Numerous new and expanded deductions and credits came into being in 2009 for a broad cross-section of taxpayers. The following is a summary of some key changes as of December 2009:

Home Tax Credit: Tax Credit of up to $8,000 for First-Time Home buyers and $6,500 for Existing Homeowners. Now, existing home buyers are eligible to receive a tax credit of up to $6,500 if they buy a replacement home by June 30, 2010.

• If you purchased a primary residence in 2009 before December 1, 2009, and are a Afirst-time@ home buyer, you can qualify for a tax credit equal to 10 percent of up to $80,000 of the purchase price.
• To be eligible, you must not have owned a residence in the United States in the previous three years.
• The credit is refundable to the extent it exceeds your regular tax liability, which means that if it more than offsets your tax liability, you will get a refund check. But it does not offset the Alternative Minimum Tax.
• The credit for 2009 purchases generally doesn't have to be paid back. But you will have to repay it if you sell the house within three years of the date you bought it.

In November 2009, the program was broadened to include existing homeowners, meaning those who have lived in the same principal residence for any five-consecutive-year period during the past eight years.

• Homeowners are eligible for a credit of up to $6,500 if they buy a replacement home to use as their principal residence. They are not required to sell or dispose of their current home, but the new home must become their principal residence. To be eligible, home buyers must buy, or enter into a binding contract to buy, a replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010.
• In addition, income limits were expanded from earlier versions of the credit. Home buyers who file as single or head-of-household taxpayers can claim the full credit if their modified adjusted gross income (MAGI) is less than $125,000. For married couples filing a joint return, the combined income limit is $225,000.
• Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit. The credit is not available for single taxpayers whose MAGI are greater than $145,000 and married couples with a MAGI over $245,000. Also, homes costing more than $800,000 are not eligible for the credit.

Capital Gains Tax Rates: The 15 percent maximum tax rate on long-term capital gains for taxpayers remain the same in 2009 and 2010 but are scheduled to increase in 2011.

Roth IRA Conversions: Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to switch a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate but may spread the tax due over two years. Half the tax will be due in 2011, and the remaining half will be payable in 2012.

• This should be considered by anyone who intends to leave the money in the ROTH for many years or who anticipates being in a low tax bracket in 2011 and 2012.
• Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which does not have income limits for contributions) and immediately convert to a Roth.

Federal Education Credit: This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials, books, computers and boarding are added to the list of qualified expenses. Here are some of its key features:

• Tuition, related fees and required course materials, such as books, generally qualify. In the past, books usually were not eligible for education-related credits and deductions.
• The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
• The full credit is available for taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less ($160,000 or less for filers of a joint return). The credit is reduced or eliminated for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
• Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student.
• There are some post-secondary education expenses that do not qualify for the American Opportunity Credit. They include expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college. That's because the credit is only allowed for the first four years of a post-secondary education.

Energy Improvements Tax Credits: People who weatherize their homes or purchase alternative energy equipment may qualify for either of two expanded home energy tax credits: the non-business energy property credit and the residential energy efficient property credit.

Non-business Energy Property Credit: This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. This means that a homeowner can get the maximum credit by spending at least $5,000 on qualifying improvements.

• Homeowners must make the improvements to an existing principal residence; this tax credit is not available for new construction. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs are also eligible for the credit, though the cost of installing these items does not count.

Residential Energy Efficient Property Credit: Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.

• Qualifying property purchased for new construction or an existing home is eligible for the credit. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.
• Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer's tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer's Web site or the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer's certification is different from the Department of Energy's Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

New Vehicle Purchase Incentive: New car buyers can deduct the state or local sales or excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles.

Child's Investment Income: Children's investment income in excess of $1,900 is taxed at the parent's rate.

Unemployment Benefits: Every person who receives unemployment benefits can exclude the first $2,400 of these benefits on their return.