Action heroes are lousy tax advisers

More tax trouble in Tinseltown this week. (That sounds like a line out of an old movie that I normally wouldn't admit liking as much as I do.) The Los Angeles Times and others are reporting that the IRS has filed a $79,000 tax lien against California Gov. Arnold Schwarzenegger. He's disputing the claim and insists he's paid his taxes.

Lots of celebrities seem to get into tax jams, of course. Wesley Snipes, who allegedly didn't file returns for a few years, is in a big one. Willie Nelson used to be, though that apparently is behind him now. Olympic swimming gold medalist Michael Phelps was thought to be, though that turned out to be a case of mistaken identity. It isn't just Hollywood either. All kinds of literati anad glitterati have been making some dumb financial moves, reports ABC News. It is even an international phenomenon; celebrity chef Gordon Ramsey reportedly is in hot water with British tax authorities too.

Watching celebrities getting into financial jams has become something of a cottage industry. There is at least one blog devoted to the subject, by Cincinnati law professor Paul Caron. Austin, TX writer and tax geek Kay Bell watches too. Even Roni Deutch, the queen of late night TV tax service commercials keeps a list. Though in her line of work, she may be able to write some of that off.

So, if you are starting to pull year-end tax records together soon - and you should be - just remember: action heroes can be lousy tax advisers. Here's a short list of things IRS definitely recommends avoiding and 15 pages of why. The short answer is, they don't work.

There are some tax breaks you don't want

More than 15 million taxpayers may owe Uncle Sam another $250 next filing season, a Treasury Department Inspector General reports.

Lower payroll taxes passed last spring to pump money into the economy ended up putting too much money back into the checks of workers with more than one job, of which there have been many this recession. Social Security recipients who worked part time may be hit too.

IRS has a free calculator to help you see what your situation is. There are barely six weeks left in the tax year, though, which leaves little time to do anything other than brace for impact.

The recession has produced some really crummy tax breaks you need to prepare for if you qualify. My two favorites? The first $2,400 of unemployment benefits you collected in 2009 are tax exempt. You pay taxes on the rest. Forgiven debt usually counts as taxable income, but not if you lost your home or modified your mortgage.

Yippee.

Gimme a (tax) break - I don't want to buy a house

Now you don't have to be a first time buyer to get a tax credit for buying a home.

New legislation that President Obama is signing, probably today, also provides a potential $6,500 tax credit for homeowners who sell their current homes to buy another one. Get it done by April 30 if you are interested.

Huzzah, say the nation's realtors. Others' enthusiasm is more restrained. The New York Times editorial board calls it throwing good money after bad. Washington Post's Steven Pearlstein grumps that it's a better deal for sellers than buyers and also for real estate agents, appraisers, lenders, brokers and insurers, who also get cuts in the deals. Tha makes sense in a way because there still are a lot more sellers in the market than buyers, the National Association of Realtors reports.

Meantime, don't forget other potential tax breaks you can get without planting real estate signs in your yard. You need to get moving on those too, because the Dec. 31 end of the tax year for most of us is a scant eight weeks away.

If you've got some investments down for the ten count, for example, you may want to sell them and use the losses to offset profits on other stuff you sold. Or if you still have stuff that didn't move at your fund-raising garage sale, donate it to your favorite charity, get receipts and deduct it on Schedule A next spring.

Or if you've been job hunting or running a part time business to make extra cash, as many of us are these days, start rounding up and saving receipts for those expenses too. Many are deductible. And if you are snugging up the house to save energy this winter, don't forget to check out any potential energy tax credits you might qualify for.

If you are still working, you are a god to many of us. But check how the tax withholding in your paycheck may have changed by stimulus legislation flying out of Washington

First time homebuyers get more time. Some will need it.

Both the U.S. House and the Senate seem likely to vote next week on extending an $8,000 tax credit for first time home buyers, Bloomberg News reports.

The credit originally was scheduled to expire Nov. 30. But at least some hopeful buyers are blowing that deadline already, because closing on a home often is a four or six week process, as About.com contributor Elizabeth Weintraub spells out.

Lord knows Realtors want the extra time. September, which was effectively a beginning of the end getting the credit under the old deadline, was a bipolar month for the industry, writes Businessweek.com's Phil Mintz. Existing home sales shot higher because the credit was ending, he found. New home sales tanked because the credit was ending.

Our heads spin. In any case, there were signs visible at least as early as last July that an extension might be in the works. And there are signs now that home buying will be different than before the economy free fell last year.

