Alternative Minimum Tax

Tip for Tax Time: Those Tax Credits Add Up

By Lynnette Khalfani-Cox, The Money Coach

How is this for positive financial news: Uncle Sam wants to put more money back into your pockets. Lots of it. A slew of tax credits are on the horizon; some new, others continuing — and one or more may have your name written on them. Some of the juiciest tax credits for 2009 include:

A tax credit, in the form of an interest-free loan, up to $7,500 for new homeowners. (If the 2009 economic stimulus passes, the limit will increase to $15,000, will not have to be repaid, and will extend to other home buyers beyond first-timers. The Senate approved this amendment on February 4, 2009 to up the credit, but the whole stimulus bill would still need to pass before it takes effect.)
A tax credit for up to $1,000 per child for those supporting youngsters under the age of 17 at the end of 2008
A tax credit for of as much as $4,824 for low-income earners with children. (A lot more people will qualify as “low income” because of layoffs, reduced work hours, or cuts in their pay.)
A tax credit worth thousands – or even tens of thousands of dollars – for people socked with a big AMT, or Alternative Minimum Tax, bill in the past. (You’re eligible if you have so-called long-term unused AMT credits, or unused AMT credits generated any year prior to 2005)

If you qualify for any of the above tax credits, it would be dollar-for-dollar money in your pocket as tax credits are far more valuable than tax deductions.