2009 Tax Return Forms and IRS Schedules for Claiming Stimulus Tax Breaks Like the Home Buyer Credit, New Car Deduction and Energy Efficiency Credits

This article was last updated on February 5

Many Americans will be eligible for claiming one or more of the economic stimulus tax credits, deductions and/or payments passed in 2009. Claiming these stimulus tax breaks require special forms and supplementary schedules, which have been recently released by the IRS. These new forms and schedules need to be filed with your tax return (Form 1040), and include:

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Use Schedule M for claiming the Making Work Pay tax credit. The making work pay tax credit was paid out via adjusting federal withholding limits in your paycheck (you should have seen a small increase in your paycheck in 2009). But even if your federal income tax withholding is reduced during 2009 because of the credit, you must claim the credit on your tax return to benefit from it.

Government retiree credit. You can take this credit if you receive a pension or annuity payment in 2009 for service performed for the U.S. Government or any U.S. state or local government (or any instrumentality of one or more of these) and the service was not covered by social security. The credit is $250 ($500 if married filing jointly and both you and your spouse receive a qualifying pension or annuity). However, you cannot take the credit if you receive a $250 economic recovery payment (see below) during 2009. If you file a joint return, both you and your spouse receive a qualifying pension or annuity, and both of you receive an economic recovery payment, no government retiree credit is allowed; if only one of you receives an economic recovery payment, the credit is $250.

Generally, you will use new Schedule M (Form 1040A or 1040) to figure both the making work pay credit and the government retiree credit. Both credits are refundable, which means they are treated like payments you made and may give you a refund even if you had no tax withheld from your pay or your pension. If you are filing Form 1040EZ, you can take the making work pay credit on that form and do not have to file Schedule M. If you want to figure now the amount you can expect from these credits, see Worksheet 2-9 in Publication 505, Tax Withholding and Estimated Tax.

New and Existing Home Buyer Credit – For qualifying purchases, taxpayers have the option of claiming the credit on either their 2009 or 2010 return using the newly revised Form 5405. Taxpayers claiming the credit on their 2009 returns, will not be able to file electronically because of the added documentation requirements, but instead will need to file a paper return by using the new version of Form 5405. A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the 2008 version of Form 5405. 

New Car Deduction : In 2009, you can deduct the state or local sales and excise taxes imposed on the purchase of a qualified motor vehicle after February 16, 2009, and before January 1, 2010. A qualified motor vehicle includes a passenger automobile, light truck, or motorcycle, the original use of which begins with that purchaser and that has a gross vehicle weight rating of 8,500 pounds or less. The amount of tax you are able to deduct is limited to the tax that is imposed on the first $49,500 of the purchase price of the vehicle. The deduction is phased out over a $10,000 range that begins when modified adjusted gross income is more than $125,000 ($250,000 if married filing a joint return). No deduction is allowed when modified adjusted gross income is equal to or more than $135,000 ($260,000 if married filing a joint return). The new deduction can be used to increase the amount of your standard deduction or you can take it as an itemized deduction (if you are not electing to take the state and local general sales tax deduction). Use Schedule L, supplement to form 1040, to claim the sales tax deduction. You can also use schedule L to claiming the additional $500 or $1,000 tax deduction for property tax paid or for a net disaster loss (together with Form 4684).

Residential Energy Efficient Property Credit (use Form 5695) You may be able to claim a non business energy property credit of 30% of the cost of certain energy-efficient property or improvements you placed in service in 2009. This property can include high-efficiency heat pumps, air conditioners, and water heaters. It also may include energy-efficient windows, doors, insulation materials, and certain roofs. The credit has been expanded to include certain asphalt roofs and stoves that burn biomass fuel. The total amount of credit you can claim in 2009 and 2010 is limited to $1,500.

Use Form 8863 to claim the Education Credits (American Opportunity, Hope, and Lifetime Learning Credits). You may be able to take a credit of up to $2,500 for qualified education expenses paid for each student who qualifies for the American opportunity credit. This credit equals 100% of the first $2,000 and 25% of the next $2,000 of qualified expenses paid for each eligible student. The amount of your credit for 2009 is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). To claim the Hope credit in Part II of form 8863, you must be claiming this credit for at leas
t one student attending an eligible educational institution in a Midwestern disaster area and choose not to claim the American opportunity credit for any student in 2009.

Alternative Motor Vehicle (hybrid and diesel cars) Form 8910 should be used to claim the qualified hybrid vehicle credit as well as for vehicles qualifying for other provisions of the alternative motor vehicle credit. If the qualifying hybrid vehicle is purchased for business use, the credit for the business use of a qualifying hybrid vehicle is reported on Form 3800, General Business Credit. For qualifying hybrid vehicles acquired for personal use, the credit is reported on the appropriate line of the taxpayer’s individual Income Tax Return (Form 1040)

The economic stimulus recovery payment – also known as the $250 social security payment – you received during 2009 is not taxable. These $250 payments are being made to most people who receive social security benefits, supplemental security income (SSI), railroad retirement benefits, or veterans disability compensation or pension benefits. If you are married and you and your spouse both meet these requirements, each of you may get a $250 payment. If you are entitled to a payment, you will get it automatically. You do not need to apply for it.

Under a new law, certain cash contributions for Haiti Relief can Be deducted on your 2009 Tax Return by must itemizing deductions on Schedule A (Form 1040) or Schedule A (Form 1040NR). The contributions must have been made after January 11, 2010, and before March 1, 2010, for the relief of victims in areas affected by the January 12, 2010, earthquake in Haiti. Contributions of money include contributions made by cash, check, money order, credit card, charge card, debit card, or via cell phone. When preparing your 2009 tax return, you may complete the forms as if these contributions were made on December 31, 2009, instead of in 2010.

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3 thoughts on “2009 Tax Return Forms and IRS Schedules for Claiming Stimulus Tax Breaks Like the Home Buyer Credit, New Car Deduction and Energy Efficiency Credits

  1. 2009 Home Stimulus – the program indicates “when qualifying for the $8000 credit, the individual must remain in the home for 3 years.” I’m looking for clarification on the term “3 years”. Is this 3 years from the closing date? We moved into our home 12/24/2009. We’re looking to downsize and move in 2012. Does this length of time qualify for the 3 year period?

    1. The credit has now expired and even it you did qualify it is no longer being paid out. So the question is moot at this point.

  2. Has the IRS formally added comment about whether or not the cost of the material for a ‘radiant barrier’ can be considered for the tax credit in the same way that insulation can be? It seems like a no-brainer to me but I’ve not ready anything current about it other than ‘waiting on IRS to comment’.

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