The biggest difference? You'll need more money. Lenders who got burned by bad mortgages before don't want to again. Plus, it's more important that you get the purchase right, advises Loan.com. You may see additional paperwork too. Federal auditors already have found more than a whiff of fraud in more than 100,000 claims for the credit already. They don't want to do that again either.

Join me at the welfare trough

We home owners are welfare bums. That's a startling thought implied by commentator Justin Fox recently in Time magazine in a discussion of some of the tax benefits available for those of who own the roofs over our heads.

The basic idea has been kicking around since a college professor named Christopher Howard described what he called a hidden welfare state kicking around in tax rules that benefit the middle and upper class.

IRS lists bunches of them just for home owners - mortgage interest, mortgage tax credits, real estate and property taxes, energy credits and more. And owning a home often lets you itemize your deductions, which opens up a whole new roomful of potential deductions, H&R Block points out.

Home owning isn't the only tax perk producer, of course. Owning real estate of any kind gets you some generous tax breaks, CPA Richard Lai found in 2003. Sending your kids to college works too. So does opening a business.

One person's tax boondoggle is someone else's support of a laudable social goal, I guess. Still, it's hard to think of Bill and Melinda Gates as welfare abusers just because they save a bundle on taxes by giving gazillions of dollars to good causes around the world.

More homebuying tax breaks coming?

Giving away free money is a popular government program. Cash for clunkers boosted car sales this summer, though perhaps only temporarily. Now there are signs that a popular $8,000 tax credit for first time home buyers may be sweetened too.

The House of Representatives in Washington last week overwhelmingly to allow armed forces members in combat zones more time to qualify for the credit, which runs out Nov. 30 for other qualifying home buyers. Both the Senate and White House must also okay the idea before anyone gets any money, but it's hard to fault the logic. Home buying is often a long, complex, highly detailed process not easy to deal with when you are distracted by live ammunition.

Realtors want to extend or expand the credit even further, to all home buyers not just service members or first time buyers. It's good for their wallets too. It helps homeowners who aren't buying too. Our homes are worth more in stronger markets.

But let's check the math before we get too giddy. Contributors to the Calculated Risk blog calculate that each of the nearly two million home sales spurred by the incentives costs us $43,000 as taxpayers collectively. OK, that is split among more than 139 million taxpayers, but it's still way more than I paid for my first house 37 years ago.

Big Oct. 15 tax deadlines coming up fast

Heads up, taxpayers. You've only got 10 more days to meet some important Oct. 15 tax deadlines.

About 10 million taxpayers who requested filing extensions last April face the biggest one. Oct. 15 is their last chance to file their tax year 2008 returns penalty-free. There are a few exceptions. Anyone serving in a combat zone and some disaster victims have more time. You don't want to qualify.

Oct. 15 also is the final deadline that taxpayers in Missouri, Kansas and many other states can qualify for property tax relief, sales tax refunds and other special tax breaks for the poor or elderly, if they haven't already. The applications are part of state income tax returns, due when federal returns are filed.

Oct. 15 also is the deadline for getting a do-over if you flubbed a Roth IRA conversion. Technically, the process is called recharacterization, but it's a chance to turn a turn your converted Roth back to a traditional IRA and get back tax money you paid when markets were higher. And if you have money stashed in a secret overseas bank account, Oct. 15 is your last chance to come clean with the IRS and avoid harsher penalties later.

Finally, there's a soft deadline to be aware of if you hope to collect a potential $8,000 credit for first time home buyers. You probably need to pick your new home by mid October to formally close by the Dec. 1 deadline and qualify for the credit.

So, first-time home buyers, do you feel lucky?

The White House is kicking around the idea of extending deadlines for this year's $8,000 tax credit for first-time home buyers. About 1.4 million home buyers already have applied for the credits, which essentially are super-sized tax refunds, the Internal Revenue Service said Thursday.

No big surprise there. The idea has been kicking around since Cash for Clunkers arced through the economy this summer. Bankers, builders and Realtors are all for it; they're sweating the recession too. And U.S. Sen. Johnny Isakson, a Georgia Republican and one of more than a dozen lawmakers proposing their own extension plans, wants to sweeten the deal by nearly doubling the credit, to $15,000. However, that may be tough to sell to deficit hawks, Bloomberg News' Dawn Kopecki reports.

