Irs Tax Laws

Every year, the IRS makes some changes to the US Federal income tax laws. The recent changes in IRS tax laws have been greatly influenced by the recession which occurred towards the end of 2008. Tough economic times such as this recession have meant that taxpayers need to pay more attention to these chances because they could affect your finances quite a bit. These are some of the changes that you need to keep track of.

Lower-income capital gains tax has been removed

This can essentially be considered a tax break. If you were single, and had a taxable income less than $32,000 you would have to pay 5% on that income. Married couples with a combined income less than $65,000 had to do the same thing. But that percentage has gone from 5% to 0%. This also changes a few laws in business. With this change, you can avoid paying your capital gains tax if you happen to sell capital assets such as stocks, bonds and real estate for a profit.

Tax credit changes for first-time home buyers

First time home-buyers can benefit from a new law regarding private mortgage insurance or PMI. If you took out your first mortgage after January 1, 2007, and set aside less than 20% for the house, then you probably need to pay PMI. However, changes in IRS tax laws have deducted this payment in full so that you will get all of it back.

Recovery rebate credit

Many people were unable to gain any advantage from the economic stimulus payments that were put into action by President Bush a few years ago. If you happen to be one of those people, all is not lost. The new IRS tax laws allow you to still make use of it. In order to find out whether or not you are still eligible, you can use the Recovery Rebate Credit Calculator which is found at the IRS website online.

Late tax filing has an increased penalty

This particular law is different from the previous ones as it does not benefit the taxpayer in any way. This law is there to make sure that procrastination pays. If you file your tax returns more than sixty days after the specified deadline, then the penalty is $135, or a payment of 100% of the unpaid tax, whichever is the lesser amount. To avoid this penalty you simply need to file your fax returns in on time.