| The stimulus package of 2009 offers a "tax break" for | | | | $8000 on the purchase of a new home if you have |
| couples ($1000) and for singles ($500). What does that | | | | not owned a home in the past three years. |
| mean to you? Well, first we have to define "tax break" | | | | Don't count on getting the full $8000. Under the tax |
| in order to resolve the confusion. | | | | credit, you will get $8000 as a maximum. If 10% of the |
| One definition informs us that a "tax break" is a tax | | | | total cost of your home is less than $8000, you will |
| benefit, deduction that is granted in order to spur a | | | | receive that amount as opposed to $8000. If you are |
| certain commercial activity. Wikipedia defines a "tax | | | | single and earn $75,000 a year or more, you will get |
| break" as a tax savings that includes exemption, | | | | less than $8000, and if you are married and earning |
| deduction, or credit | | | | $150,000 in combined annual income or more, you will |
| The promised "tax break' is on payroll taxes, which | | | | get less than $8000 back as well. |
| makes it even a bit more confusing. Payroll taxes are | | | | This is a refundable credit, meaning that if you owe the |
| the amount of taxes your employer deducts from | | | | federal government nothing or less than $8000 at tax |
| your paycheck every pay period. The employer pays | | | | time, the entire refund of $8000 is refundable to you |
| some of these taxes, but most are your income taxes | | | | less what you owe. So, if your total tax liability by April |
| held in trust by your employer, and handed over to the | | | | 15, 2010 is $2000, you will get $6000 back if you used |
| Internal Revenue Service. The amount withheld from | | | | the first time home-buyers tax credit for 2009. |
| your paycheck is used against your income tax at the | | | | This "tax break" was intended to spur commercial |
| end of the year in order to determine if you owe the | | | | activity in the real estate industry. |
| Internal Revenue Service, or if the Internal Revenue | | | | It is recommended that you consider consulting with a |
| Service owes you. The proposed deduction is a | | | | tax professional and have them file your return. Filing |
| deduction of your payroll tax. | | | | an income tax return can ordinarily be a bit confusing, |
| Employers have mostly agreed to reduce the amount | | | | but due to all the tax changes resultant of the |
| of payroll taxes taken out of your income every pay | | | | recession, your next filing could prove more difficult |
| period by a sum that will total $500 for singles and | | | | than ever. Tax professionals are trained on all the |
| $1000 for couples. | | | | changes to the code and will know which ones will |
| Part of the stimulus plan was also the first time | | | | benefit you and exactly how you do or do not qualify |
| home-buyer's deduction, which could save you up to | | | | to take advantage of them. |