But this leaves first-time home buyers - anyone who hasn't owned a home in the last three years - with an $8,000 wager to consider. Do you hustle now to catch a tax break you know is on the table? Or do you wait to get maybe either the same deal or an almost twice better tax break next year, or maybe nothing at all if the credit runs out?

There isn't much time to decide either. Taking the most conservative bet, and grabbing the tax break that's on the table now, requires closing the deal by Dec. 1. That's a daunting process for first timers, as outlined here by Bankrate.com. It's no picnic for those of us who've done it before either.

It's not a quick process either. Under ideal circumstances, buyers can close on their new homes in as little as two weeks after they reach an agreement with sellers, writes About.com's Elizabeth Weintraub. But nearer 30 days is more common and it may take longer.

Count on longer. Tighter lending practices and recession-thinned financial services backshops are stretching the closing process to nearer two months in some places, reports The Wall Street Journal's Amy Hoag. You may want to aim for no later than the last week before Thanksgiving to be sure you don't miss out. Thirty day closings are still happening in the Kansas City area, where I live, but plan on 45 days just to be safe, suggests the Kansas City Regional Association of Realtors.

Falling inflation has some hidden traps too

Lord knows I don't miss $4 gas.

But the latest round of flat and falling consumer prices reported by the government may hold some perils for the unwary too.

Near-zero inflation means Social Security beneficiaries won't get cost-of-living increases for the next couple years, for the first time since COLA adjustments became automatic in 1975. Some Medicare prescription insurance premiums will rise, however, so some retirees will take a pay cut. The big question, outlined as clearly as I've ever seen by Felice Baker at Northwestern U.'s Medill Washington Project, is whether lower prices for other stuff will outweigh the higher premiums.

Your ability to put extra money in your 401(k) may be crimped too. Just as workers are feeling secure enough for the first time in nearly a year to increase contributions instead of cutting them, federal inflation adjusting formulas point to a $500 cut in maximum contributions, to $16,000. That won't make much difference to many workers, who only put maybe $4,000 or $5,000 a year into their plans. IRS is expected to announce Oct. 15 whether it will cut the limit or simply freeze it at the current $16,500.

And think about low inflation now when you next fill out your federal and state income tax returns. Senior economist Gerald Prante of the Tax Foundation says the current year-over-year monthly average 0.19 percent uptick in the Consumer Price Index effectively freezes personal exemptions, standard deductions, how much you can itemize, tax bracket boundaries, and virtually everything else on which you base your calculations.

This follows the largest increase in nearly two decades last year. You decide if the turnaround means stability or hitting the windshield.

IRS cops taking a closer look at home mortgages

IRS will be watching those deductions we take for interest on our home mortgage payments more closely, the Treasury Department's Inspector General said recently.

The service's aim is to catch tax cheats who either don't file or who report low incomes but are making McMansion-sized mortgage payments with money they may be hiding. There already is a Form 1098 that will help track these discrepancies, but IRS hasn't been using it much, Treasury investigators found.

This could get complicated for all the estimated 51 million home owners making mortgage payments though. That's because no one appears to know how to accurately calculate how much we should be deducting, the Government Accountability Office reports. An estimated 12 percent to 14 percent of the taxpaying public writes off either too much or too little, GAO found. But IRS, the tax industry and individual taxpayers often don't have enough information to catch those errors when they happen.

Tax audits are rising again, Syracuse University reports, so keep good tax records and file accurately. And if you are among the small contractors, free lancers and other non W-2 workers whose returns may be watched most closely, remember your Sept. 15 estimated quarterly tax payments need to hit the Post Office in just less than two weeks.

Give IRS a piece of your mind

I'm a bald guy, but my barber needs a license to trim the fringe. My tax situation is complicated by self-employment, part time W-2 work and big IRA changes, but my tax guy doesn't need a license to sort any of that out.

Does that make sense? I don't know. More interestingly, IRS doesn't know either. The service is formally asking us to chime in on that question this summer. It's already held one public hearing last month on the topic. Click on the witness names here to see what was said. Another one is in the works this week, and two more are in the works later this summer. Or if you can't make any of those, the agency will take written comments this month too.

The issue is worth following, even if it isn't your first choice for light summer reading.

Basically, more than half of us turn to someone for help with our taxes each year. But neither the IRS's enforcement arm, its consumer friendlier Taxpayer Advocate's office, nor its operations overseers at the Treasury Inspector General for Tax Administration office know enough about those preparers to know how to monitor them.

