Jan 2, 2009 7:10 pm US/Eastern
Consumer Watch: Money-Saving Tax Tips From IRS
NEW YORK (CBS) ―
Need a little extra cash now that the holidays are over?
Now is a great time to review your taxes for breaks that can put a lot more money back in your pocket.
Teacher April Brown spends quite a bit of her own money getting supplies for her students.
"I'm paying out of pocket weekly for things for the classroom," Brown says.
Now, there's one way to put money back into her pocketbook – a little-known federal tax break for educators that will allow her to deduct some of those expenses.
"This was a deduction that we thought might expire, but was extended this year," IRS spokesperson Jim Dupree said.
The IRS also thought the tuition and fees deduction would be cancelled, but it wasn't.
"Tuition and fees, up to $4,000, can be deducted for yourself or your spouse or your dependents," Dupree says.
First-time home buyers can take advantage of a special tax credit – if they made their purchase after April of this year and meet certain income requirements.
"Up to ten percent of the value of the home or up to $7,500 is the credit amount, and this is a refundable tax credit," Dupree says. "It reduces the amount of taxes that you pay."
However, this is a credit – and not a deduction – so it's more like an interest-free loan. It has to be paid back in equal payments over the next 15 years.
Another real estate change provides help for people who pay property taxes, but don't typically get a break because they don't itemize.
"They will be able to write off or deduct the amount of real estate taxes that they pay," Dupree says. "Up to $500 for a single taxpayer and, if you're married, it can be as much as $1,000."
There's also been an extension to the 2008 economic stimulus payments.
"Those people who were not able to get the full amount will be able this year to apply for that credit," Dupree says.
If you'd like help with your taxes and make under $56,000 a year, the IRS does provide free assistance as well.
The IRS also wants you to know that they never initiate contact through the Internet. If you get an official-looking e-mail, forward it to the IRS to report as spam – it may contain a virus or could be a tool to steal your identity.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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