In these troubling times we need all the help we can get.  But did you know the IRS may be able to help you during these economically challenging times?  Here are 10 things to know”. 

1. Recovery Rebate Credit: If you didn’t get an economic stimulus payment this past summer and didn’t file a tax return, you may be eligible for the Recovery Rebate Credit . See IRS.gov for details.

2. The Alternative Minimum Tax has been ‘PATCHED”. For 2008, the exemption amounts are $69,950 for married couples filing jointly and $46,200 for single individuals . More information is available at IRS.gov.

3. Cancellation of Debt income: If you have had or will have a home foreclosure, check out the tax rules at IRS.gov. Things may not be as bad as you think.

4. Commuting: If you ride your bike (bicycle) to work in 2009, it could be worth $20 a month, tax free from your employer. See IRS.gov. for more.

5. Deductions: The new additional standard deduction for non-itemizers can be as much as $500 or $1,000 if you are married, filing a joint return. Go to IRS.gov for details.

6. Election to Deduct Sate and Local General Sales Tax: You have an option when itemizing. Claim either State and local general sales taxes paid or state and local income taxes paid, but not both. IRS.gov has more.

7. Mileage: The standard mileage rate is changing from 59.5 to 55 cents per business mile as of Jan. 1, 2009. More information at IRS.gov.

8. Homebuyer Credit: The new “First Time Home Buyers Credit” is for a home purchased after April 8th, 2008 and before July 1st, 2009 and could be worth as much as $7,500. Do you qualify? See IRS.gov.

9. Residential Energy Property Credit: This credit has been re-instated for 2009 and is worth up $500 for up-grading your home with certain energy efficient items. See if you qualify at IRS.gov

10. Plug-in Electric Drive Motor Vehicle Credit: Buy a new plug-in electric car and get a credit of $2,500 or more. See IRS.gov about this today.
And one more for “tax credit”:

11. Record Keeping: Make sure you don’t omit or forget an item so you pay only the correct amount of tax – no more, no less. See IRS.gov for more details

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It’s not too late to take advantage of some opportunities to reduce your 2008 income tax bill.

For example, a new federal law establishes a tax credit of up to $7,500 for first-time homebuyers. The credit must be repaid over a 15-year period, functioning like a no-interest loan for those who qualify.“It is a nice way to get a little extra boost when you first purchase your home,” Stell said Monday.

Under the Housing and Economic Recovery Tax Act of 2008, the home must be purchased after April 8 of this year and before July 1, 2009. Homes bought after Dec. 31 would be eligible for the tax credit next year.

A homebuyer is considered a first-timer if he or she has not owned a principal residence for three years.
The credit is equal to 10 percent of a home’s purchase price, capped at $7,500.
For taxpayers earning more than $75,000, or $150,000 on a joint return, the credit is less.

The end of this turbulent economic year might also be a good time to think about selling some losing stocks, because such losses can offset capital gains that may have occurred before the economy headed south in recent months.  If there is a net capital loss, up to $3,000 of that offsets anything on the tax return, it can offset ordinary income, such as wages or salary. The rest is carried over to the following year.

Other last-minute tax-saving ideas:
For taxpayers who do not itemize, take advantage of an additional standard deduction for property taxes, up to $500 or $1,000 on a joint return. As of now, the deduction is available only for 2008 and 2009.

Buy a hybrid vehicle. More than 50 models through the 2009 model year qualify for an alternative motor vehicle tax credit of up to $3,000, if bought new by an original purchaser this year.

Donate to qualified charitable organizations. The fair market value of property you give to a qualified organization is generally tax-deductible for those who itemize. The IRS Web site has a “Charities and Nonprofits” link where taxpayers can search to see if a particular group qualifies. A tip: If an organization accepts donations by credit card, taxpayers can charge a contribution in 2008, but postpone paying for it until next year.

The Hope (up to $1,800 per student) and Lifetime Learning (up to $2,000 per return) education credits help offset tuition costs for those whose modified adjusted gross income is less than $58,000 or $116,000 on joint returns. Both credits are generally allowed for qualified expenses for academic periods in 2008 or during the first three months of 2009, which could make prepaying tuition a good idea. The reinstated higher-education tuition deduction, up to $4,000, covers the same time periods.

Open or contribute to a traditional IRA, for a tax deduction of up to $5,000, or $6,000 for taxpayers 50 years of age or older. Stell said the amount of the deduction may be less if an individual is covered by an employer retirement plan or if income exceeds $63,000 ($105,000 on joint returns or $10,000 if married filing separately). IRA contributions can result in a deduction for 2008 even if made next year, as long as they are made no later than April 15, 2009.

In addition, a saver’s credit helps offset part of the first $2,000 that employees contribute to IRAs, 401(k)s and other workplace retirement plans. Relevant income levels for the saver’s credit are as follows: married filing jointly, up to $53,000; single or married filing separately, $26,500; head of household, $39,750.

Congress has also reinstated a deduction of up to $250 in expenses for books and classroom supplies paid by eligible educators.