The enforcers want to put preparers like Joyce Marie Simmons out of business. She's a former Texas snow cone stand operator who went into the tax business and, IRS alleges, fudged about $13 million in improper deductions. She disputes the allegations and the matter may be in court for some time.

One danger is that clamping down on egregious abuses may make it harder for your tax pro or mine to claim legitimate deductions too. The definition of what's iffy moves closer to us.

So, speak up while you have a chance. And keep those receipts just in case.

Gimme shelter ... and maybe tax credits up front?

Auto industry forecasters are starting to sound almost giddy about cash for clunkers. Some predict that an estimated 16,000 sales in the few-days-old plan may push July's annual sales rates into 10-million unit territory.

Now some real estate executives are urging ramping up the current potential $8,000 tax credit so that first-time homebuyers can come up with more scratch for shelter. A $4,500 tax break on a median price $28,000 auto works out to a 16 percent subsidy for car buyers. An $8,000 tax credit on a median $198,000 home only equals four percent.

Fair's fair, say proponents of expanding the credit. But raising it to even $15,000 might seem greedy, worries National Association of Realtors President Charles McMillan. They likely will talk amongst themselves for a while.

There is another approach to consider. First-time buyers in 14 states, including Missouri, but not Kansas, can use bridge loans from state housing commissions to collect the $8,000 credit now, in time to increase their down payments. Mechanically, it works like tax refund loans that consumer advocates gripe about.

HUD Secretary Shaun Donovan said a couple months ago that his agency was exploring a national expansion of the program. Officials will be racing the calendar though. Depending on where you live, you may need to buy by mid-October to complete all the necessary paperwork in time to close before the Dec. 1 tax credit deadline.

I think that raises another question. Will HUD overhaul national lending rules for what effectively would be a 10-week or shorter lending window? Or will there be an expanded Scratch for Shelter plan to buy garage space for clunker replacements?

Nail down your income tax refund now

Now is a good time to tweak how much money comes out of your paycheck for taxes in order to be surer of getting the refund you want, tax pros say.

With almost half the 2009 tax year still ahead for most of us, increasing our withholding just a few dollars now will help assure a bigger refund later if we want that. It also is a good time to have a bit less taken out to improve cash flow now if you are willing to settle for a minimal refund later.

There's a catch, of course. To make the change, you need to file a new Form W-4 Employers Withholding Certificate with your company's payroll people. Research shows most of us know we can and, from time to time, should do this, but almost none of us ever do that, says Jackie Perlman, a Tax Institute research analyst at H&R Block.

We probably know why too. The simple two-page form - one page of instructions and one with a few blanks to fill in - can be a little intimidating for anyone who doesn't deal with it often. Knowing that the IRS will provide a free 24-page booklet of supplemental instructions in Publication 919 doesn't make you think it gets easier.

There are faster ways to cut through the clutter, Perlman said.

"Start by figuring how large a refund you want," she said.

It can be larger than what you got back last time, smaller, or the same. It doesn't matter which. Each of us has our own good reasons for choosing any of those three. The point is, it is a target and you can manipulate your paycheck withholding to hit it.

Next, don't confuse exemptions - which are those $3,500 dollops of tax exempt income you, your married partner and the kids get every April just for being there - with withholding allowances, which are what you claim on the W-4. Withholding allowances are basically accounting guidelines that IRS and your payroll department work out to help calculate your take-home pay.

Most W-4 calculations start out based on one withholding allowance for each exemption you claim, but you can bump those allowances up or down to fit your circumstances. In fact, you probably should, especially if you or your married partner's incomes have changed recently, because some of the IRS formulas are easily knocked out of whack when life happens, researchers report.

There is an easy way to adjust your calculations for that too, Perlman said. Go online and plug your numbers into one of the good online withholding calculators that tax professionals and others offer for free. Those will ask questions designed to help you get handles on all the tax issues that may affect your refund. Maybe you'll qualify for a homebuyers or energy conservation credit, for example, which could help reduce what you need to withhold now.

Perlman, not surprisingly perhaps, said she's partial to an H&R Block calculator on the bottom half of this page. There's a similar calculator next to it for self employed people facing similar issues.

IRS also provides similar calculators at its site that get high marks from users. Just Googling for withholding calculators fetches up fistfuls others such as this one.

Tax audits - the midyear tax review you don't want

Uh, oh. H&R Block is beefing up its plans to help clients with income tax audits. The world's largest tax service calculates that our individual chances of being double-checked have roughly doubled, to one in return in 99 from one in 202 previously.

