Taking Advantage of Tax Credits
Posted by Tax Man - 29/08/09 at 03:08 pmWhen you invest in anything, you will have to pay taxes in one form or another. If you invest in real estate, then you will pay property taxes. If you invest in stocks, then you will likely pay capital gains taxes. In the United States, The Internal Revenue Service or the IRS collects taxes and enforces the tax laws. It is an agency within the U.S. Department of the Treasury and is responsible for interpretation and application of Federal tax law. If you do not pay your taxes, then the IRS will collect from you everything that you owe as well as IRS tax penalties and interests. Most people want to pay the least amount of taxes they can get away with which is the reason why tax planning is such as popular service. There are lots of free tax tips that you can learn how to keep as much of your hard earned money in your pocket as possible.
Property tax is an ad valorem tax that a homeowoner is required to pay on the value of the home being taxed. Property tax can be defined as “generally, tax imposed by municipalities upon owners of property within their jurisdiction based on the value of such property.” The taxing authority needs an appraisal of the value of the property, and tax is assessed as a percentage of that value. Forms of property tax used vary between countries and jurisdictions.
Now that property prices have dropped substantially, the government is providing even more incentives to entice people to purchase homes or invest in homes. They hope that new buyers will help raise the prices of homes and save the real estate market. The new home buying tax credit, for example, gives a new home buyer a maximum of $7,500 tax credit or $8,000 if the home is purchased in 2009. This new tax credit is for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more or $80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009. This first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.
