Lost in all the hubbub about the $700B bailout bill was a series of income tax breaks for individuals. While a number of these won’t have any impact on the majority of Americans, they’re still worth knowing about just in case…
- An AMT fix. The alternative minimum tax (AMT) is the bane of the upper middle class tax filer’s existence. Without an annual patch, and every-increasing fraction of Americans would get snagged. The bailout included just such a fix for tax year 2008.
- Mortgage debt forgiveness. Congress recently passed a law saying that if you sell your home for less than you owe, restructure your mortgage, or get foreclosed on, the cancelled mortgage debt won’t count as income through 2009. This has now been extended to 2012.
- A break on education. You can now deduct up to $4k in school tuition if your AGI is $80k or less for single filers ($160k or less for joint filers).
- A sales tax deduction. The option to deduct stat and local sales tax instead of state income tax was extended.
- Tax-free donations. If you’re at least 70-1/2 years old, you can withdraw up to $100k from an IRA and give it to a charity tax-free.
- Energy tax credits. In 2009, you can get a credit of up to $500 for energy-efficient home improvements such as adding insulation or replacing windows.