Start Thinking about Taxes

With your 1099 or W-2 in hand, you can start on your 2009 federal tax return, which means it's time to look at some changes in the tax law.

If you’re self-employed, your 1099s for 2009 have arrived. If you’re an employee, by now you should have gotten your W-2. By February 16, your broker must send you your 1099-B forms, if you haven’t already gotten them. With these basic documents in hand, you can start on your 2009 federal tax return, which means it’s time to look at some changes in the tax law.

If you take the standard deduction instead of itemizing, that amount has gone up this year, from $10,900 for married couples to $11,400. For most singles, the new standard deduction is $5,700, up from $5,450. You should also know that married couples can deduct up to $1,000 and singles can write off up to $500 of any property taxes they paid even if they don’t itemize.

Another deduction you can take even if you don’t itemize is sales and excise taxes you paid on the purchase of a new vehicle bought after February 16 of last year. You can write off those taxes on the first $49,500 of the vehicle’s cost. Leases aren’t eligible and there are income restrictions, so check with your tax advisor before taking the deduction.

You may also be eligible for a first-time home buyer credit if you bought a new home last year. Under a recent extension of the home-buyer credit program, you can choose to take the credit on your 2009 return as long as you seal the deal before April 30 of this year and close before July 30. The eligibility rules on the credit are extremely complex, however, and the IRS is vetting these write-offs very closely, so talk to your tax advisor to make sure you comply with all the regulations.