Act Now on Tax Credits, Deductions, Flexible Spending Plans; Save Money Next Year on Your Taxes

Purchase a home for less than $800,000 between Nov. 6, 2009 and have a binding contract in place by April 30, 2010 (the sale must be completed by June 30, 2010);

Meet certain income requirements: Single filers must have a modified adjusted gross income of less than $125,000, and for married filers the figure must be less than $225,000. Those who earn above these amounts may qualify to receive partial credit.

Additionally, to be eligible for the first-time homebuyer credit, you cannot have owned a home for the three consecutive years prior to your purchase. For the repeat homebuyer credit, you need to be an existing homeowner who has lived in your current home for five consecutive years out of the last eight and be purchasing another home as your primary residence. Finally, if you plan to claim the new homebuyer's credit on your 2009 or 2010 tax return (as applicable), you will need to complete Form 5405.

Job-related expenses may be tax-deductible. Despite the hardship of losing a job, if you earned more than $8,950 in 2009 or if you are self-employed and made more than $400, you need to file a tax return. Also, keep in mind that unemployment benefits are subject to federal income taxes and any money received must be filed on your federal income tax return. The good news is that the first $2,400 of benefits received is tax-free in 2009. Remember, too, that many of the expenses incurred while looking for another job can be deducted -- such as the costs for resume preparation, expenses related to employment agencies and headhunters, unreimbursed travel expenses incurred for interviews, including mileage, and even long distance and cell phone charges connected to your job search, so be sure to keep careful records.

Pay Mortgage Early, Apply Investment Losses

Pay Your January Mortgage by Dec. 31. If you itemize your tax returns, today is an excellent time to pay your January 2010 mortgage payment. If you pay your mortgage by Dec. 31, you are able to deduct the interest this year.

Apply Investment Losses: You can apply up to $3,000 of your losses to offset your taxable income and carry forward any losses in excess of $3,000 for future tax years. Keep in mind, if your losses are in your 401k or IRA, you cannot claim the $3,000 loss on your tax return. The credit is only available to you if you actually sold any of your investments.

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