This is a guest post by Manny Davis of Back Taxes Help.

In 2009, many tax credits were augmented and created. Tax credits can help you lower your total tax bill and increase your chances for a tax refund. Below are some of this year’s most important tax credits. Some are new, some changed, and some became part of the American Recovery and Reinvestment Act (ARRA).

For those of you who are unsure of the difference between a tax credit and a tax deduction, a tax credit lowers your total tax bill directly, whereas a tax deduction lowers your taxable income (indirectly taxes dollar for dollar), sometimes placing you in a different income tax bracket.

Consumer Energy Tax Credit
This tax credit is a good one. If you have made repairs to your home (non-business) to improve energy efficiency you will be able to get up to 30% back from that investment but no more than $1,500. This would include better insulation through the installation of more efficient windows, doors, roofing and even the installation of water heaters, solar thermal technologies, natural and oil furnaces and so on. If you are unsure whether your recent energy efficiency investment qualifies, contact a CPA or the IRS directly.

American Opportunity Tax Credit
The old Hope Tax Credit was expanded for 2009 with the new American Opportunity Tax Credit. As a parent, for each student in college now, you can save up to $2,500 in taxes. There are income limitations with this credit though. Once you start to make over $80k as a single parent (or $160k for married couples), the credit begins to phase out. Realize though that you cannot claim the Hope Tax Credit and this credit in the same year for one student.

Home Buyer Tax Credit
This credit applies to new home buyers and even existing home buyers that meet certain guidelines. First time home buyers who purchased after January 1st, 2009 and before April 30th, 2010 can take up to $8,000 ($4,000 if married and filing separately) off of their tax bill. This tax credit is completely phased out once you make over $145k (individual) or $245k (for a married couple).

For existing home owners, who moved primary residences, the credit is $6,500 (individual) or $3,250 (if filing jointly) but you must have lived in the home for five consecutive years. Furthermore, it only applies for homes purchased after November 6th, 2009.

Making Work Pay Tax Credit
With this credit, you can claim up to 6.2% on earned income from wages but no more than $400 for individuals or $800 for married couples filing jointly. However, this really only applies to those that are self-employed as your employer should have reduced withholding for this during the year. Realize that does not apply to those receiving a pension, or unemployment.

Electric Motor Vehicle and Electric Plug-In Vehicle Tax Credits
These tax credits differ slightly in a few different ways if you went “green” in 2009.
* The Electric Motor Vehicle tax credit ranges from $2,500 to $15,000 depending on the capacity of the battery and how heavy the vehicle is.
* The Electric Plug-In Tax Credit is 10% of the vehicle cost capped out at $2,500. To take advantage of this your vehicle had to go into service after February 17th, 2009.

Adoption Tax Credit
This tax credit increased to $12,150 for 2009 but the tax credit is only applicable if the adoption expenses were paid this year (unless they are a special needs child).

Government Retiree Credit
This tax credit is $250 ($500 if filing jointly) for 2009 if you received a government pension payment or annuity in 2009. Realize though this credit becomes invalidated for you if you took an economic recovery payment.

Earned Income Tax Credit
This credit applies to low-wage earners and it had a few changes in 2009. One change is that the credit increased for individuals with 3 children or more and for married couples filing together. Also the income limit to qualify for this credit has increased as well.

For more details on any credit, visit IRS.gov.

Bonus: Use Your Tax Refund To Buy US Series I Savings Bonds
By utilizing some of these tax credits above you can increase your refund or your chances of getting a refund. Starting this year, the IRS is you purchase US Savings Bonds with your refund. Although these US bonds offer low rates of return during these economic times, they are great investments.

The IRS for this year’s filing will allow you to take up to $5,000 of your tax refund to buy U.S. Series I Savings Bonds in multiples of $50 by selecting this on Form 8888.

If you purchase more than $250, the denominations of the bonds should get larger. Anything over $5k or that be divided by a multiple of $50 will need to be deposited into a savings/checking account.

With the Federal government spending at all time highs, and with my belief that inflation is on the horizon, US savings bonds can be a very attractive hedge against inflation. Taxes on these bonds are due when redeemed but you will not be responsible for state or local taxes with these bonds. One drawback to these bonds is the fact that they cannot be redeemed until a year has passed from their issuance so be sure to check with your investment adviser.

Manny Davis is a partner and tax accountant at Back Taxes Help. He helps taxpayers with IRS and state back taxes and the problems that arise from having them. His firm especially focuses on major IRS problems including tax levies (IRS wage garnishment, bank account garnishment), tax liens, penalties, tax audits and more.

Welcome to tax season. If you’re a small business owner, those words might induce a shudder. For many of us, tax season means scrambling to itemize, catching up on stray expenses, and rushing to send contractors and employees the right forms at the right time. Unless you’re a CPA or other tax expert, tax season can be one prolonged headache.