That's not a surprise. New IRS Commissioner Doug Shulman has been warning for months that service will be getting more adamant about collecting an estimated $345 billion in taxes we may have fudged on. Now, twin plans to increase compliance and step up enforcement are the twin top priorities for IRS' 2019-2013 strategic plan.

We don't know yet how much pain stepped-up enforcement may cause. Negligence messes up most tax returns, Alvin Brown, a former high ranking IRS attorney told Congress a few years ago. Those mistakes are usually easier to fix than intentional cheating attempts. But either way, Brown already lists a wide array of potential audit magnets on his Web site.

IRS has some pretty explicit procedures for both its agents and audited taxpayers to follow. You need to know them, both to get through the audit as successfully as possible and, increasingly, to avoid phishing and other scams that are expected to perk up as enforcement revs up.

National Taxpayer Advocate Nina Olson vows to step up her office's efforts to make IRS more accessible to taxpayers in order to help reduce unintended abuses. Reconciling the need to collect what taxpayers really owe with the increasing difficulty that many have with everyday bills will be one of the service's biggest challenges this year, Olson predicts.

Here's a sneak peek at your next income tax form

Ford Motor Co. redesigned its Model T pickup trucks a lot between 1925 and 1927. In the end, the newer ones looked a lot like the older ones.

Same way with the IRS, which recently asked for public comment on its proposed new Form 1040 income tax form, pictured here. It looks remarkably like the 2008 version, pictured here. Mostly, some of the numbers, for standard deductions and the like, have been adjusted for inflation.

Some of your calculations may be way different, though, because of all the economic stimulus changes that are kicking in. You should eyeball your tax situation, and specifically check what's being withheld from your pay stubs against the taxes you paid in 2008, to see if you are on track toward where you want to be at filing time.

And if numbers aren't your thing, try this.

Got a pulse? Be a tax professional. That must change, IRS chief declares

In Missouri, like many places, it's tougher to become a tattoo artist than a tax preparer.

California and Oregon require tax preparers to meet some state-specified education requirements before taking on clients, but most everywhere else, anyone with a pulse can hang out a shingle.

IRS Commissioner Doug Shulman pledged Thursday to try to change that and come up with ways that our individual tax preparers can help improve the accuracy and quality of the returns we file each year.

Shulman wants us to help too. He's planning a still-to-be scheduled series of meetings across the U.S. in the near future to hear changes we want, along with recommendations from lawyers, accountants, our tax preparers and others in the industry, and get the proposals in hand by the end of the year.

About 80 percent or so of U.S. taxpayers seek professional help during the filing season, Shulman estimated. Tax returns are among the biggest financial transactions Americans engage in every year, he said.

Drowsy oversight hurts both IRS and taxpayers, observers say. No one even knows how many complaints about inept or abusive tax work are filed each year because IRS doesn't count them, one group of Treasury Department investigators found. And inconsistent IRS procedures were allowing even preparers with records of tax abuse to remain in business, a second group reported.

So now, "we want to put everything on the table," Shulman said Thursday. "At this early and critical stage of the process, we need hear from the broades possible range of stakeholders.

One significant stakeholder is applauding the effort.

"For many years, H&R Block has strong supported efforts to upgrade training, professionalism and ethics among all tax preparers," said Richard Breeden, chairman of the world's largest tax service chain.

"We believe that all tax assistance providers should be trained and licensed as necessary to insure that tax returns are prepared accurately every time," Breeden said.

There may be extra cash hiding in your pay stub

Need extra cash? Now is a good time to check your pay stub to find it.

Many U.S. wage earners already have piled up refunds for next April, reports Kiplinger's Kevin McCormally. If you are among them, now is a good time to dial down your withholding and bring home a little more of your money in your next paycheck.

It's not hard work. At the simplest, you check last year's tax return to compare the taxes you owed then against what your pay stub says has been collected year-to-date. Then, if your income and tax situation hasn't changed much from 2008 and year-to-date is bigger, go ahead and ask your employer to reduce your withholding.

Don't forget to scope the same numbers on your state income tax returns too. Budget problems have delayed 2008 refund payments in both Missouri and Kansas. We don't know that will happen again, but it's another good reason to get your money now instead of later.

The IRS provides free online instructions, forms and a quick calculator to help you figure how much to change to keep up with stimulus plan tax changes.

