Fiscal Tax Blog
Key taxpayer provisions: The good news is that 95% of taxpayers will benefit from at least one of the tax breaks. Unlike the 2008 Economic Stimulus, there will not be stimulus rebate payment checks in 2009.
Details of 2009 Stimulus Plan Tax Law Changes
Provision | What is it? | Who gets it? | When do they get it? |
First-time Homebuyer Credit | Up to an $8,000 refundable tax credit for first-time homebuyers. | You purchase a personal residence between January 1, 2009 and November 30, 2009, and you have not owned a home in the last three years. | When taxpayers file their 2008 or 2009 tax returns. |
Energy Property Credit | A credit of up to $1,500 for qualifying residential energy improvements. | Taxpayers who invest in qualifying energy improvements such as: (storm windows and doors, energy efficient furnace, air conditioner, heat pump, etc) to their residential property. | When taxpayers file their 2009 and 2010 tax returns. |
Vehicle Purchase | A tax deduction for the state and local sales tax on a purchase of a new vehicle in 2009 costing up to $49,500. | Individuals who purchase new vehicles after 2/16/09 and before 2010. Phase out at 125k / 250k. | When taxpayers file their 2009 return. |
Education Tax Credits | An enhanced Hope credit that can be applied to the first 4 years of college. Max credit of $2,500 of which 40% is refundable. --- Most | Individuals who pay for qualified education expenses for the first four years of college. Phase out starts at 80k / 160k. | When taxpayers file their 2009 and 2010 returns. |
Earned Income Tax Credit | An increased tax credit for families with 3 or more children. Additional marriage penalty relief for married couples filing joint returns. | Certain qualifying individuals (based upon income) and married couples filing jointly. | When taxpayers file their 2009 and 2010 tax returns. |
Unemployment Compensation | An exclusion from tax on the first $2,400 of unemployment benefits. Additional $25/week and extended time to receive benefits. | Jobless taxpayers receiving unemployment compensation. | Sometime during 2009 and/or through filing your 2009 tax return. |
Tax Credit for Workers. “Making Work Pay Credit” | A refundable credit of up to $400/single and $800/married. Taxpayers payroll check will increase $8.00 to $16.00 per week. | Individuals who are employed or self employed. Benefits start to phase out at 75k/150k and full phase out at 95k/190k. | 2009 and 2010: Benefit delivered thoughout year as an increase in paycheck. Will start by April 2009. |
Retirees Payment | A $250 one time payment (mailed to your home or direct deposited to your bank account). | Individuals who receive Social Security, Tier I railroad retirement, SSI or VA pension or disability benefits. | Sometime during 2009 and/or through filing your 2009 tax return. |
COBRA | A federal subsidy of 65% of monthly COBRA premiums for 9 months. | Jobless individuals paying for COBRA insurance and involuntarily terminated. | Sometime during 2009, COBRA charges will be reduced. |
Note:
- Most provisions above are subject to phase out for higher-income individuals. Ask us for more details.
- Individuals may want to consider adjusting their income tax withholding during the year (and thereby increasing their paychecks), if indeed any of these provisions significantly reduces their end-of-year tax liability.
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