The people behind Outright want to help. They founded the online bookkeeping software after watching small business owners flail during tax season. Rather than spending hours compiling tax data, why not live your life? That’s what Outright aims to help you do. The bookkeeping software is free, Web-based, and intuitive enough to ease the aches out of tax work.

Outright also recently launched Right Taxes Now, a blog devoted to helping those in the business community make positive changes both their own tax understanding and government tax legislation. We talked to Kevin Reeth, Outright’s CEO, and Marketing VP Paul O’Brien to get their take on small business, taxes, and what needs to happen at the places where they intersect.

BP: What are some of the biggest mistakes small business owners make when doing their taxes?

One, not paying taxes because they don’t think it’s a lot of money or because they have other bills. Or they wait until the end of the year, instead of paying estimated taxes throughout the year. Another is to allow themselves to get disorganized, which causes them to miss important deductions or critical tax deadlines. And of course, there’s the fear of claiming the home office deduction – even though more than half of all small businesses are home-based, the majority don’t claim the home office deduction.

BP: What’s the biggest point of pain that Outright removes for those people?

Outright help get entrepreneurs get organized, automating a lot of their recordkeeping and reminding them to pay estimated taxes on time.

Let’s switch gears to RightTaxesNow. Can you tell me a little bit about what the website does, and what its goals are?

RightTaxesNow.com is a community web site that’s been created to highlight the tax-related issues that cause really small businesses the most trouble, and to rally people in an effort to influence legislation that could simplify taxes and make entrepreneurship easier. If we really want small business the step up, create jobs, and help get this economy back on track, we’d be well served to make it easier to be in business.

BP: What are some of the biggest tax changes facing sole proprietors and small business owners this year?

The real impact on small business owners is just the amount of changes in tax laws and, maybe even worse, the unknown, of what Washington may do next with tax rates. Very few of the 2009 tax law changes had any broad impact either positive or negative on small businesses, but there has been so press about law changes, most of which impact individuals that business owners are concerned they can’t keep up.

One positive law change has been the ability to carry back operating losses, to still take advantage of them; it seems though, the majority of small business owners are doing well enough this change has little benefit to anyone.

BP: If you had one sentence of advice to give small business owners this year regarding their taxes, what would it be?

Actually, it would be to get organized so they spend as little time dealing with taxes, and as much time as possible earning a living.

BP: Any other remarks?

If you can’t tell from the direction we’re heading, we’re fed up with the support self employed professionals get from the government, and even big businesses like the credit markets and banks. Outright.com is designed to make it not only very easy to keep up, but to help entrepreneurs all but forget about the business of running a business. We’ll take care of your bookkeeping, help with taxes, and now, with Right Taxes Now, we intend to change things for the better for people just trying to make a living.

For more on small business, taxes, and how to make the two gel, visit Outright and Right Taxes Now.

Seemingly everyone has an opinion about taxes. As one of the largest economic and political issues of any country, the subject of how high taxes are (and upon which segment of society they predominantly fall) can be counted on to engender heated debates among politicians, academics, and ordinary citizens. However, beneath all the heated rhetoric and opinions are hard facts and numbers. Certain tax rates in certain countries correlate with certain outcomes, regardless of whether these are acknowledged by various strains of financial opinion. Today, Business Pundit takes an honest look at twelve countries – six with the highest tax rates, and six with the lowest – and examines other facets of those economies with an eye toward possible correlations. Naturally, there are several different ways to assess the income tax burden a nation imposes – the lowest rate of income tax in a country, the highest rate, income tax on corporations, and the like. Depending on who is being taxed (say, someone making $10,000 per year vs. someone making $100,000), a nation’s income tax structure can look very different. For the sake of using one uniform measure, our article uses marginal income taxes on average income workers in a given country.

The Highest Tax Rates

Belgium

Image Source

As will be seen throughout this article, most of the world’s highest tax rates can be found in western European nations. Belgium tops the list, with a marginal tax rate that goes as high as 54%. Despite such a high tax rate, Belgium ranks relatively highly on various economic measures. NationMaster.com, for instance, reports that Belgium’s $392 billion GDP ranks 18th out of 203 countries, and exports over $322 billion worth of goods and services yearly. However, other statistics show Belgium’s high tax rate coming back to haunt it. The International Monetary fund ranks Belgium 18th on its list of Gross Domestic Product based on purchasing power parity, at $36,416. It is also noted that Belgium was “likely to have negative growth, growing unemployment, and a 3% budget deficit.” Canada’s Trade Commissioner Service similarly reported “a slowdown of the activity in all sectors” during the last two quarters of 2008. In sum, it seems that Belgium’s high tax rates stifle economic vitality to some extent, despite the social safety net it provides.

