Headlines across the country are blasting that millions of taxpayers may owe come tax time because "the government was too generous with their new Making Work Pay tax credit," as the New York Daily News put it.

It sure makes for dramatic news coverage... only it's not quite right.

The government didn't make a mistake when calculating the Making Work Pay tax credit and this most definitely isn't something just hitting the radar of taxpayers. It just makes good headlines now.

The issue of too much withholding has been making news since the inception of the credit in early 2009. Yahoo even appeared to revamp an earlier version of the CNNMoney.com story released on this past Tuesday, titled "Stimulus surprise: 15 million people may owe taxes" from a piece released six months ago. Clicking on the link from the prior story, formerly here, now gives you a 404 error. Hmm.

You'll find numerous blogs out there threatening jail time for the uninsured, but don't believe them. This is just another scare tactic to prevent health insurance reform.

While it's true there are penalties for those who choose not to get insurance, that penalty is 2.5% of one's income and the penalties will be collected by the IRS. Jail time is not likely. In fact criminal prosecutions by the IRS are rare. Of 156 million individual tax returns filed in 2008, only 100 resulted in criminal prosecutions for those who willfully defrauded the system. The penalty will only impact those who are wealthy enough to pay for insurance and choose not to pay. The intent is that this penalty will be used to pay for the medical needs of those who choose not to get insurance.

The first time home buyer tax credit has officially been extended. If you're an existing home owner you may also qualify for the tax credit if you're planning on buying a new house! Check out this week's episode of Show & Tell with The 2 Mortgage Guys and we'll fill you in with the "nuts & bolts" of this new program. You can also get the complete details by visiting federalhousingtaxcredit.com.

Ryan Minick and Steve DeLon are The 2 Mortgage Guys. Subscribe to their newsletter or visit them at www.The2MortgageGuys.com.

The deadline for first-time home buyers to take advantage of the government's $8,000 tax credit appears in line for an extension. But the popular tax break has already been fueling a phenomenon that many struggling real estate markets haven't experienced in years: bidding wars.

Lower-priced homes on the market in many once-beleaguered areas have seen a flood of offers, say real estate brokers from Boston to Portland, Ore. Though the original tax credit is good on homes sales completed by Nov. 30, because home deals can take months to complete, new buyers are rushing to close escrows so they don't miss out on the credit.

"It's a welcome change from the way things have been around here," says Carrie Novotny, a realtor in Edina, Minn., outside Minneapolis. She says a recent open house for a two-bedroom, Craftsman-style home listed at $213,000 drew several dozen prospective buyers and more than five serious bidders. The home eventually went into contract for $217,000, Novotny says. "It's been a bit crazy," she says. "People really want to nail down a sale to cash in on the tax break."

Homebuyers did not have to truly be first-timers in order to qualify for the "first time homebuyer" tax credit, expiring Nov. 30; they only had to meet the limitation of not having owned a primary residence for the past three years, with income limits of $75,000 for individuals and $150,000 for married taxpayers.

According to the Treasury Department, however, 4-year-olds (and other individuals incapable of legally signing a purchase agreement) don't count.

In an Internal Audit Report meant to assess the 2008 filings in anticipation of a surge in claims for the 2009 tax season, as many as 90,000 claims were determined to be potentially ineligible, and 528 of those were to homebuyers under 18.

The federal tax credit for first-time homebuyers is $8,000.

If you live in Indiana and you're planning on buying or refinancing a home then you'll definitely want to file for you eligible property tax exemptions. And if you don't, then follow along and we'll explain some of the common exemptions as well as the impact it could make on your tax savings.
Ryan Minick and Steve DeLon are The 2 Mortgage Guys. Subscribe to their newsletter or visit them at www.The2MortgageGuys.com.

While the $8,000 first-time homebuyer tax credit is scheduled to expire next month, there are ways that everyone - not just first-time buyers -- can collect thousands of dollars in tax credits by installing or upgrading eco-friendly elements to their homes.

This Wall Street Journal article details several different types of credits available this year and next year for eco-upgrades. For starters, there's a federal credit of up to $1,500 available for switching to energy-efficient doors, windows, air-conditioning, insulation, water heaters and roofing. The credit is good for 30% of the purchase price, up to the $1,500 cap if spread between this year and next year. It's only good for your primary home, so if you have a vacation home you planned to trick out, that still has to come out of your own pocket. The Department of Energy has a webpage with more details about the credit program.