And while you are wonking out anyway, why not give all your finances a midyear once over, asks Bankrate Monitor's Kay Bell. Her basic 2003 rundown of what to look for is still good, but some tax rates and other details have changed since then.

Stimulus money - there may be strings attached

You know that extra money that started showing up in your paycheck last month? Uncle Sam may want some of it back.

But first - perhaps within a few weeks - the Internal Revenue Service plans to uncork a big educational campaign to help you figure out how to keep as much of the cash as possible. It will deal with the potentially eye-glazing topic of income tax withholding calculations, but watch for it anyway. Whether you get a refund next year and how much or how little may be riding on it.

"This one's a hot burner issue," said Michael Devine, IRS's spokesman in St. Louis.

Here's the deal. To help stimulate the economy, Congress and President Obama earlier this year ordered a tweaking of tax withholding rules so that most everyone's take-home pay would be maybe $8 or $9 fatter, and work out to as much as an additional $400 2009 tax cut on earned income for single taxpayers and $800 for couples. Multiply that times a few hundred million taxpayers and you get some real stimulus working, the theory went.

But real life isn't always as simple as lawmakers like to imagine. Tax professionals and others soon realized many of the changes might get really messy when we calculate taxes next April. That's because the tax withholding tables employers use to calculate our net pay often don't match our individual situations.

A single worker holding down two $20,000 a year jobs at different employers, for example, might get a $400 bigger paycheck from each of them. But the law only allows that worker to keep $400 of the tax cut. He or she would then have to repay the other $400 next April and either get a much smaller refund or owe a larger balance due.

Many of the nation's 33 million dual income married couples are headed for similar trouble. If they both work and are eligible for an $800 tax credit, their employers could refund them as much as $1,200. Then the couple get to figure how to come up with an unexpected $400 more they'll owe at tax time.

Retirees who work part time to supplement their Social Security income, or who are having taxes withheld from their pension checks, may get nailed too. Both are getting extra money now, but may have to give some of it back later. Social Security and pension benefits don't count as earned income, which is what the $400 and $800 credits are based on.

Details of the IRS campaign to help taxpayers avoid these jams will come soon, said Devine in St. Louis. Meantime, IRS already offers an online calculator at its Web site to help you sort out the right amounts of withholding for your situation.

Tax refund rules change when you are job hunting

Tax time is a hoot on the unemployment line.

A guy named Ray Conejo in Kissimmee, Fla., apparently is using his refund to help pay for his bankruptcy filing this year. And late night TV tax doyen Roni Deutch points out, accurately, that it's easier for some of us to qualify for bigger refunds this year. With our reduced incomes, more of what we spent in 2008 bumps above the 7.5 percent of adjusted gross income threshhold that is tall cotton to itemizers.

It's a mixed boon. Like saving on shampoo because you are bald, quips Deutch

Kitchentablenomics.com crunched tax numbers this weekend. Our refunds are going to outrun our balances due by about $150. The really good news, when you are on a lean budget like ours, is that we don't owe. The not so good news is that unemployment benefits and other part-time income mean more tax work before April 15. We need to file estimated and self employment taxes too because our withholding is way down.

But what do we do with the $150 windfall? The basic advice that personal finance writers shovel out still works. Pay debts and stash as much as you can. But priorities change. We're more into stashing these days.

And whether you are employed or not, it's time to start planning for next year.

IRS tells homebuyers, we can wait.

IRS Commissioner Doug Shulman recently offered homebuyers advice that I don't remember hearing ever come out of a tax chief's mouth before.

Don't file your taxes too quickly if you plan on claiming a new first-time homebuyers credit, Shulman urged taxpayers recently. Check out your options and think about asking for a six-month filing deadline extension, to Oct. 15, if that works out better for you, he said. You do need to file that request by April 15, however.

Briefly, singles can claim a dollar-for-dollar tax reduction up to $4,000 - and married couples can claim up to $8,000 - buying a home this year if they haven't owned one in the last three years.

Falling home prices and a crocus-like bloom in late winter home sales may make this an even better deal for first-time buyers. H&R Block offers a rundown of the key points to consider about the tax credit, as well as similar, but less attractive credit for purchases in 2008.

But weigh your filing choices too, Shulman suggests. Waiting until Oct 15 to file, if you buy a home before then, may get your tax credit into your hands faster than waiting until you file your return for 2009 a year from now. Or, if you've already filed, filing an amended return after you buy could do the same things. But you also can wait a year and claim the money on your return for 2009 if you think the tax reduction might do more good then.