"We're from the government, and we're here to help you." That's a line that always brings a smile and a groan.
A lot of people I've talked to this past year had mixed emotions about all the government bailout programs. On one hand, they felt like the government was using their tax dollars as a big giveaway to people or companies that didn't deserve it. On the other hand, they were often left asking "What's in it for me?"
In many respects, we have an obligation to ask these kinds of questions
. Exercising good stewardship over our financial situation includes understanding and taking advantage of tax-related opportunities.
For instance, take the first-time homebuyer's tax credit. Under this new provision, first time homebuyers are eligible to receive a tax credit of 10% of the purchase price of their new home up to a maximum of $8,000. This would be great if we were all first time home buyers, but most of us are not eligible because we have been homeowners for years. However, it might be a good planning tool for our children or grandchildren. If so, send them a copy of this newsletter or go to www.irs.gov for more information.
An extension of this law could benefit you more directly, depending on your circumstances
. In November, 2009, the Home Buyer Tax Credit was broadened to include existing homeowners. The law now includes anyone who has owned and lived in the same principal residence for any five-consecutive-year period during the last eight years. These homeowners are eligible for a tax credit of up to $6,500, if they buy a home to use as their principal residence.
If you have been thinking about moving or maybe downsizing, this could be a great time to take advantage of the tax credit. Remember this is a credit, not a deduction, so it is like the IRS writing you a $6,500 check. However, since we are talking about taxes, there are a few catches. We are not tax experts, so make sure you check with your tax advisor before taking any action. Both of these credits are set to expire by May, 2010, so quick action is required.
If you want to know more about this tax credit or other changes in the tax law that could have a big impact on your financial life this next year
, join us for our next workshop on either Tuesday, Jan. 19, or Wednesday, Jan. 20 - and invite any friends you think could benefit. We will be discussing the federal budget and new tax law changes as they apply to estate taxes, Roth conversions, capital gains, and other areas.
Maybe the government isn't here to help, but we are.