Qualifying home improvements must be made in 2010

If you want to make energy-efficient home improvements to your principal residence and qualify for a nonbusiness energy credit, you have until December 31, 2010.

The credit equals 30 percent of the amount paid for:

·         Qualified energy efficiency improvements (i.e., insulation, windows, doors, etc.); and

·         Residential energy property costs (i.e., central air conditioners, natural gas furnaces, tankless water heaters, biomass fuel stoves, etc.).

For purposes of this credit, costs are treated as paid when the original installation of the item is completed. Thus, you cannot simply purchase the item before year-end; it must be installed on or before December 31, 2010, to qualify for the credit.

The credit is limited to a total of $1,500 for tax years 2009 and 2010. Thus, if you already claimed a $1,500 credit in 2009, you are not eligible for a credit in 2010.

Reduce your taxable income while saving for retirement

If you are employed and an active participant in an employer sponsored retirement plan [i.e., §401(k), SEP, or SIMPLE IRA], you can still make a contribution to a traditional IRA. You can contribute up to $5,000 ($6,000 if 50 or older), but not more than your compensation for the year. If you file a joint return, your spouse can also make an IRA contribution based on your compensation (even if he or she has little or no compensation).

Whether or not the contribution is deductible depends on your filing status and your modified adjusted gross income (MAGI). If you are single and your MAGI is more than $66,000, you cannot deduct your contribution. If you are married filing jointly and your MAGI is more than $109,000, you cannot deduct the contribution made for yourself. However, if your spouse is not covered by an employer sponsored retirement plan and your MAGI is less than $177,000, part or all of your spouse's IRA contribution may be deducted.