Surprising Tax Breaks to Cut Your 2009 Bill

There’s no law or ethics rule that says you have to pay more in taxes than is legally required. You should make the most of every credit and deduction that’s coming to you. This year, there are a lot of new write-offs in addition to a host of existing deductions you may have overlooked before. Maybe you can still trim your taxes for 2009.

If you don’t itemize, don’t worry

Many older taxpayers find they don’t have enough deductions to justify itemizing them, especially once they’ve paid off their mortgage. That’s not such bad news. In the first place, anyone over 65 gets an extra $1,400 ($1,100 each for spouses filing jointly) added to the $5,700 standard deduction ($11,400 for joint filers) they can take instead of itemizing. Here are a few mostly new, above-the-line deductions that filers may be able to add to the standard deduction:

Property taxes. You can deduct up to $500 ($1,000 for joint filers) of your state and local property taxes by claiming it on Form 1040. (If you do itemize, you can deduct the full amount of the property tax.) “This provision affects seniors most,” says Dustin Stamper, who works for the accounting firm Grant Thornton in Washington, D.C. “That’s because many older people own their homes outright and no longer have a mortgage interest deduction, but they still pay property taxes.”

Car taxes. If you bought a car between Feb. 17 and Dec. 31, 2009, you can deduct the sales tax on up to $49,500 of the car’s purchase price. You get this break even if you already took advantage of the Cash for Clunkers rebate program when you bought your car. This deduction phases out for incomes above $125,000 ($250,000 for joint filers.)

Homebuyer’s credit. You don’t have to itemize to get cash back if you bought a home last year, but the rules changed partway through the year and are complicated. If you already were a homeowner and bought a new principal residence after Nov. 6, 2009, you may qualify for a $6,500 credit. If you were a first-time homebuyer, there’s an $8,000 credit. In either case, you have until April 30, 2010, to sign a contract and take this homebuyer’s break on your 2009 tax return. Various income and home-value limits apply to different dates in 2009, so check the details at the IRS website to see if you qualify and find out how to claim your cash.

Teacher’s supplies. Did you spend your own money to buy crayons, decorations, calculators or books for your classroom? Even non-itemizers get a $250 dollar-for-dollar credit.

Cash for your troubles

If you lost your job, lost money in the stock market (and who didn’t, in 2008 or 2009?), got robbed or saw your house hit by a natural disaster, there’s a tax break for you.

Capital losses. If you sold any stocks, mutual funds or other securities for a loss in 2009, you can use that loss to cut your taxes. It can offset any capital gains you received, and up to $3,000 of ordinary income once you’ve zeroed out your gains. If you have losses left over from securities you sold in 2008, don’t forget to carry over any losses you weren’t able to use on your 2008 return. They’re still usable in 2009.

Jobless benefits. If you were unlucky enough to have qualified for them, the first $2,400 of your unemployment benefits were tax-free in 2009.

Casualty losses. Even if you don’t itemize, you can deduct losses due to thefts and natural disasters. You can find the list of federally declared disaster areas at the website of the Federal Emergency Management Agency. If your crisis made that list, you can deduct all of your losses (minus $500).

Bonus: If your property was damaged by this February’s monster East Coast snowstorms and is in a qualifying federal disaster area, you can take those losses on your 2009 return, reports tax research and consulting firm CCH.