Another, larger credit program, also administered by the Department of Energy, lets homeowners deduct up to 30% of the cost of fuel cells, solar cells or solar water heaters, wind energy and geothermal energy generators. These credits have no cap and are in place until 2016. Also, all but the fuel-cell credit can be used for non-primary residences.

Two caveats to be aware of, the Journal article cautions: The items for which homeowners file for a credit can only be used inside a house, so implements to heat a pool or hot tub don't qualify. Also, keep in mind that some of these credits just let you count the cost of the new items, not their installation. The details of which items qualify for installation credits are available on the Energy Department's website. There are also variations to the rules if you're building a new house as opposed to upgrading an existing one.

To consumers who are overwhelmed by the possibilities, the Journal article offers a bit of sound advice: Start small. Upgrading windows and insulation is almost always a good investment, even without the added incentive of the tax credit. These two relatively quick fixes can even be tackled by a relatively handy amateur.

October is Energy Awareness Month and if you are like most, you're about to get pretty "aware" of just how un-energy inefficient your home may be. As temperatures start to drop and heating systems kick on, receiving that first heating bill is likely to grab your attention pretty quick.

According to the U.S. Department of Energy, the typical home loses more than 25% of its heat through windows. So, here are a few ways to lock down energy loss from leaky windows before that first big bill show's up:

Test your windows
The first step towards sealing out drafty, inefficient windows is to figure out where the problems lie. Look for condensation inside the glass on double- or triple-glazed windows. This could indicate seal failure. If this is the case, you might need to replace the glass or the entire window.

Just as "cash for clunkers" boosted auto sales, another federal program introduced this year aimed at first-time home buyers is driving home sales and helping to salvage the nation's beleaguered residential real-estate market. And if you want to get in on the action -- up to $8,000 worth -- you'd better hurry, as the incentive is set to expire Nov. 30.

So far, 1.4 million Americans have taken advantage of the first-time home buyer provision, contained with the American Recovery and Reinvestment Act, according to the Internal Revenue Service. It gives those who have never owned a home or haven't owned one within the last three years a credit of 10% of the price of the home, up to an $8,000 maximum.

While cashing a federal tax rebate check is the easiest way get some of the federal stimulus funds, probably the next easiest is to get a tax rebate for work you were going to do on your home anyway.

The American Recovery and Reinvestment Act of 2009 has plenty of energy provisions to save taxpayers money while helping to save the environment, but most look like they're expensive for consumers to afford.

There are tax credits for residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. Ever get a quote for a wind turbine? They're not cheap. There are also tax credits for plug-in electric cars, which cost a lot of money, too.

Probably one of the best deals, at least in terms of tax credit for money spent, is getting back 30% of the cost of improvements by homeowners for energy savings, called the Residential Energy Property Credit. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air-conditioning systems.

According to a news report by the National Association of Home Builders (NAHB), the clock is running down on the $8,000 tax credit for first-time home buyers. With less than four months to go, builders are urging qualified prospective buyers to start the sales process long before the Nov. 30 deadline.

Builders are also warning that faulty appraisals, completed using foreclosed properties as comparables for new homes, have been slowing down the sales process, creating hiccups in the financing stage that can often push the closing date much later than originally expected.

First-time buyers should also anticipate tighter lending standards that generally don't allow 100% financing, making buyers responsible for coming up with enough money prior to their purchase to meet required downpayment and closing costs.

For anyone with a child in college, filing a tax return for 2009 should be a little less painful.

While filing your taxes is the last thing you want to think of as the remaining free days of summer tick away, now is a good time to remind your college student to start saving book receipts and keep track of other college expenses before they start spending.

As part of the American Recovery and Reinvestment Act, more parents and students will qualify for the tax credit called the American Opportunity Credit for tax years 2009 and 2010, and their tax credits will increase from $1,800 under the Hope Credit, to $2,500 under the new plan.

If you're bored with keeping track of where the money goes in your household, try out a relatively new government Web site that tracks where your tax dollars are spent.

USASpending.gov offers an easily digestible look into where the government is spending money, with current and historical spending broken down by grants, contracts and loans. It drills further down by breaking it down into congressional districts and by contractors.

For example, I was amazed to learn that the top government contractor so far in fiscal year 2009 -- Lockheed Martin Corp. at $20.36 billion -- has received more money from the federal government than the top assistance recipient -- $18.9 billion to the Department of Health Care Services.