Newsletter December 2009

Martin H. Chan, P.C.
Over 10 Years Experience Providing Accounting, Tax and Payroll Services to Small Business Owners.

DECEMBER 2009 eNEWSLETTER

In this issue:

Featured Tax Tips:

Worker, Homeownership, and Business Assistance Act of 2009
7 Facts About Non Business Energy Property Credit
New PA Deductibility Rules for Contributions to 529 College Plans

Worker, Homeownership, and Business Assistance Act of 2009

This new legislation will allow up to 20 additional weeks of unemployment insurance, with the most weeks going to workers in states with the highest unemployed rates.

1st Time Home Buyer Credit Extension

The First Time Home Buyer Tax Credit has been extended to April 30, 2010. The new bill includes an incentive for current home owners as well. Here's a quick recap of the extension's new guidelines:

Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500.
First-time home buyers — or people who haven't owned a home in the previous three years — could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.

Business losses incurred in 2008 or 2009 can now be used to recoup taxes paid in the prior five years.

Seven Facts about the Nonbusiness Energy Property Credit

Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.

Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
To qualify as "energy efficient" for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers' Website.
Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
The improvements must be made to the taxpayer's principal residence located in the United States.
To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.

For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/recovery.

New PA Deductibility Rules for Contributions to 529 College Plans

For tax years beginning on or after Jan. 1, 2009, the contribution limitation has increased to $13,000 per beneficiary, per taxpayer, per year, up to the amount of taxable income. A married couple, who could previously contribute $12,000 each per beneficiary, per year as long as there was sufficient taxable income for each spouse may now contribute $13,000 for each beneficiary. Where the married couple with one beneficiary could contribute up to a total of $24,000, a married couple with one beneficiary may now contribute a total of $26,000. Each may contribute up to $13,000 (limited by the amount of taxable income) per beneficiary.