What Will I Receive in the New Stimulus Bill?
What’s in the 407 page stimulus bill that will actually affect the normal taxpaying citizen? Because of the enormity of the bill and the various sectors it reaches, whether you realize it or not, this bill will affect you in many ways. As for as actual provisions that put immediate money in your pockets, there isn’t a whole lot. However, there are a few sections of the bill you should know about like the tax credit that will make your paychecks bigger, retiree tax checks, and tax breaks for new automobile owners. Below are what we feel are a the most relevant sections of the new stimulus bill that matter to you.
Provisions of the “American Recovery and Reinvestment Act of 2009” that Might Put Money into YOUR Pocket:
Tax Cuts (Make Work Pay Credit). Do you remember Joe the Plumber? That debate was ultimately about tax cuts, and tax cuts that the majority (95%) of Americans are supposed to see in the coming months. Depending on your income, single workers will receive about $400 and couples about $800 of tax relief in 2009. You won’t receive a check like the first stimulus, rather you will see your paychecks increase slightly, probably about $12-14 per week. You may think this is nothing, but I like that it wasn’t given in one big sum like the last stimulus, which usually gets us to blow it.
What are the details?
The credit begins phasing out once your income exceeds $75,000 ($100,000 if married) and disappears once your income exceeds $100,000 ($200,000 if married).
Energy Efficient Appliance Tax Credits. This provision made changes to existing credits and in many instances increased the credits and extended them. To get specific details on this credit, please check out this link.
What were the main changes?
- The tax credits that were previously effective for 2009, have been extended to 2010 as well.
- The tax credit has been raised from 10% to 30%.
- The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
- The maximum credit has been raised from $500 to $1500 for the two years (2009–2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
- The $200 cap on windows has been removed.
First Time Home Buyer Credit. I went over this in a previous post and it’s a provision you should not ignore if you plan on buying a home this summer. The credit is equal to 10% of the purchase price of the home; of course, it cannot be for over the maximum credit of $8,000 and this a credit not a deduction, which means free money!
How Do I Claim the First Time Home Buyer Tax Credit?
You will receive the credit when you file either your 2008 or 2009 individual tax return. If you qualify, you will have to fill out Form 5405, which will help them determine the amount you can expect to receive. In case you already filed your return and you qualify for the credit, don’t worry, you can amend your return and still get the credit.
Who Qualifies for the First Time Home Buyer Tax Credit?
First time homeowners who purchased their house between January 1,2009 and December 1, 2009 are eligible for the credit. But don’t let the title of the credit fool you. If you have not owned a home for three years, you also qualify for the credit. It should have been called the First Time Home Buyer and Three Years Removed From Homeownership Tax Credit.
What are the Income Limits ?
Single taxpayers with incomes up to $75,000 and couples filing together with an income of up to $150,000 can expect to receive the full credit.
Tax Deduction for New Car Purchases. Despite rumors from previous versions of the bill, you cannot deduct interest paid on a new car loans, similar to home mortgages. However, the bill does allow us to deduct sales tax paid on a new vehicle. Everyone knows how I feel about buying new cars, but if you really feel you need a new one, I guess this is an incentive.
When do I have to buy a car by?
Any new car, light truck, recreational vehicle, or motorcycles purchased between February 17th and December 31, 2009.
What are the income restrictions?
Income restrictions are in play. Individuals with a modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 a year in 2009 qualify.
What if the car I purchased is not a new model, but has never had an owner?
It doesn’t matter what year the vehicle is, you just have to be the first owner, thus the car is basically new.
Seniors on Social Security Receive Checks. Starting in May (or no later than 120-days after the bill was signed), the Social Security Administration will begin to send checks for $250 to recipients of social security. The money should be sent in the same way you already receive your benefits.
Are there income restriction limits?
No.
Education Tax Credit. If you are a parent of a dependent college student or even independent college students, then you can claim a credit of up to $2,500/year to help with the cost of school. You have to of paid the cost after January 1, 2009.
Food Stamps. Families who are eligible for food stamps will receive an estimated $79 of additional worth of stamps a month. $
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Every little bit of extra money in a paycheck helps, I guess. It’s actually going to be a larger amount overall than the stimulus checks received last year, although it might not be as noticeable because it’s spread out over your paychecks. The Making Work Pay Credit is supposed to be in effect no later than April 1st by all employers.