesswork out of tax time.
- Education benefits extended — The American Opportunity Credit was extended, allowing taxpayers to claim $2,500 for the first four years of college education for each student. The tuition and fees deduction also was extended and could provide a reduction in taxable income of up to $4,000.
- Sandwich generation gets tax relief — Taxpayers supporting their parents and their own children may be able to claim the $3,650 qualifying relative exemption. Generally, the taxpayer must provide more than 50 percent of the financial support for eligible expenses such as food, lodging, clothing, education, medical and dental care, recreation and transportation.
- Unemployed are required to file — All unemployment benefits will be taxed this year, unlike last year when the first $2,400 was tax-free.
- 2008 homebuyer credit repayment starts, but not for 2009 and 2010 — The 2008 First-time Homebuyer Credit was similar to an interest-free loan and taxpayers must begin repaying it with their 2010 tax returns. In general, taxpayers must repay $500 a year for 15 years. If the taxpayer no longer lives in the house, then the credit must be repaid in full with the next tax return. Taxpayers who claimed the credit in 2009 and 2010 will not have to repay it unless the house is sold or no longer their principal residence within three years of purchase.
- Energy credit reduced — For 2011, the lifetime maximum for the energy property credit is reduced from $1,500 to $500. Taxpayers who never claimed the credit can claim the entire $500. But, those who claimed $500 or more for the 2009-2010 and/or the 2006-2007 energy credits are not eligible in 2011. Eligible improvements include external windows and doors, insulation, roofing, HVAC and non-solar water heaters meeting specific energy guidelines.
- Adoption Credit fully refundable in 2010 and 2011 — The Adoption Credit can be claimed for qualified expenses up to $13,170 for 2010 and $13,360 for 2011. Plus, new for 2010 and 2011, the IRS will refund any amount of the credit that exceeds the adoptive parents’ tax liability.
- 2011 federal filing deadline is April 18 — Due to the observation of Emancipation Day in the District of Columbia on April 15, the filing deadline for federal tax returns is April 18 this year. But, some state filing deadlines will remain April 15.
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Contest ends/3/28/11
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