Every permanent resident residing in the United States are required by law to pay their taxes. In the past year, the federal government however have made so many changes that you are entitled a tax break every year. Here are the 8 ways I have put into the list below for you to cut your taxes this year.

1. If you have bought a house

…after November 2009 and this is your second house, you may be entitled for a tax credit of 10% of the purchase price. The maximum tax credit you are allowed to have is $6,500.

If you are in the process of purchasing a second or third home, basically just beyond your first home, you have time until April 30, 2010 to sign a contract or until June 30, 2010 to close the deal. The only requirement is that you have to have lived in your old home for 5 consecutive years out of minimum 8 years that you own your home.

Also, first time home buyers are also entitled for a 10% tax credit of the purchasing price with the maximum amount of $8,000.

2. If your kid is in college

The American Opportunity Tax Credit will give you a chance to claim $2,500 per student per year. But his is only applicable for students of the first 4 years in college.

3. If you bought a new vehicle

…after Feb 2009, you will be able to have your sales taxes that you paid deducted up to $49,500. If you have traded in your car in the cash-for-clunkers program, you are also entitled for a tax credit.

4. If you have been looking for a job

…all your expenses that came with finding a new job for traveling, career coaching, and résumé services can be written off as miscellaneous deductions, to the extent that they (combined with other deductions like safe-deposit fees) exceed 2% of your adjusted gross income.

5. If you have contributed to Haiti

…although the disaster only happened this year, you do not need to wait until next year to deduct your tax. All donations made before March 1, 2010 can be deducted in your 2009 tax return.

6. If you have sold your securities at a loss in 2009

…while you had owned your shares for over one year, you can use up to $3,000 of investment losses to offset your ordinary income.

7. If you are a victim of one of the 2009 natural disaster

…and your home insurance did not pick up the full bill, you can claim the loss with no limit.

8. If you have a home-based job

…in addition to your normal day job, and are not using your home-office as a TV room or play room too, you can deduct a prorated share of all the utility bills in your home.

Popularity: 1% [?]