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If you are still doing your taxes once a year, you are losing out on a valuable opportunity to reduce your burden. A smart approach is to do a test run mid-year so that you can take advantage of strategies while there is time for them to make an impact before you submit your actual return. Here are some possible tax-saving ideas that are worth knowing more about, should they apply to you.

If you are a first time homebuyer this year, you will definitely want to look into the tax break that is available for the first time. Under the new federal stimulus plan, there is now a 10% tax credit on the purchase of a new home, up to an $8000 maximum, effective for all of 2009.

Good news is that the term “first time home buyers” is liberal enough to include anyone who hasn’t owned a home as a primary residence for at least three years. In fact, this tax credit can be redeemed immediately, allowing you to amend your 2008 returns for a possible refund.

There are some restrictions, of course. You must have an adjusted gross income of between $75,000 and $95,000 for single filers, and from up to $150,000 to $170,000 for joint filers.

New car buyers are also being given incentives. The sales tax on the purchase of car is deductible for cars bought between Feb. 16, 2009 and January 1, 2010. The limits are for purchases up to $49,500 with incomes up to $125,000-$135,000 for single filers and $250,000-$260,000 for joint filers.

For retirees, there are also new tax breaks worth noting. If you are over 70 ½, the required minimum distributions has been suspended, even for those who are receiving withdrawals as beneficiaries. In addition, the annual gifts per person gift tax frees are now $13,000 per recipient. The traditional strategies also still apply, such as charitable donations.

Other savings can be derived by looking at maximizing retirement contributions such as 401k, 403b and IRA deposits to deductible limits. As well, write off worthless securities and offset losses with gains in your portfolio.

Meanwhile, for those whose income has declined or who are working sporadically, adjust your tax withholding and estimates to allow for your reduced income.

Right now it’s half time for the 2009 tax year. This offers the best chance to take advantage of tax breaks, credits and strategies before the clock runs out.

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Tags: 401k, 403(b), federal stimulus bill, first time home buyers, ira deposits, lee rosenberg, tax savings, tax strategies, Taxes

About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.

This entry was posted on Wednesday, July 1st, 2009 at 7:53 am and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.