Finland

Image Source

With a marginal tax rate of 46.6 on average workers, Finland has the fourth highest such rate in the world. However, unlike many similarly taxed countries, Finland has managed to have a stronger overall economy despite its taxation. Unemployment currently sits at 6.8% – surprisingly low given the current economic crisis and double-digit unemployment in the United States. Additionally, Finland’s $36,320 GDP per capita ranks 20th on the International Monetary Fund’s list. The CIA Factbook likewise states that Finland has “a highly industrialized, largely free-market economy with per capita output roughly that of the UK, France, Germany, and Italy.” It is also worth noting that Finland has been one of the best performing economies in the entire European Union in recent years, owing in no small part to the country’s having avoided the worst of the banking crisis.

Germany

Image Source

Clocking in just beneath Finland is Germany, with a 45% marginal tax rate on average income workers. Despite having the largest national economy in Europe (and the fourth largest in the world measured by nominal GDP), Germany has effectively traded off having a comprehensive social safety net against more robust economic growth. Its GDP measured by PPP is $35,539 according to the International Monetary Fund – 21st on the list, behind Belgium. As recently as 2007, TheNewEditor.com reported that Germans were emigrating at their highest rate since the 1940’s, resulting in a “brain drain” on the nation’s brightest and most motivated people. As a result of “high taxes and bureaucracy, thousands of Germans have upped sticks for Austria and Switzerland, or emigrated to the United States” — 155,290 during the year in question, which rivals “levels last experienced in the 1940s during the chaotic aftermath of the Second World War.” Furthermore, emigrants are generally said to be highly motivated and educated, while those immigrating to Germany are increasingly poorer and less educated — perhaps more inclined to consume Germany’s generous social benefits.

Denmark

Image Source

Denmark clocks in as having the fourth highest tax rate in the world at 44.4%. On the surface, high taxes have not had the chilling effect on Denmark that they appear to be having on other highly taxed nations. An ABC News story, for instance, reports that “Danes Rank Themselves as Happy and Content” – indeed, the happiest nation on Earth – despite the tax burden they bear. Furthermore, the high taxes mean that “a banker can end up taking home as much money as an artist” so that “people don’t chose careers based on income or status.” However, outsiders are skeptical of whether high taxes impose a bigger burden than is acknowledged. The New York Times (hardly an enemy of high taxation) reported in 2007 – the same year of ABC’s story – that Denmark’s tax structure was worsening a labor shortage. As in Germany, the Times found that “the Danish labor force had shrunk by about 19,000 people through the end of 2005″ (significant in a country of less than 6 million) because “Danes and others had moved elsewhere.” To its credit, Denmark does boast the 16th highest GDP per capita at $37,304 – impressive for a small and highly taxed nation.

Italy

Image Source

As of 2006, the highest tax rate in Italy has been roughly 43%. Unfortunately, Italy also has the lowest GDP per capita of any country covered so far — $30,631, good for 27th on the International Monetary Fund’s list. Various economic indicators portray Italy negatively, not the least of which is debt as a percentage of GDP being higher than 100%, according to EconomicsHelp.org. Italy also appears to have a sluggish male work population. According to Mint.com’s article on bizarre tax breaks around the world, Italy once toyed with the idea of offering males 30 and over a tax incentive to leave their mother’s homes and start their own lives. The problem, Mint writes, is ” is apparently so bad that a third of all men over 30 live at home” in Italy. Naturally, this segment of the population is not participating in economic growth by having their own homes or apartments, utility bills, and the like. The case could be made that overly generous government benefits have softened the population’s will to work.

France

Image Source

Finally, no discussion of highly taxed nations would be complete without including France. With a top marginal tax rate on average workers of about 40% (and a top tax on high-income workers of nearly 50%), France is long-known for sacrificing economic growth to social benefits handed out by government. As Charles Wheelan writes in his book Naked Economics, “France is a good place to be a struggling artist, and a bad place to be an Internet entrepreneur.” Despite being the fifth largest economy in the world, France’s GDP per capita stands at just $34,205 – only 23rd on the IMF’s ranking. A study done several years ago by the Organization for Economic Cooperation and Development found that “France’s tax burden as a percentage of gross domestic product last year rose to 43.7%, from 43.4% a year earlier”, according to ThisFrenchLife. A 2009 Wall Street Journal piece likewise finds France’s popular universal healthcare system “has been in the red since 1989″, with an expected 2010 shortfall of €15 billion.

