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Credit Report Check a Must for Tax Season

By Faye Mergel
Published: Sunday, December 27th, 2009

The holiday season is here once again and finance advisers are quick to remind consumers of the importance of checking their credit report before being caught by the holiday rush. However, they also tell consumers that when the shopping days are over, it will be time for them to pay Uncle Sam his due or get a refund instead. The time for taxpayers to meet their obligations is fast approaching and another credit report check would help them know what financial plan they should be taking next year.

Credit Report Check a Must for Tax SeasonSpecialists say one of the things consumers must plan during tax season is making retirement contributions. Taxpayers under 50 years old are reminded that the 2009 limit for both traditional IRAs and Roth is $5,000. The limit for those who are older than 50 years old is $6,000.

The tax season is expected to be merrier for first-time homebuyers as the $8,500 tax cut, which would have ended last month, is extended until April 30, 2010. Homebuyers looking to qualify are required to close a binding contract by April 30 next year and close on their purchase before July 1.

Since mortgage securer Fannie Mae will not provide assistance to people who spend more than 45 percent of their income on paying debts, homebuyers are advised to check their credit report now and see if they exceed this limit. For taxpayers who want some home improvements, they can now avail tax breaks for energy-efficiency improvements. Qualifying homeowners can save as much as $1,500 for 24 months.

Meanwhile, unemployed individuals for the first time will get a tax exemption for the first $2,400 of their unemployment benefits. The benefits they are receiving will not be included in their gross income computation and consequently will be tax-free.

Not only homeowners and unemployed individuals will get tax incentives, but car owners who made their purchases between Feb. 17 and Dec. 31 this year will also receive tax deductions on the excise taxes they paid.

Aside from taking note of tax incentives, taxpayers are also advised to review their monthly and yearly expenses. Financial planner Kevin Jacobs advises consumers to know where their money went for the year. The credit bureaus—Equifax, Experian, and TransUnion—document the activity of consumers hence experts advise them to pull out their credit report to see how much, and to whom, they owe.

Finally, taxpayers are advised to share their financial plans with their family and discuss with them how they can carry out their plans.

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