Tax Break #1: First-time Home Buyer Credit Background information The first-time homebuyer credit is one of the most popular tax incentives in recent years. When originally enacted, the credit was limited to $7,500 ($3,750 for a married taxpayer filing separately) and it acted like a loan, requiring taxpayers to repay it over 15 years. Extension of the credit The credit was set to expire November 30, 2009. The new law passed last week extends the credit to April 30, 2010.

Expansion of the credit The new law expands who is eligible for the credit in 2 different ways.

#1: No longer limited to first-time home buyers The credit was limited to first-time homebuyers. #2: Income limits raised The new law raises the income phase-outs for the credit. Previously, the credit phased out for single individuals with modified adjusted gross income (MAGI) between $75,000 and $95,000 and for married couples filing joint returns with MAGI between $150,000 and $175,000. Eligible taxpayers can elect to treat the purchase as having occurred in 2009 for purposes of claiming the credit on your 2009 tax return. Without this special rule, you’d have to wait until 2011 to receive your credit when your 2010 tax return is filed.

Tax Break #2: Net Operating Loss Carryback Background information A taxpayer can use a net operating loss (NOL) to obtain a refund for taxes paid in prior years. Extension of the NOL rules The expanded carryback period was originally only for 2008 NOLs. The new law extends the expanded carryback period to 2009 NOLs.

If a taxpayer elected under the 2009 Recovery Act to carryback 2008 NOLs, then that taxpayer may make the election for an additional year. Expansion of the NOL rules The new law expands who is eligible for the expanded carryback period by making all businesses eligible and not just small businesses.