The Lowest Tax Rates

Switzerland

Image Source

Perhaps unsurprisingly, the country with the lowest marginal tax rate on average income workers — Switzerland, at 20% — also boasts the world’s 7th highest GDP per capita at $43,196. The UK’s Times Online called attention to Switzerland’s “benign tax system” in a 2009 article about the nation’s “low tax high life” that invites people to escape 50% tax rates by moving there. Contrary to general assumptions, the Times explains, Switzerland has found a way to maintain a high standard of living alongside an extremely low personal income tax rate. BusinessWeek likewise reported in 2009 that Switzerland was “openly and legally urging multinationals to relocate” — and succeeding, while other nations buckled beneath staggering debt. Switzerland’s low tax rates have not stopped it from having some of the leading universities in the world, a highly educated work force and less than 3% unemployment as of 2009.

USA

Image Source

The United States is still relatively tax-friendly, with a marginal tax rate of around 27% on average income workers. As the world’s largest economy by far, the economic vitality and high standards of living in the U.S. speak for themselves. The United States boasts the 6th highest GPD per capita in the world at $47,440 and serves, in the words of Wikipedia, as “the epicenter of world trade.” Total GDP stood at over $14 trillion for 2008, which is more than three times that of the world’s second largest economy (Japan). American citizens also have the highest income per hour worked of any nation surveyed. By any objective measure, the United States and its relatively low tax rates offer the best of both worlds — reasonable social safety nets, and extraordinary economic capacity stemming from essentially free market policies. The standard of living in the US is evidenced by consistently being the most immigrated-to nation on earth — 38,355,000 immigrants currently call the US home, more than double that of Russia, which is second on the list.

Australia

Image Source

Australia, with a 31.5% marginal tax rate on average income workers, manage to clock in at 17th on the IMF’s GDP per capita ranking with $36,918. The island nation is bouncing back surprisingly strong from the worldwide economic meltdown, with the BBC reporting on January 14, 2010 that had fallen to 5.5% at a time when similarly situated nations are struggling with double-digit unemployment. According to Deputy Prime Minister Juliar Gillard, the BBC’s findings “provide further evidence of how Australia has outperformed virtually every other advanced economy during the global recession.” With a tax rate similar to that of the United States, Australia has long provided incentives for the hard work, entrepreneurship and risk-taking that are fundamental to sustained economic growth and high standards of living.

Canada

Image Source

Canada is taxed in a manner similar to that of the United States, imposing a 31.2% marginal tax rate on average income workers. Despite a $39,098 GDP per capita (good for 13th on the IMF’s list), Canada has struggled amidst the current economic crisis. The Canadian government’s statistical agency, Statistics Canada, reported on January 8, 2010 that the national unemployment rate sat at 8.5% – slightly below the double-digit rate of the U.S., but still troubling. Canada-based CBC News also reported in early 2009 that the International Monetary Fund had “slashed Canada’s GDP growth for 2009 and 2010.” Like Japan and several other nations so far discussed, Canada maintains universal healthcare coverage for all its citizens in addition to other social programs. Canada has also, according to Reuters, ruled out raising taxes to ease the national deficit, but rather, would “constrain public spending” instead.

Japan

Image Source

Japan is an interesting case on several fronts. Despite being the second largest economy on Earth, Japan’s GDP per capita is just 24th on the International Monetary Fund’s list, at $34,116. Canada’s Parlimentary Research Service offers some answers. One explanation for Japan’s recently diminished economic vitality could be that “Japan was the country with the lowest government revenue-to-GDP ratio (31%) and the second-highest government net debt-to-GDP ratio (78%).” Nonetheless, it’s 33% marginal tax rate on average income workers represents one of the lowest in the world. Japan’s unemployment rate also stood at a manageable 5.5% as of late October 2009, according to the BBC. To its credit, Japan boasts a strong standard of living, including a hybrid system of public and government-subsidized health insurance for all its citizens.

United Kingdom

Image Source

With a 32% marginal tax rate imposed on average income workers, the UK still qualifies as a relatively low-taxed nation, but only amidst the rest of highly-taxed Western Europe. With a GDP per capita of $36,358 (19th on the IMF’s ranking), Great Britain stands as the sixth largest economy in the world by this measure. The United Kingdom provides universal healthcare to its citizens, as do most industrialized nations in Europe, and Poverty.org reports that roughly 21% live below 40% of the country’s median income. The country is also a major financial hub in the world economy, with London housing various important stock exchanges and investment banks. Unemployment is manageable at 7.8%, as of the fourth quarter of 2009, compared with double-digit employment in many similarly situated nations. All told, London continues to offer one of the higher standards of living in the world, owing in part to its relatively low taxes and focus on economic growth.

In the U.S., our dependence on oil not only makes for wealthy oil companies, it also supports our federal, state and local governments. Gas taxes add up quickly and some areas of the country are taxed more heavily than others. However, one surprising thing holds true: The government profits even more from our oil addiction than the super-rich oil companies do.

Click to Enlarge