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Guide to Tax Law
- Introduction to Tax Law
- What is the IRS?
- Filing Your Tax Return
- Rights of Tax Payers
- Tax Free Income
- Tax Implications of Differed Income
- How Tax Deductions Work
- Recucing Your Taxes with Investments
- Tax Benefits for Homeowners
- Shifting Income withing a Household
- Your Status as a Tax Payer
- Small Business Owners and the IRS
- Minimize Taxes on Your Estate
- Tax Fraud and other Crimes
- Red Flag: IRS Audits
- Taking Your Case to Tax Court
- What if Your Owe the IRS?
- When to Hire a Tax Attorney
Tax credits and tax deductions are incentives provided by the Federal government in certain situations or under certain establish conditions. Examples of tax credits and tax deductions include things like interest-free retirement accounts or education savings accounts, tax-free earnings from the sale of a home, or tax credits for environmentally sound living (including tax credits for renewable energy use and energy efficient home or business improvements).
Renewable Energy Tax Credits
Renewable Energy Tax Credits are available currently for eligible goods bought or eligible improvements made between Janueary1, 2009 and December 31, 2010.
Most tax credits for renewable energy are given only for improvements made to a taxpayer's primary residence; however, there may be available credits available for improvements made to a second home if they include things such as: geothermal heat pumps, solar water heating units, and wind energy harnessing systems for the home.
If eligible for Renewable Energy Tax Credits, $1,500 is the maximum allowable credit that a household can receive for goods, services and improvements made during the 2009-2010 period.
The exception to the $1,500 maximum credit applies through 2016 and includes available credits up to 30% of the cost, without limit, for specific types of geothermal, solar, wind and fuel cell technologies.
Business Tax Credits
General Business Credits – Most of the available Business Tax Credits fall within the prevue of the General Business Credit as defined by the IRS. In order to claim the available business tax credits, the business must file a claim form as well as a Form 3900 (available on the IRS website).
Additional Business Tax Credits include, but are not limited to:
- Investment Credits, including rehabilitation to business property, implementation of energy efficient materials and machines, and reforestation efforts.
- Alternative Fuel Motor Vehicle Credit - enacted
by the Energy Policy Act of 2005. The
available tax credits include separate credits for each type of qualified
vehicle:
- Hybrid and Heavy Hybrid Vehicles,
- Fuel Cell Vehicles,
- Alternative Fuel Motor Vehicles (QAFMV); and
- Advanced Lean-Burn Technology Vehicles.
Education Tax Credits
The Hope Scholarship Credit
The Hope scholarship credit(maximum $1,800 for 2008) is available only for the first two years of college.
Lifetime Learning Credit
The Lifetime learning credit (maximum $2,000) can be used at any time and doesn't have a degree or workload requirement.
Each education tax credit must be taken in different years – the regulations prohibit both credits for the same student in the same year.
Many parents earn too much to be eligible for either one of the credits; however, often times students can take the credits themselves. In 2008, both education credits phased out starting at an adjusted gross income ("AGI"), of $96,000 for joint filers and $48,000 for individuals. At AGI levels of $116,000 and $58,000, individuals become completely ineligible for the tax credits.
Child Tax Credits
The Child Tax Credit allows eligible taxpayers to reduce their Federal Income Tax liability by up to $1,000 for each qualifying child that is under 17 years of age.
To be a "qualifying child" for purposes of the Child Tax Credit, the following criteria must be met:
- Child must be 17 or under at the end of the fiscal year
- The Relationship must be either biological child, adopted child, stepchild, or eligible foster child or descendent of any eligible child
- Child must be a US citizen or a US national or US resident
- Child must not have provided over half of their own financial support
- Child must have lived with the parent claiming that Child Tax Credit for at least half of the tax year.
Real Estate Tax Credits
1. Rehabilitation Tax Credit - The Rehabilitation Tax Credit may be utilized for costs incurred in connection to rehabilitation and reconstruction of certain real estate. For purposes of the tax credit, "rehabilitation" includes things like renovation, restoration, and reconstruction. "Rehabilitation" does not include enlargement of exiting construction or the costs associated with new construction.
2. Renewable Energy Tax Credits are available currently for eligible goods (such as energy efficient appliances) bought or eligible improvements made between Janueary1, 2009 and December 31, 2010.
3. Most tax credits for renewable energy are given only for improvements made to a taxpayer's primary residence; however, there may be available credits available for improvements made to a second home if they include things such as: geothermal heat pumps, solar water heating units, and wind energy harnessing systems for the home.
4. Commercial Real Estate Investment Credits, including rehabilitation to business property, implementation of energy efficient materials and machines, and reforestation efforts.