Tax Considerations for 2009

My building is putting up their holiday decorations this week even though the pumpkins are still in the lobby! While I believe it is too early to be thinking about the holidays, I do want you to think about your taxes. The government has put into place a number of tax-saving laws for 2009 that require you to act before the year is up.

Some to consider are:

• You can use assets in a 529 without penalty to purchase computers for educational use.
  
  
• If you do not contribute to a Roth IRA because you are above the income limits, you can make a non-deductible IRA contribution this year and convert it to a Roth next year when the income limitation for conversions is no longer in effect.
  
  
• You can deduct more educational expenses--the American Opportunity Tax Credit has grown from $1,800 to $2,500.
  
  
• There are tax credits for energy efficient home improvements, alternative energy products and hybrid vehicles.
  
  
• There are also special provisions for retirement, small business stock ownership, and sales tax for new car purchases.

For more details on these, and some end-of-year tips on balancing your investments, click on Tax Tips 2009.

Two mortgage options to consider:

1. 2009 was the year of the refinance. Normally any points you paid on a refinance must be deducted over the life of the loan. However if your refinance replaced a mortgage that was itself a refinance you can deduct the balance of the points you paid on the original refinance.
   
   
2. If you pay your January mortgage payment in December, you accelerate January's interest into your total 2009 interest deduction. Next year you will have less interest to deduct, so carefully consider your situation.

Of course, my expertise is mortgages, not tax law, so make sure you check with your tax advisor first!