Things to know before filing your taxes

Do you qualify for any of the new credits?

File your taxes early and get your rebate fast, advises Kevin Bauer of Bauer & Associates, Ltd. If you file electronically, you speed up the process. You can count on seeing your state rebate in as little as one week and your federal rebate within two and one-half weeks. He warns against paying anyone extra to get your rebate faster. “It’s kind of a waste to pay money to get it instantly,” he noted, because if you file electronically it will come quick anyway.

He reminds people to keep receipts for all the charitable contributions they made over the year. “A lot of people think there is a standard deduction for charitable gifts,” he noted. There isn’t. And if you don’t have your receipts before you file, you might be in big trouble later if you’re audited. The IRS is cracking down on charitable giving. In a recent court case, a man who had given his church about $7,000 was denied the deductions because he didn’t have the receipts first. He got them later, but it didn’t matter. “If you give more than $250 at a time, a cancelled check won’t do,” stated Bauer, who has 39 years of experience in tax and financial issues.

CHANGES THAT MAY BENEFIT YOU

• First-time homebuyer credit: A credit of $8,000 is available to first-time homebuyers who purchase a home between Jan. 1, 2009 and April 30, 2010. Those who have not owned a home in the past three years are considered first-time homebuyers.

• Long-time resident credit: While many know of the credit for first-time homebuyers, not many are aware that long-time residents qualify for a $6,500 credit. You qualify for this credit if you sold a home you had owned for five consecutive years of the past eight and purchased a new one. Purchases must have been made between Jan. 1, 2009 and April 30, 2010.

• Energy credit: The energy credit has returned after a year’s hiatus, and it has been increased. For 2009 and 2010, you can get 30% back on what you spent to install windows, insulation, exterior doors, high efficiency heating and air conditioning systems. The cost of installing the systems is included. This credit is capped at $1,500. Be sure to bring the purchase documents with you when you visit your tax preparer.

• Unemployment compensation: Unemployed? For the first time ever, a portion of your unemployment compensation is not being taxed. For 2009 only the first $2,400 of your unemployment is excluded from gross income.

• Sales tax on new motor vehicles: Did you buy a brand new vehicle between Feb. 17 and Dec. 31, 2009? If so, deduct the sales tax paid. You can claim this deduction even if you don’t itemize. However, you can’t claim it on a “new-to-you” vehicle you purchased used. Bauer stressed, “It has to be brand new.”

• Education credits: Tuition has always been eligible for a tax credit, but for the first time you can also get up to $2,500 per student in credit for books and course materials. This credit can be applied to the first four years of post-secondary education. For those who have been in school longer, check out the Lifelong Learning credit, which hasn’t changed.

Along with planning and tax preparation, Bauer & Associates offers services in accounting, creating financial statements and setting up QuickBooks. Call the Cambridge office at 763-689-4044 or drop by 237 2nd Street S.W. (Courthouse Square). In Princeton, call 763-389-3090 or go to 121 Rum River Drive.