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Hiring Incentives to Restore Employment (HIRE) Act

The HIRE Act provides employers with an exemption from the employer’s 6.2% share of social security tax on wages paid to qualifying employees, effective for wages paid March 19, 2010 through December 31, 2010.

Employee may contact IRS directly about missing Form W-2

An employee may contact the IRS directly if an employer is not cooperative in providing a new or corrected Form W-2. The IRS will then send a letter to the employer, asking the employer to give the Form W-2 to the employee within ten days.

American Opportunity Credit

The American Opportunity credit modifies the existing Hope Credit for tax years 2009 and 2010. A credit of up to $2,500 is allowed for qualified education expenses. The credit is: 100% of the first $2,000 of qualified expenses and 25% of the next $2,000 paid.

40% of this credit is refundable.

Haiti Earthquake Relief

Taxpayers may claim a charitable contribution deduction on their 2009 tax return for cash donations made for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. These contributions must be made by March 1, 2010 and are limited to cash contributions.

Social Security Numbers May Be Truncated

The IRS recently launched a pilot program to help combat identity theft. For calendar years 2009 and 2010, filers of 1099 series forms may truncate a payee's Social Security Number or Employer Identification Number to just the last four digits. The filer must still report the full identification number on forms sent to the IRS for processing.

Making Work Pay Credit

In 2009, the making working pay credit is the lesser of (1) 6.2% of an individual's earned income, or (2) $400 ($800 for a joint return). It is phased out for higher income taxpayers.

$8,000 First-Time Homebuyer Credit

The first-time homebuyer credit is a refundable tax credit equal to the lesser of 10% of the purchase price of a principal residence or $8,000. To qualify for the credit, the taxpayer must complete the purchase of an eligible home before December 1, 2009.

Gift Taxes

To avoid income and estate taxes, shift your income or assets to other family members with lower brackets and wealth. Avoid gift tax by limiting gifts to $13,000 per person this year. ($26,000 if your spouse agrees.)

2009 IRA CONTRIBUTION AMOUNTS

The contribution limits for 2009 are: $5,000. IRA owners age 50 or older can make an addtional $1,000 "catch-up" contribution. The deadline to contribute to an IRA is April 15 after the end of a tax year.