Here are a few of my favorite 2009 tax deductions from the article to pay close attention to. Be sure to talk with your tax advisor about these:

• State Sales Tax: State sales tax can be deducted, especially in those states who do not have an income tax. There is a standard deduction which works for most people. However, if you made a big purchase in 2009 like a car or boat, you are good to go. Homebuilding material is also deductible.
• Job Moving Expenses: If you moved more than 50 miles for your first (or any) job, you can deduct moving expenses. This includes mileage if you drove yourself, parking fees, and tolls. With 2009 unemployment being so high, those who were able to get a job should take advantage of this tax deduction
• 2008 state tax: If you owed 2008 state income tax, then you can claim this amount on your 2009 taxes.
• Refinancing Points: You can deduct a percentage of your points paid for your home if you refinanced in 2009.
• Make Work Pay: Part of the economic recovery act(s) of 2009, this was a reduction in payroll taxes. Be sure to claim for yourself and your spouse if married, in order to get the 2009 tax deduction of $400 or $800 dollars

Any other tax deductions that you can think of that can be overlooked? Good luck to all in the 2009 tax season.

Remember that taxes don’t have to be this hard. Have you heard of the FairTax? This would eliminate the income tax system and instead replace that revenue with a retail sales tax (completely different than the VAT). Having the FairTax would simplify the tax system (you only pay taxes on new retail goods) and generate income from those who avoid the current system (illegal immigrants, black market) and bring the money currently overseas back to the US.

You can read more about the FairTax here.

So, what can you do about it? Well, you can either agree with what you are assessed, or you can try the following:

1. Contact Your County Assessor: These guys set the prices, and you can file an appeal through them. Be warned you may have to take a day off and go to their office directly.
2. Know Your Neighbors: Keep track of the costs of houses selling in your area. Most counties have online search tools, or you can use other websites to help. Zillow is one that is useful in my neck of the woods. Having a list of similiar selling prices is great ammunition to fight the claimed value from the county.
3. Be Careful: It’s not out of the question that they come back and say the value is even higher. There is a difference between market value and property value. Assessments tend to be a little lower than what the selling price could be.

If you are feeling the pinch of government trying to squeeze an extra dollar (or more) out of you through your property taxes, take action! Don’t be afraid to challenge their estimates or go up against the tax man. Revenues are being lost and raising tax values on property is a very easy way for them make up those losses.

I think I’ll spend the day drinking tea.

So what am I going to do with all that loot? Buy lottery tickets of course! Isn’t that the soundest investment one can make today?

Actually, this money has already been earmarked. Unfortunately a good portion of the “credit” went to pay for my taxes due. I owed money this year, so this loan is actually covering some of that cost. Being somebody who doesn’t like the idea of borrowing money to pay debts, this was an interesting dilemma for me. Ultimately I chose to take the free loan. Who knows, maybe our elected officials will get worried come election time and they’ll forgive this home buyer’s credit all together. Stranger things have happened.

The rest of the money is going to fuel this struggling economy. The roof on our house needs to be replaced and so this summer I’m going to get someone to fix it. Hopefully I’ll save some money and demo the current roof myself. Roof replacements are pretty expensive and I knew when the house was purchased that it would be the second major repair (first was the electric panel). I’ve been saving additional funds monthly to help make up the difference. I’m also looking into what type of roof to install. With the current green movement and my location, it makes sense to put some sort of eco-friendly roof on the house.

Any big purchases or plans with your tax refund? Anyone still owe and waiting till the last moment to pay your share?

• Can deduct State, local and excise taxes on new car purchases.
• Purchase must be made between February 17th, 2009 and December 31st, 2009. One day before or after and no deductions.
• Includes light trucks, motorcycles, and motor homes.
• Deduction is available to filers regardless on how they handle their deductions (you don’t have to itemize to get the deduction).
• Income phase outs occur at MAGI’s of 125k-135k for Singles and 250k-260k for Joint filers.
• No mention of having to buy American or vehicle needing to be hybrid or electric (hooray for choice!).

If you actually pay taxes, earn less than the phase out income, and are in the market for a new car, then this is a good deal.  Just another way to take advantage of the current state of the economy. With taxable deductions and many manufacturers giving other incentive packages for purchasing, you could walk away with a great bargain.

Just remember that with all these incentive packages, the resale value of your car will be lower and have more competition when selling. Of course, all of you drive your cars into the ground anyway so the resale value doesn’t matter, right? Right?

But, did you know that if you if you spend all your FSA money and get fired/laid off from your employer, you do not have to pay the difference? For example, let’s say you set up a FSA account for $2000 dollars for the year 2009. That equals to $167 a month out of your paycheck throughout the year. Now, in February you had LASIK surgery on your eyes for $2000, essentially spending all the money in your Flexible Spending Account. Then on March 1 you get the bad news your employer is letting you go. So far, you’ve only paid $400 of that $2000 FSA. Guess what? That’s $1400 free money! You are not responsible for having to pay that money back.

If you are contributing to a Flexible Spending Account (FSA) and are worried about losing your job, get out there and spend that account money now. Don’t put off a surgery or getting presciption glasses any longer. Take advantage of a system that takes advantage of you (if you don’t spend). If you were just laid off, you usually have 30 days (sometimes up to 45) to make insurance claims. The bad news is that after you’ve been let go, you can only benefit up to the limit of what you’ve paid into the FSA.

Playing the lottery has been called the stupid tax. Your chances of winning the lottery are insanely high. They get even crazier when the estimated payouts skyrocket like they have if you want to be the sole winner. The probability of winning is over 175 million to 1. Think of it this way, you have a better chance of – being audited by the IRS (175:1), becoming a pro athlete (22,000:1), dying from drowning (79,065:1), being killed by lightning (2,320,000:1) than you do of winning the lottery. it’s called stupid because from the odds, it is nearly impossible to win. You’d have to be an idiot to play.

But people do win and I played the Mega Millions Lottery anyway. I gave $2 to the cause on Tuesday. I think you are only stupid if you look at this as your investment strategy rather than an entertainment expense. For those interested, I got 2 out of 6. Sorry, I’ll have to keep up this blog for at least another week.

Do any of you get your W2 online? Wish you could? See any drawbacks?

Looking for tax tips? how about here, here, and here for starters.