The first-time homebuyer credit has been expanded and extended. Buyers who have owned their home for the last five years will be eligible for a credit of up to $6,500 on a new home purchase.
Qualified buyers will be required to have signed purchase agreements by April 30, 2010 and to have closed by June 30, 2010. (Military and federal employees serving outside the U.S. have an extra year to buy, provided they served more than 90 days outside the U.S. after December 31, 2008 and before May 1, 2010.)
The credit is available for the purchase of principal residences costing $800,000 or less. The credit phases out for individuals with annual incomes above $125,000 and for joint filers with income above $225,000.
You may want to wait until 2010 to convert a traditional IRA to a Roth IRA. 2010 conversions allow for taxes to be deferred and spread out over two years. You can have 50% of the conversion income taxed in 2011 and half in 2012.
The ban on conversions by high incomers won't apply after this year, those with AGI's over $100,000 will be permitted to switch to a Roth.
High incomers may choose to pay the tax up front with the top rate likely to go from 35% to 39.6% after 2010.
Don't forget to record your odometer reading on December 31... you will need the information for end of 2009 mileage deductions.
As always, check with your tax preparer regarding any of these issues.
Submit questions to:
PO Box 13
Barnesville, OH 43713
Or e-mail: firstname.lastname@example.org (Please enter "Ms. 1040EZ" in the subject line.)