There are many tax incentives set to expire. As a result, accelerating qualifying expenses into 2009 to take advantage of these incentives, rather than incurring them early in 2010, may make a significant difference in your overall tax bill. Some noteworthy changes in 2009 include the following:
• New vehicle deduction - The new economic stimulus law includes a special tax provision
designed to generate sales of motor vehicles. It applies to qualified vehicles purchased after
February 16, 2009.
• Residential Energy Credits - Take advantage of the energy tax credit for installations in
your home. The new economic stimulus law enhanced the residential energy credit for
installations in 2009.
• For businesses, bonus depreciation and enhanced "section 179 expensing," both designed
to temporarily encourage business to make capital investments, likely will be headed for
extinction at the end of 2009.
• Education Tax Credits - Qualifying taxpayers can now deduct 100% of the first $2,000
of tuition and related expenses and 25% of the next $2,000 of expenses for the first four
years of postsecondary education.
• Unemployment compensation - First $2,400 excluded from federal taxation in 2009.
• Cash for Clunkers - Excludable for federal tax purposes but potentially taxable in
California.
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