Helpful Resources
Tax Checklist
Get It Together
Expanded Kiddie Tax
Job Expenses
Student Loan Interest
Recovery Rebate Credit
Earned Income Tax Credit (EITC)
First-Time Homebuyer Credit
Child and Dependent Care Tax Credit
Homestead Property Tax Credit
Michigan Home Heating Credit
Claiming Your Mileage for 2008
Tax Relief for Midwest Disaster Areas
Economic Stimulus Payments are Tax Free
Medical Expenses and Health Savings Accounts
Charitable Donations
Home Office Tax Deduction
Need Help Preparing Your Taxes?
The VITA Program offers free tax help to low-to moderate-income people who cannot prepare their own tax returns. To locate the nearest VITA site, call (800) 829-1040.
AARP provides free tax help to people age 60 and older. To locate the nearest AARP Tax-Aide site, call (888) 227-7669.
Opt to E-file
E-filing your tax return will help you get your return more quickly, sometimes up to eight weeks faster. You can also opt to have your refund deposited electronically into your bank account.
Depending on your income and the difficulty of your tax return, e-filing may be free; otherwise it is usually rolled into the fee charged by the tax program or office.
Click here to download a checklist to help you get organized?
Please Note:
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There’s nothing worse than finally sitting down to do your taxes, only to find out that you’re missing some important documents or receipts. Taking the time to get organized will save you time and frustration. Below are some tips to help make the process easier.
GET SERIOUS: Schedule a time to work on your taxes.
GET ORGANIZED: Compile all of your W-2 forms, 1099s and other tax-related forms together – it will make it easier for you or your tax preparer to calculate your return.
GET INFORMED : Make sure you know all the credits and exemptions you qualify for and make sure you take them.
GET FILED : Decide how you are going to file – e-file or paper.
GET RECEIPTS: If you decide to mail in your return, always send it to the government through certified mail and request a return receipt. If you can’t prove you sent your return and it doesn’t show up, legally it wasn’t filed.
GET AHEAD: Start organizing your materials to file your 2009 taxes next year. The better you organize throughout this year, the less of a burden it will be next tax season.
Credits and Deductions
The kiddie tax has been expanded to apply to any child who is under 19 years old or is a full-time student over the age of 18, but younger than 24. However, the kiddie tax will not apply to children who have earned income that exceeds half of their support for the year.
You can deduct education and training expenses for your current job as long as your employer doesn’t reimburse you for them. Job-hunting expenses – including mileage and travel, the cost of preparing and mailing resumes, and employment and placement agency fees – are also deductible. If you’re a teacher, don’t forget to include teaching-related expenses for a small tax break.
You can deduct up to $2,500 in student loan interest payments every year, for the lifetime of the loan. If you qualify, your lender will send you a Form 1098-E. The amount of interest you paid on your student loans for the year will be reported in Box 1 on the form.
The Recovery Rebate Credit is a special one-time benefit that most people received last year in the form of an Economic Stimulus Payment. But people who did not receive the maximum amount of the Economic Stimulus Payment or whose circumstances have changed may be eligible now, including:
- Individuals who did not receive an economic stimulus payment.
- Those who received less than the maximum economic stimulus payment in 2008 – $600 per taxpayer; $1,200 if married and filing jointly – because their qualifying or gross income was either too high or too low.
- Families who gained an additional qualifying child in 2008.
- Individuals who were claimed as a dependent on someone else’s tax return last year, but who cannot be claimed as a dependent on this year’s tax return.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) helps working families with incomes below $41,646 and childless workers with incomes under $15,880. Generally, you must have earned income as an employee, independent contractor, farmer or business owner to qualify. The federal government offers up to $4,824 for residents with two or more qualifying children; $2,917 with one qualifying child; and $438 with no qualifying children. For the first time this year the State of Michigan also offers a credit of 10 percent of the federal EITC amount.
A first-time homebuyer is allowed a refundable tax credit equal to the lesser of $7,500 or 10 percent of the purchase price of the home. In order to receive the credit, the home must have been purchased
on or after April 9, 2008, and the homebuyer must have an income of no more than $75,000.
