Tax season usually leaves Americans grumbling, but you might have a few things to smile about this year, thanks to a bout of generosity from your dear old Uncle Sam.
Desperate to kick-start the sputtering economy, Congress last year passed a stimulus bill that threw money at anyone willing to buy homes, cars, solar water heaters, energy-efficient air conditioners, refrigerators -- even golf carts.
Why? Consumer spending is believed to account for about two-thirds of economic growth, so legislators were giving Americans reasons to spend.
Add expanded credits for financing college, better breaks for casualty losses and charity, and you've got the makings of a great year for tax filers.
The trick will be finding the credits and dealing with the rapid-fire changes that have even tax experts flummoxed.
"It's not as easy as it used to be," said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information. "Even the simple things, like deciding whether to take a standard deduction or itemize, have become complicated."
Of course, when the problem is figuring out which of the assortment of new and highly lucrative tax credits you can claim, that's probably a problem you can live with.
Home-buyer credits
The most generous tax break was thrown at home buyers through the first-time home buyer's tax credit (which isn't just for first-timers).
But your ability to claim this credit -- and how much you can claim -- will depend on a number of factors, including when you bought the home, how much it cost, how much you earn and whether you've owned a home before.
If you bought a home before Nov. 6 of last year, you can claim a credit of $8,000 (or 10% of the purchase price, whichever is less), if:
* The home is your personal residence.
* You have not owned a home in the three years prior to the purchase.
* You earned less than $75,000 if single or $150,000 if married. Individuals earning up to $95,000 and married couples earning up to $170,000 can claim partial credits if they meet the other criteria.
The income limits were increased for purchases made after Nov. 6. If you bought (or buy) a home from Nov. 7 to April 30, you can claim the full credit while earning up to $125,000 if single or $225,000 if married. You can get partial credits with single-earner income of up to $145,000 and married couple income of up to $245,000.
The caveats:
* The home must cost less than $800,000.
* You didn't buy the home from a relative.
* If you are married and filing separately, the maximum credit is $4,000.
* If you sell the house in less than three years, you'll have to pay the credit back (unless you are a member of the military and you've been reassigned; in that case you'll qualify for a special exemption).
* If you are claiming a credit for a home purchased after Nov. 6, you must file a paper return and include a HUD-1 closing statement to show that you really closed the deal.
Longtime owners
If you bought a home after Nov. 6 or buy before April 30, you can claim up to $6,500 in tax credits if you've owned a home before. This "longtime homeowner" tax credit works much the same as the first-time home buyer credit.
The only difference: To claim it you must have owned and used the same home as your personal residence for five of the last eight years before buying a replacement home during the relevant time window.
Notably, you don't have to dispose of your previous residence to claim a credit for buying a new residence, but you do have to move into the new home.
Another happy note: If you bought a house in early 2010, you can choose to claim the credit on your 2009 return. That would give you a faster refund and assure that you could meet the income restrictions if 2010 turns out to be a better year.
What if you owned a home for only three or four years and replaced it last year? Sorry. No credit for you.
Car-buyer break
If you bought a car in 2009, you can claim a tax deduction for the state and local sales and excise taxes that you paid on that purchase, regardless of whether you itemize. The deduction is limited to the taxes and fees paid on up to $49,500 of the purchase price. The break is phased out for singles earning more than $125,000 and married couples with more than $250,000 in joint income.
It's worth mentioning that you get to claim this deduction regardless of whether you take the standard deduction or itemize. (That's one of the reasons that tax filing will be more complex this year, but more on that later.)
Golf cart credits
This may be one of the weirder new tax credits. If you bought a "low-speed neighborhood vehicle" powered by a battery in 2009, you could qualify for a tax credit of up to $15,000. (If you buy one this year, you can get a credit of up to $7,500.)
What's a low-speed neighborhood vehicle? They look like golf carts; they drive like golf carts, but they have rear-view mirrors and vehicle identification numbers that make them street legal.
