Did you buy energy-efficient windows for your home last year? You can only take the energy efficiency credit if they were installed by Dec. 31.
That's just one of the details that could trip up taxpayers filing 2010 returns.
Want to take the first-time home buyer credit on your taxes? If you bought your house after April 30, or didn't have a binding contract by that time, you're probably out of luck. Was closing delayed? Depending on how long, you might not be eligible.
But some taxpayers have an extra year to buy a home. Those serving outside the United States as members of the Foreign Service, the uniformed services, including the military, or the intelligence community have until April 30, 2011, to buy a new house and qualify for the credit.
One more thing: The first generation of the new home buyer's credit was actually an interest-free loan. If you claimed that credit on your 2008 taxes, you have to start paying it back this year. If you took the full value of the credit, you'll owe $500 this year.
"It might catch people unaware," said Barbara Weltman, author of tax guides for J.K. Lasser.
If you deducted the first $2,400 of your unemployment benefits last year, be aware that you can't do it again this time around. Congress didn't extend that tax benefit.
Some experts advise taxpayers to seek help preparing their returns, either from a professional tax preparer or by using tax preparation software, especially with the late changes Congress made to the tax law. Some benefits were extended; others were allowed to lapse.
One source of information is the Internal Revenue Service's tax guide for individuals, Publication 17. Running over 200 pages, it's filled with information on credits and deductions, and how to figure your tax and file your return.
"There's so much going on this year and it's confusing," said Kathy Pickering, executive director of H&R Block's Tax Institute. "It really isn't the year to go it alone."
Take the energy credit.
Taxpayers may qualify for a credit of 30 percent, or a maximum $1,500, for energy improvements made to their homes. They can include new windows, doors, insulation, and certain air conditioning, heating or hot water systems. The improvements must be expected to remain in use for at least five years and meet certain energy efficiency requirements. How do you know if they meet the requirements? In most cases, you have to rely on the contractor or the manufacturer to tell you.
There's another catch. The energy efficient product must have been installed before the end of the year to qualify for the credit. "Purchasing something at the hardware store and putting it in the garage for installation later won't do it," said Mark Luscombe, principal tax analyst at CCH, a provider of tax, accounting and audit information.
The home buyer credit had different incarnations. The first, taken as a credit, was the loan for first-time home buyers. That was later changed to make it a true credit, and a provision was added for long-time home owners. But the maximum credit differed for first-time home buyers and people who already had owned a home, a maximum $8,000 for the former, $6,500 for the latter. If the purchase price exceeds $800,000, you cannot claim either credit.
So how do you know whether you had the loan or the true credit?
Most people know the year in which they bought their home and can figure it out that way, said Terry Lemons, chief spokesman for the IRS. If you used tax preparation software and rolled over your data from year to year, it also lets you know which you took.
Other things that could trip folks up:
- Charitable deductions. You'll need a bank record, such as a cancelled check or a receipt, even for the smallest donation. That means that if you gave $1 in cash to the Salvation Army bell ringer over the Christmas holidays, you can't claim a deduction without a receipt. For donations of motor vehicles, get a completed Form 1098-C or similar statement from the organization and attach it to your return.
- Out-of-pocket expenses for teachers. Congress restored the deduction of up to $250 for teachers. It applies only to full-time teachers from kindergarten through high school.
- Conversion of traditional IRAs to Roth IRAs. You'll have to decide whether to include the value of the conversion as income for 2010, or split it over two years, 2011 and 2012.
One more thing: For this year only, forget that April 15 is synonymous with tax day. Because of the Emancipation Day holiday in the District of Columbia, the deadline for submitting tax returns is April 18 for everyone, including those who don't live in the nation's capital.