A few twists for parents, home buyers, the jobless

The Internal Revenue Service facility in Andover will become busier in the coming weeks as the April 15 tax filing deadline nears. (George Rizer/Globe Staff/File 2007)

The federal tax return for 2008 looks a lot like the one you dealt with a year ago. But looks can be deceiving.

While some changes in the rules can trap the unwary, there also are new benefits. Whether you do your own return or hire a professional tax preparer, keeping up with the twists can pay off.

Real estate tax: Homeowners who do not claim itemized deductions may now deduct at least some of their property tax as an additional benefit. "People who have ignored their property tax payments because they don't itemize may not think to look for this," advises William Massey, a senior tax analyst at the tax and accounting arm of Thomson Reuters.

The deduction is capped at $500 for single nonitemizers and $1,000 on a joint return. Those who don't itemize can take this in addition to the standard deduction generally, for example, $5,450 in 2008 for a single filer and $10,900 for a couple filing jointly.

Home buyer credit: The recently enacted stimulus bill offers an improved incentive for first-time home buyers, but those who bought last year are stuck with 2008's less generous version, notes Massey.

Last year's incentive, taken on 2008's tax return for homes bought after last April 8, is for a maximum credit of $7,500 against income tax. But after a two-year grace period the credit has to be repaid over 15 years through a payment included on your annual tax return. Selling the home or converting it to rental property makes the balance due at once.

The better deal for homes bought this year through November is for a maximum $8,000 credit that generally doesn't have to be repaid.

People who qualify for the new incentive don't have to wait until they file 2009's return next year to benefit, advises Massey. The better credit for a 2009 purchase can be claimed on 2008's return.

So, if you buy a new home this year and qualify for the credit, you can claim it on your 2008 return, or if you've already filed that return, you can do an amended return for 2008, notes Massey.

The payoff is not having to wait until you file your 2009 return next year to benefit from the credit.

Income limits and other qualifications apply to both years, and either credit can boost a refund or trim the tax you owe. If the credit more than wipes out your tax liability, you can get a check for the excess.

One bit of leeway: First-time home buyer means not having owned a home as your principal residence within three years of the purchase.

Recovery rebate credit: Remember the rebate checks from Uncle Sam last year? For most people, that payment of up to $1,200 or more was it. But some may get a second crack on their 2008 return.

That's because a change in finances or other status during 2008 can be used to override the 2007 information relied upon by the IRS as an expedient way to quickly pay the rebates last year.

"Someone last year may have received no payment or a reduced one because their 2007 income was too high, but it may have turned lower in 2008," explains Massey. If so, they can try again, using a worksheet in the tax form instructions.

The birth of a child in 2008 could also mean a bigger rebate than originally figured. Someone who was a dependent in 2007 didn't qualify for the rebate distributed in 2008. But if that dependent status ended in 2008, the person may retroactively qualify for the missed rebate.

Unemployment compensation: Just as wages are taxable when you're working, typical unemployment compensation is taxable when you're not, at least as far as 2008 federal and state tax is concerned. It's even possible to pay a penalty when you file your tax return if you end up owing a chunk of tax because of the jobless compensation.

But here's a change that can help for 2009. The recently enacted stimulus bill exempts up to $2,400 of unemployment compensation received this year from federal taxes.

Kiddie tax: "Kids" can be older than in the past. The so-called kiddie tax is designed to block parents in a high tax bracket from shifting income-producing investments to a child in a lower bracket. It does that by making children potentially liable for tax on some of the income at their parent's higher rate.

For 2007, that provision could hit through age 17, up from 14 at one time. For 2008, the tax can apply with some exceptions through age 18, or through age 23 for a full-time student who qualifies as a dependent under IRS rules.

The kiddie tax for 2008 kicks in after a child's investment income hits $1,800, and for 2009 the amount is $1,900.

"This has to be taken into account when figuring the after-tax return on a child's investments or even if a transfer makes sense," cautions Ed Smith, a tax partner at the Boston office of BDO Seidman.

Zero investment tax: For people hit by regular income tax at a rate of 25 to 35 percent, generally paying just 15 percent on dividends and long-term capital gains is attractive. But how about zero?

For 2008, there's no tax bite on such income for people in the bottom two tax brackets, assuming they lucked out on an investment. That covers people with taxable income, after deductions and exemptions, of up to $65,100 on a joint return and $32,550 for a single unmarried filer.

A big gain could push these people into a higher bracket, but at least some of the gain will benefit from a zero bite.

Driving a deduction: Because of steep gas prices, the IRS made a midyear change in the mileage allowance that can be deducted when using a car for business in 2008. People who claim this deduction must juggle two figures: 50.5 cents a mile for driving through last June 30 and 58.5 cents for driving after that date.

Tip: Tolls are deductible in addition to the per-mile allowance.

Driving for medical care or during a job-related move is 19 cents in the first half of the year, 27 cents in the second half.

E-file free of charge: Do-it-yourselfers can now fill out and file their own return electronically through the IRS website, no professional preparer or tax software required and no income or other limits as in the existing free online filing program run by the IRS and tax software industry. But also no options to do a state return.

Filing electronically can speed a refund and provide confirmation that your return was received, says IRS spokeswoman Peggy Riley.

Unlike with other online offerings you won't get preparation assistance when using this new IRS fill-in-the-form program, though you can view published IRS help and worksheets at the site and most of the math will be done.

"This is a great option for people who have knowledge about their return and feel comfortable doing it on their own," says Riley. "And it's all free."