Saver’s Credit: Lower-income individuals can get a federal income tax credit worth up to $1,000 off their 2010 taxes by contributing at least $2,000 to a qualified retirement account. Contributions for 2010 can be made as late as April 15, 2011. Married couples can get a credit worth up to $2,000 if each spouse contributes at least $2,000 to his and her separate retirement accounts. The credit ranges from 10% to 50% of the amount you contribute. You cannot claim the credit if your AGI is higher than $27,750 for single filer and $55,000 if joint filer.
Non-Business Energy Credit: The tax credit of up to $1,500 for residential energy improvements such as energy efficient windows, hot water heater or insulation material was set to expire after 2010. It was extended through 2011. However, the new law reduces the maximum credit to $500 and there are further restrictions.
Residential Energy Efficient Property Credit: The credit is 30% on qualifying property and includes solar electric property and solar water heating property. You can refer to IRS Form 5695 for additional instructions or go to www.energystar.gov. The credit is not available for property placed in service after December 31, 2016.
Plug-In Electric Vehicle Credit: This credit is permanent but phase outs are triggered for a manufacturer’s vehicles when at least 200,000 vehicles manufactured by that company have been sold. The maximum federal credit is $7,500 for a qualifying vehicle. 2011 Nissan Leaf and 2011 Chevy Volt are among the vehicles eligible for credit. There is $5,000 California rebate on 2011 Nisan Leaf and 2013 Chevy Volt. One has to apply online for the California rebate.
Earned Income Tax Credit: Eligible low-income workers are able to claim a refundable Earned Income Tax Credit. The amount depends upon the taxpayer’s income and number of qualifying children. Married individuals filing separately do not get this credit. The most one can get is $5,666, with three or more qualifying children. You may be able to take credit if you have:
• Three or more qualifying children and you earn less than $43,352 ($48,362 if filing jointly)
• Two qualifying children and you earn less than $40,363 ($45,373 if filing jointly)
• One qualifying child and you earn less than $35,535 ($40,545 if filing jointly)
• No qualifying child and you earn less than $13.460 ($18,470 if filing jointly)
The maximum amount of investment income one can have and still get the credit is $3,100.
Making Work Pay Credit: Eligible individuals are allowed a credit equal to the lesser of 6.2% of the taxpayer’s earned income or $400. This credit is phased out for taxpayers with modified adjusted gross income in excess of $75,000 or $150,000 for married couples filing jointly.
For any additional questions, please go to www.irs.gov
Parveen Maheshwari is a Certified Public Accountant. He can be reached at 650-340-1400 or firstname.lastname@example.org