As the April 15 tax deadline quickly approaches, many are scrambling to gather their documents to make the sometimes dreaded trip to their tax preparers. Still others have already completed their requirements and this process has brought to light some misconceptions that seem to be very common.
Many taxpayers have been under the assumption that because the area was declared a disaster area, they are entitled to tax credits for home repairs and clean up costs. Local accountant John Ed Welch with Hughes Welch and Milligan offered some information that may help those who have been told some things that are false regarding possible deductions and credits.
Welch said that there is no credit for damage from the ice storm. He said this misconception may have came from a few years back when there was a threshold on claims that were greater than 10 percent of a taxpayers gross income, but this credit does not apply this year.
Other confusion came from those who were refused the deduction for first time homebuyers. Welch said in order to take this credit, a person must not have owned and resided in home as a primary residence in the last 10 years. After buying a home, the taxpayer may take the credit of up to $8,000 or 10 percent of the cost of the home they purchased during the tax year.
Other misconceptions include taxpayers thinking they can receive a credit for energy efficient appliances from the Internal Revenue Service. Welch said this is not on this year's returns but said there is a credit that is more complicated and was passed by Congress but the credit comes directly from the manufacturer of the appliance and must be submitted from forms given at the appliance retailer and is in no way connected to the IRS.
Other credits that many are taking advantage of are those for things such as energy efficient roofs, storm doors, windows and heating and air units that qualify. Welch said the credit is for 30 percent of the cost of the energy saving improvement. He said taxpayers must provide their tax preparer with the dated receipt for the installation and documentation that the improvement meets the guidelines to be qualified as energy efficient. This Nonbusiness Energy Property Credit is for up to a maximum of $1,500.
Welch also added that there is a larger credit for anything that is solar, geothermal or wind powered that has been installed during the year. The Residential Energy Efficient Property Credit can be claimed on this type of appliance, such as solar water heaters.
As with any tax question, contact your tax preparer prior to your visit regarding any questions one may have regarding possible deductions on their 2009 tax returns.