Child and Dependent Care Tax Credit
If you pay someone to care for your child (under 13) or a dependent needing care, such as an elderly parent, you may be able to claim a tax credit for those expenses. The Child and Dependent Care Credit is
a percentage of the expenses, ranging from 20 to 35 percent, depending on your income.
Michigan’s Property Tax Credit is a way the State of Michigan helps you pay some of your property taxes if you are a qualified Michigan homeowner or renter. You may claim a property tax credit if all of the following apply to you:
- Your permanent home is in Michigan.
- Your household income is less than $82,650.
- You were a resident of Michigan for at least 6 months during the year.
- You own or rent and resided in a Michigan homestead on which property taxes were levied.
The State of Michigan offers a Home Heating Credit to help low-income residents pay their heating costs. Most residents who apply for the credit will receive an energy draft to give to their heating provider as payment toward current and future heating bills.
To apply for the 2008 credit you must fill out Form MI-1040CR-7 by September 30.
To have a Home Heating Credit form and instruction booklet mailed to you, call (800) 827-4000. Forms and instructions also are available at Treasury offices and at most public libraries, Northern Michigan post offices, Michigan Secretary of State branch offices, and Department of Human Services (DHS) branch offices. You can also e-file the form by visiting michigan.gov/heatingassistance.
Claiming Your Mileage for 2008
The standard mileage rate for business use of a car, van, pick-up or panel truck is 50.5 cents per mile from Jan. 1, 2008, to June 30, 2008. The rate is 58.5 cents for each mile driven from July 1 to Dec. 31.
From Jan. 1, 2008, to June 30, 2008, the standard mileage rate for the cost of operating a vehicle for medical reasons or as part of a move is 19 cents per mile. The rate is 27 cents from July 1 to Dec. 31
The standard mileage rate for using a car to provide services to charitable organizations is 14 cents a mile.
Tax Relief for Midwest Disaster Areas
Special tax relief related to severe storms, tornadoes or flooding occurring after May 19, 2008, and before Aug. 1, 2008, is available to individuals in portions of Michigan that were affected by these disasters. Tax benefits include:
- An additional exemption amount for persons who provided housing for someone displaced by these disasters.
- The option to use 2007 earned income to figure a 2008 earned income tax credit (EITC) and additional child tax credit.
- An increased charitable standard mileage rate for use of a personal vehicle for volunteer work related to these disasters.
- Special rules for withdrawals and loans from IRAs and other qualified retirement plans.
Economic Stimulus Payments are Tax Free
Economic stimulus payments are not taxable, and they are not reported on 2008 tax returns. However, the stimulus payment does affect whether a taxpayer can claim this year's Recovery Rebate Credit and how much credit he or she can get. People who did not receive the maximum amount of the Economic Stimulus Payment or whose circumstances have changed may be eligible for this year's Recovery Rebate Credit, including:
- Individuals who did not receive an economic stimulus payment.
- Those who received less than the maximum economic stimulus payment in 2008 – $600 per taxpayer; $1,200 if married filing jointly – because their qualifying or gross income was either too high or too low.
- Families who gained an additional qualifying child in 2008.
- Individuals who were claimed as a dependent on someone else’s tax return last year, but who cannot be claimed as a dependent on this year's tax return.
Medical Expenses and Health Savings Accounts
If you had substantial medical and dental expenses – including both health insurance premiums and out-of-pocket expenses not covered by insurance for you and your dependents – you can deduct the amount that exceeds 7.5 percent of your adjusted gross income.
If you have a qualified Health Savings Account (HSA), you can deduct your contributions to the account, and you don’t have to pay tax on any interest you earn from the account.
You can deduct any cash or non-cash contributions you make to a qualified nonprofit organization. For non-cash contributions over $250, you must have a receipt or acknowledgement from the nonprofit organization. For non-cash contributions over $500, you have to file an extra form with your tax return, Form 8283.
If you use a portion of your home exclusively for business purposes, you may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, your mortgage or rent, and depreciation.