Mellody Hobson, the "GMA" personal finance adviser, is offering you five tips -- things that you can do right now to save big come tax time:
Buy a car or other qualifying vehicle. If you're in the market for a vehicle, now is a great time to buy a car, light truck, motor cycle or motor home. That's because dealers are trying to empty their lots and salesmen are eager to make deals so they can meet their quotas. But there's an added tax incentive to buy a new car in 2009. If you purchase one of the previously mentioned vehicles between Feb. 17 and Dec. 31, you may be able to deduct state and local sales and excise taxes. The deduction is limited to taxes paid on up to $49,500 of the purchase price. To be eligible, your annual income must be less than $135,000 for single filers and $260,000 for people filing jointly.
Take advantage of the American Opportunity Credit. It modifies the existing Hope Credit -- a tax credit that allows you to offset the cost of a child's college tuition. The American Opportunity Credit raises the existing Hope credit from $1,800 to $2,500, and makes it available to a broader group of people, including those families with higher incomes and those who owe no taxes. Income limits for the full American Opportunity Credit are $80,000 or less for single filers and $160,000 or less for joint filers, up from $48,000 for single filers and $96,000 for joint filers. The credit can be claimed by parents or students for a variety of college expenses, including tuition, books, lab supplies, software and other class materials. If you qualify, you don't have to itemize your taxes in order to claim the credit, but keep your receipts as supporting documentation.
Get energy-efficient appliances and home improvements. The stimulus bill includes tax incentives for energy-efficient home improvements for 2009 and 2010. To take advantage of the credit this year, you should buy before Jan. 1. You could receive a credit of 30 percent up to $1,500 when you purchase certain energy-efficient items or improvements, including insulation and air conditioning systems. There are limitations. For more information, check out the government's Web site at www.energystar.gov. Be aware that if you claim the full amount of the credit in 2009, you won't be able to claim it in 2010.
Get your documents in order. The IRS audited more than 1.4 million individual tax returns last year. Don't be unprepared. Organize all your paperwork, including receipts for itemized deductions, charitable donations and documentation of all income earned, just in case you get audited.
Don't forget your Flexible Spending Account. You have to use all the money you have deferred before the year is up, so if you have tax-deferred money left in your account, think about buying those extra pairs of glasses or getting that dental work. If you don't use it, you will lose the money.
Here are some additional tips that you might not have heard on the air:
Take advantage of the homebuyer's tax credit. Originally set to expire on Dec. 1, the first-time homebuyer's credit -- worth up to $8,000 for qualified buyers -- was extended into 2010. A credit of up to $6,500 was made available to repeat homebuyers as well.
Under the homebuyer's tax credit extension, you need to: