Why is your paycheck more than usual?  Because the economy stinks and the Democrats are in control!  That was intended to be a joke, but it’s actually true.  You may have noticed that your paycheck is slightly higher than it has been in the past, mine was $31 more.  This is a result of the second stimulus bill passed by Congress.  There is a section titled, “Making Work Pay Credit,” which essentially does what the first stimulus did, which is giving us some of our money back!  The major difference is, this time around, the money is coming to us piecemeal through our paychecks by reducing our taxable federal income taxes.

You’ll notice that your federal income tax withheld has been reduced by the same amount as your paycheck increased.  This is all a good thing, because the credit is a credit, we will not have to pay taxes on the extra amount we receive each check.  Most of everyone will receive the credit; our President has said that 95% of the population will receive tax help.

How Much is the Credit?
To quote the legislation,

“there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of—(1) 6.2 percent of earned income of the taxpayer, or (2) $400 ($800 in the case of a joint return).”

Simply put, this means that you will receive whichever is the lesser amount of 6.2 percent of your earned income or a max of $400 for single filers or $800 for a married couples, over the year.  Although most don’t realize it, this credit is more than the first stimulus passed last year when we received checks for $600.

How Long Will The Credit Last?
We will receive the credit in 2009 and 2010.

Why Was My Credit Less/More Than My Coworkers?
We had this discussion at work when we looked at our first paycheck with the credit.  I looked online and couldn’t find anything explaining it, so again, I went to the source—the stimulus bill itself.  I’ll quote the bill,

“(1) IN GENERAL.—The amount allowable as a credit under subsection (a) (determined without regard to this paragraph and subsection (c)) for the taxable year shall be reduced (but not below zero) by 2 percent of so much of the taxpayer’s modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).”

In English, this means if you make over $75,000/single filers or $150,000/married filers, then your credit begins to phase out by 2 percent.

What Should You Do With The Credit?
Save it.  Unless you are experiencing economic trouble, which many of us unfortunately are, then you should increase your saving contributions by the same amount as the credit.  Why not, you’re living fine without the added few dollars anyways? In general, the amount is small enough where paying off debts is probably laughable and saving in this financial atmosphere is a must.

For the Select Few Who are Interested, Here is the Tax Credit Language Directly from the Bill:

Subtitle A—Tax Relief for Individuals and
Families
PART I—GENERAL TAX RELIEF
SEC. 1001. MAKING WORK PAY CREDIT.

(a) IN GENERAL.—Subpart C of part IV of subchapter A of
chapter 1 is amended by inserting after section 36 the following
new section:

‘‘SEC. 36A. MAKING WORK PAY CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year an amount equal to the lesser
of—

‘‘(1) 6.2 percent of earned income of the taxpayer, or
‘‘(2) $400 ($800 in the case of a joint return).
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED GROSS
INCOME.—

‘‘(1) IN GENERAL.—The amount allowable as a credit under
subsection (a) (determined without regard to this paragraph
and subsection (c)) for the taxable year shall be reduced (but
not below zero) by 2 percent of so much of the taxpayer’s
modified adjusted gross income as exceeds $75,000 ($150,000
in the case of a joint return).

‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For purposes of
subparagraph (A), the term ‘modified adjusted gross income’
means the adjusted gross income of the taxpayer for the taxable
year increased by any amount excluded from gross income
under section 911, 931, or 933.

‘‘(c) REDUCTION FOR CERTAIN OTHER PAYMENTS.—The credit
allowed under subsection (a) for any taxable year shall be reduced
by the amount of any payments received by the taxpayer during
such taxable year under section 2201, and any credit allowed to
the taxpayer under section 2202, of the American Recovery and
Reinvestment Tax Act of 2009.

‘‘(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—

‘‘(1) ELIGIBLE INDIVIDUAL.—

‘‘(A) IN GENERAL.—The term ‘eligible individual’ means
any individual other than—
‘‘(i) any nonresident alien individual,
‘‘(ii) any individual with respect to whom a deduction
under section 151 is allowable to another taxpayer
for a taxable year beginning in the calendar year in
which the individual’s taxable year begins, and
‘‘(iii) an estate or trust.

‘‘(B) IDENTIFICATION NUMBER REQUIREMENT.—Such
term shall not include any individual who does not include
on the return of tax for the taxable year—
‘‘(i) such individual’s social security account
number, and
‘‘(ii) in the case of a joint return, the social security
account number of one of the taxpayers on such return.
For purposes of the preceding sentence, the social security
account number shall not include a TIN issued by the
Internal Revenue Service.

‘‘(2) EARNED INCOME.—The term ‘earned income’ has the
meaning given such term by section 32(c)(2), except that such
term shall not include net earnings from self-employment which
are not taken into account in computing taxable income. For
purposes of the preceding sentence, any amount excluded from
gross income by reason of section 112 shall be treated as
earned income which is taken into account in computing taxable
income for the taxable year.
‘‘(e) TERMINATION.—This section shall not apply to taxable years
beginning after December 31, 2010.’’.
(b) TREATMENT OF POSSESSIONS.—
(1) PAYMENTS TO POSSESSIONS.—
(A) MIRROR CODE POSSESSION.—The Secretary of the
Treasury shall pay to each possession of the United States
with a mirror code tax system amounts equal to the loss
to that possession by reason of the amendments made
by this section with respect to taxable years beginning
in 2009 and 2010. Such amounts shall be determined by
the Secretary of the Treasury based on information provided
by the government of the respective possession.
(B) OTHER POSSESSIONS.—The Secretary of the
Treasury shall pay to each possession of the United States
which does not have a mirror code tax system amounts
estimated by the Secretary of the Treasury as being equal
to the aggregate benefits that would have been provided
to residents of such possession by reason of the amendments
made by this section for taxable years beginning
in 2009 and 2010 if a mirror code tax system had been
in effect in such possession. The preceding sentence shall
not apply with respect to any possession of the United
States unless such possession has a plan, which has been
approved by the Secretary of the Treasury, under which
such possession will promptly distribute such payments
to the residents of such possession.

(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED
STATES INCOME TAXES.—No credit shall be allowed against
United States income taxes for any taxable year under section
36A of the Internal Revenue Code of 1986 (as added by this
section) to any person—
(A) to whom a credit is allowed against taxes imposed
by the possession by reason of the amendments made by
this section for such taxable year, or
(B) who is eligible for a payment under a plan described
in paragraph (1)(B) with respect to such taxable year.
(3) DEFINITIONS AND SPECIAL RULES.—
(A) POSSESSION OF THE UNITED STATES.—For purposes
of this subsection, the term ‘‘possession of the United
States’’ includes the Commonwealth of Puerto Rico and
the Commonwealth of the Northern Mariana Islands.
(B) MIRROR CODE TAX SYSTEM.—For purposes of this
subsection, the term ‘‘mirror code tax system’’ means, with
respect to any possession of the United States, the income
tax system of such possession if the income tax liability
of the residents of such possession under such system is
determined by reference to the income tax laws of the
United States as if such possession were the United States.
(C) TREATMENT OF PAYMENTS.—For purposes of section
1324(b)(2) of title 31, United States Code, the payments
under this subsection shall be treated in the same manner
as a refund due from the credit allowed under section
36A of the Internal Revenue Code of 1986 (as added by
this section).

(c) REFUNDS DISREGARDED IN THE ADMINISTRATION OF FEDERAL
PROGRAMS AND FEDERALLY ASSISTED PROGRAMS.—Any credit or
refund allowed or made to any individual by reason of section
36A of the Internal Revenue Code of 1986 (as added by this section)
or by reason of subsection (b) of this section shall not be taken
into account as income and shall not be taken into account as
resources for the month of receipt and the following 2 months

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.  $

Congress has been blamed for pushing homeownership so much so that in part, they helped our subprime crisis evolve.  After all, it’s easy for them to turn a regulatory eye when their constituents are happy and in nice homes.  Having said that, in a desperate move to try to get people to buy homes again (this time to rejuvenate the crippled market) they have made law in the recently passed stimulus package an $8,000 tax credit for first time homeowners.

Again, this is a credit not a deduction, which means it is a free $8,000 (if you qualify for the full amount) in your pocket and not a write off on your taxable earnings for the year.  Honestly, I’m amazed at this credit and I hope many of you can take advantage of it.  Originally, the amount was $7,500 and had to be repaid, which raised many questions if the money should even be accepted by new homeowners. Well, that’s in the past and the future is green (for some of you).

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 homebuyers 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.

How Much of the Credit Will I Receive?
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.

So, if any of you know anyone who might be able to qualify for this credit, let them know!  This is one of the few provisions of the second stimulus package that directly puts money into taxpayer’s pockets. $

President Obama wanted a stimulus package on his desk before Pesident’s Day and surprisingly, he will have it.  Below is a sumary of what is in the passed version of the 2009 stimulus, thanks to the Appropporiations Committee.

The American Recovery and Reinvestment Act provides $311 billion in
appropriations, including the following critical investments:

• Investments in Infrastructure and Science – $120 billion

• Investments in Health – $14.2 billion

• Investments in Education and Training – $105.9 billion

• Investments in Energy, including over $30 billion in infrastructure – $37.5 billion

• Helping Americans Hit Hardest by the Economic Crisis – $24.3 billion

• Law Enforcement, Oversight, Other Programs – $7.8 billion

Infrastructure Improvements

• $7.2 billion for Broadband to increase broadband access and usage in unserved and underservedareas of the Nation, which will better position the U.S. for economic growth, innovation, and job creation.

• $2.75 billion for the Department of Homeland Security to secure the homeland and promote economic activity, including $1 billion for airport baggage and checkpoint security, $430 million for construction of border points of entry, $210 million for construction of fire stations, $300 million for port, transit, and rail security, $280 million for border security technology and communication, and$240 million for the Coast Guard.

• $4.6 billion in funding for the Corps of Engineers.

• $1.2 billion for VA hospital and medical facility construction and improvements, long-term care facilities for veterans, and improvements at VA national cemeteries.

• $3.1 billion for repair, restoration and improvement of public facilities at on public and tribal lands.

• $4.2 billion for Facilities Sustainment, Restoration and Modernization to be used to invest in energy efficiency projects and to improve the repair and modernization of Department of Defense facilities to include Defense Health facilities.

• $2.33 billion for Department of Defense Facilities including quality of life and family-friendly military improvement projects such as family housing, hospitals, and child care centers.

• $2.25 billion through HOME and the Low Income Housing Tax Credit program to fill financing gaps caused by the credit freeze and get stalled housing development projects moving.

• $1 billion for the Community Development Block Grant program for community and economic development projects including housing and services for those hit hard by tough economic times.

• $1 billion for the Bureau of Reclamation to provide clean, reliable drinking water to rural areas and to ensure adequate water supply to western localities impacted by drought

Transportation

• $27.5 billion is included for highway investments

• $8.4 billion for investments in public transportation.

• $1.5 billion for competitive grants to state and local governments for transportation investments.

• $1.3 billion for investments in our air transportation system.

• $9.3 billion for investments in rail transportation, including Amtrak, High Speed and Intercity Rail.

Public Housing

• $4 billion to the public housing capital fund to enable local public housing agencies to address a $32 billion backlog in capital needs — especially those improving energy efficiency in aging buildings.

• $2 billion for full-year payments to owners receiving Section 8 project-based rental assistance.

• $2 billion for the redevelopment of abandoned and foreclosed homes.

• $1.5 billion for homeless prevention activities, which will be sent out to states, cities and local governments through the emergency shelter grant formula.

• $250 million is included for energy retrofitting and green investments in HUD-assisted housing projects.

Environmental Clean-Up/Clean Water

• $6 billion is directed towards environmental cleanup of former weapon production and energy research sites.

• $6 billion for local clean and drinking water infrastructure improvements.

• $1.2 billion for EPA’s nationwide environmental cleanup programs, including Superfund.

• $1.38 billion to support $3.8 billion in loans and grants for needed water and waste disposal facilities in rural areas.

Science

• $1 billion total for NASA.

• $3 billion total for National Science Foundation (NSF).

• $2 billion total for Science at the Department of Energy including $400 million for the Advanced Research Projects Agency—Energy (ARPA-E).

• $830 million total for the National Oceanic and Atmospheric Association (NOAA).

Investments in Health

• $19 billion, including $2 billion in discretionary funds and $17 billion for investments and incentives through Medicare and Medicaid to ensure widespread adoption and use of interoperable health information technology (IT). This provision will grow jobs in the information technology sector, and will jumpstart efforts to increase the use of health IT in doctors’ offices, hospitals and other medical facilities. This will reduce health care costs and improve the quality of health care for all Americans.

• $1 billion for prevention and wellness programs to fight preventable diseases and conditions with evidence-based strategies.

• $10 billion to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, and to improve NIH facilities.

• $1.1 billion to the Agency for Healthcare Research and Quality, NIH and the HHS Office of the Secretary to evaluate the relative effectiveness of different health care services and treatment options.

Investments in Education and Training

• $53.6 billion for the State Fiscal Stabilization Fund, including $39.5 billion to local school districts using existing funding formulas, which can be used for preventing cutbacks, preventing layoffs, school modernization, or other purposes; $5 billion to states as bonus grants for meeting key performance measures in education; and $8.8 billion to states for high priority needs such as public safety and other critical services, which may include education and for modernization, renovation and repairs of public school facilities and institutions of higher education facilities.

• $13 billion for Title 1 to help close the achievement gap and enable disadvantaged students to reach their potential.

• $12.2 billion for Special Education/IDEA to improve educational outcomes for disabled children. This level of funding will increase the Federal share of special education services to its highest level ever.

• $15.6 billion to increase the maximum Pell Grant by $500. This aid will help 7 million students pursue postsecondary education.

• $3.95 billion for job training including State formula grants for adult, dislocated worker, and youth programs (including $1.2 billion to create up to one million summer jobs for youth).

Investments in Energy

• $4.5 billion for repair of federal buildings to increase energy efficiency using green technology.

• $3.4 billion for Fossil Energy research and development.

• $11 billion for smart-grid related activities, including work to modernize the electric grid.

• $6.3 billion for Energy Efficiency and Conservation Grants.

• $5 billion for the Weatherization Assistance Program.

• $2.5 billion for energy efficiency and renewable energy research.

• $2 billion in grant funding for the manufacturing of advanced batteries systems and components and vehicle batteries that are produced in the United States.

• $6 billion for new loan guarantees aimed at standard renewable projects such as wind or solar projects and for electricity transmission projects.

• $1 billion for other energy efficiency programs including alternative fuel trucks and buses, transportation charging infrastructure, and smart and energy efficient appliances.

Help for Workers and Families Hardest Hit by the Economic Crisis

• $19.9 billion for additional Supplemental Nutrition Assistance Program (SNAP), formerly Food Stamps, to increase the benefit by 13.6 percent.

• Child Care Development Block Grant: $2 billion to provide quality child care services for an additional 300,000 children in low-income families who increasingly are unable to afford the high cost of day care.

• Head Start & Early Head Start: $2.1 billion to allow an additional 124,000 children to participate in this program, which provides development, educational, health, nutritional, social and other activities that prepare children to succeed in school.

• State and Local Law Enforcement: $4 billion total to support law enforcement efforts.

• $555 million to expand the Department of Defense Homeowners Assistance Program (HAP) during the national mortgage crisis.

Unprecedented Oversight, Accountability and Transparency

The American Recovery and Reinvestment Plan provides unprecedented oversight, accountability, and transparency to ensure that taxpayer dollars are invested effectively, efficiently, and as quickly as possible.

• Funds are distributed whenever possible through existing formulas and programs that have proven track records and accountability measures already in place.

• Numerous provisions in the bill provide for expedited but effective obligation of funds so that dollars are invested in the economy as quickly as possible.

• The Government Accountability Office and the Inspectors General are provided additional funding for auditing and investigating recovery spending.

• A new Recovery Act Accountability and Transparency Board will coordinate and conduct oversight of recovery spending and provide early warning of problems.

• A special website will provide transparency by posting information about recovery spending, including grants, contracts, and all oversight activities.

• State and local whistleblowers who report fraud and abuse are protected.

• There are no earmarks in this bill.

If you didn’t receive your full rebate check a few months back, you may still be eligible to apply for the remainder of your stimulus if you made less in 2008 then in 2007.  The original stimulus checks were rushed out with the hopes of a magical boost to our ailing economy.  Because they were rushed out, the IRS used our 2007 return as a basis to determine the amount to send to each taxpayer.  However, the stimulus checks are actually tax credits for 2008, meaning you were  prepaid your credit.  So, you may be eligible to claim the remainder of your check if your income is under the following requirements.

Single filers received a $600 rebate and married couples received $1200 rebate plus an additional $300 per dependent younger than 17.  You received these amounts if you your gross income for 2007 income was less than $75,000/single filers or $150,000/married filers.  If you earned more than this, then your rebate check was reduced $50 for every $1,000 above the limits.  The rebate phased out completely at $87,000 for single filers without dependents and $174,000 for married filers without dependents.

You may need to read this twice, but stay with me, were getting to the punch line.  If you earned more than the maximums mentioned above in 2007 and didn’t receive your full rebate, but earned less then the minimums in 2008, then you are eligible to file for the rest of your stimulus check with your 2008 taxes.  Why?  Because it was actually a prepayment credit on your 2008 taxes using your 2007 income figures.  Also, if you had kids in 2008, congratulations, because you can still claim your $300 credit to buy some diapers.  Lastly, if you didn’t qualify for the rebate because you were claimed as a dependent in 2007 but not in 2008 you can file to get your full rebate–young filers take note.

If you qualify for the remainder of your stimulus, it will be added to your 2008 Federal refund.  You can figure out the credit when you file form 1040 for 2008.  Or if you using a tax software, it should ask you questions leading to your additional payment.

Let us recap:

• If you didn’t receive a full stimulus and made less in 2007 then in 2008 you may be eligible for the remainder of your stimulus.

• If you had kids in 2008 you can get the $300 dependent stimulus with your 2008 return.

• If you didn’t get a rebate because you were claimed as a dependent in 2007, but are filing on your own in 2008, you can receive your stimulus with your 2008 return. $

The fate of the upcoming stimulus bill is still up in the air with Senate Republican’s being the major roadblock.  This is exactly why our democratic process is so genius.  I personally believe we need a stimulus bill to create jobs and improve not only our nation’s physical infrastructure, but our economical infrastructure as well. However, a stimulus bill must be exactly that, a stimulus and if the Republicans can successfully shed light on wasteful spending currently included in the House passed version of the stimulus bill, then everyone wins but special interests.   We cannot afford, nor should taxpayers be expected to fund  $246 million for Hollywood movie producers  or $110 million to the Farm Service Agency to upgrade their computer systems.  If a provision in the stimulus bill does not provide near-term jobs or needed relief to those who need it, it should be stricken from the legislation.

Below is a list of what the Senate Republicans feel should be taken out of the House passed bill; I tend to agree with most of it.  What are your thoughts?

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.
• A $246 million tax break for Hollywood movie producers to buy motion picture film.
• $650 million for the digital television converter box coupon program.
• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).
• $448 million for constructing the Department of Homeland Security headquarters.
• $248 million for furniture at the new Homeland Security headquarters.
• $600 million to buy hybrid vehicles for federal employees.
• $400 million for the Centers for Disease Control to screen and prevent STD’s
• $1.4 billion for rural waste disposal programs.
• $125 million for the Washington sewer system.
• $150 million for Smithsonian museum facilities.
• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.
• $75 million for “smoking cessation activities.”
• $200 million for public computer centers at community colleges.
• $75 million for salaries of employees at the FBI.
• $25 million for tribal alcohol and substance abuse reduction.
• $500 million for flood reduction projects on the Mississippi River.
• $10 million to inspect canals in urban areas.
• $6 billion to turn federal buildings into “green” buildings.
• $500 million for state and local fire stations.
• $650 million for wildland fire management on forest service lands.
• $1.2 billion for “youth activities,” including youth summer job programs.
• $88 million for renovating the headquarters of the Public Health Service.
• $412 million for CDC buildings and property.
• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.
• $160 million for “paid volunteers” at the Corporation for National and Community Service.
• $5.5 million for “energy efficiency initiatives” at the Department of Veterans Affairs National Cemetery Administration.
• $850 million for Amtrak.
• $100 million for reducing the hazard of lead-based paint.
• $75 million to construct a “security training” facility for State Department Security officers when they can be trained at existing facilities of other agencies.
• $110 million to the Farm Service Agency to upgrade computer systems.
• $200 million in funding for the lease of alternative energy vehicles for use on military installations. $

Stimulus Time Again!

Negotiations have finally gotten to a point where details have been released of what will be included (debated) in a new stimulus package worth around $825 billion dollars over a two-year period.  More likely however, the bill will probably increase to over a $1 trillion.  Three Congressional committees are schedule to mark up the bill in the House, which means the final product will ultimately look considerably different than what has recently been proposed.  The ultimate goal for both Houses of Congress is to have the bill (in some form) passed by mid February.  It looks like individuals will be receiving some more money, but in the form of a tax cut…

The point of the stimulus is easily confused with the previous stimulus.  This bill is much different than the previous stimulus that Congress approved.  This bill is designed to boost our nation’s economy by creating jobs through infrastructure projects like the building of new schools and roads.  The bill has money going towards energy and health care projects.

Individuals will receive relief if the bill as currently written stands.  Through tax relief, most workers would receive approximately a $500 tax cut in their paychecks.  The original draft is available and can be viewed by clicking here.  As it currently stands, the bill is around 250 pages and will likely grow after about a month of Congressional markups.

We will keep you posted as the bill works its way through Congress, focusing of course on how much money YOU will receive through a tax cut.  $

Oh Eureka. So we are hearing from quite a number of people that they haven’t received their economic stimulus check yet, myself included. Well after we got a hot tip, (thank you Greg) the mystery has revealed itself. No thanks to the IRS mind you…

According to Turbo Tax, the difference comes about when you get to the end of the filing process. You have a choice of paying for the filing to the federal government and the state with a credit card outright, or by having the filing fees taken out of your refund, provided you qualified for one. You must have had a completed tax return on file by the deadline, April 15th 2008, in order to receive the stimulus check by the normal given time.

In the event that you went with the first option, to pay for it outright at the time of filing, there should be no issues. However, if you had the fees taken out from your refund, like I did, then you will not be receiving your check like the rest of the class.

What ends up happening on Turbo Tax’s back-end is that when you opt for fees to be taken from your refund, a small temporary bank account is created on your behalf for the refund to pass through, ergo, Turbo Tax is given the window to scrape out their dues. Then this little temp account gets deleted and we continue to hurdle on in our busy lives. Unfortunately, this magical temporary account is the last thing the IRS knows about as far as giving you money. And naturally, they don’t do this very often so they get confused. When they went to go pump up your account they got a bounce back and your check gets tossed into the snail mail pile to be sent later than what you expected, hence everyone wondering where their check has run off to.

You will get your check, but you better check your mail and be aware of when yours is to come if it was mailed. Spend wisely!

As we all sit around, glued to our bank accounts, waiting for our stimulus check, the country is hurdling towards an unknown that won’t officially be settled until July. Once the magic “R” word comes out, I would imagine that there is going to be a new shock to the system as a whole. Thats going to happen even without considering when the monstrous ARS issue thats going to hit the federal government to the tune of about $330 billion dollars.

It brings up another important issue that millions of Americans are currently facing. What to do about their home. If you bought your house in the past 3 or 4 years and it has a jumbo loan or more amount on it, then you are probably seeking as much information as possible about what to do to remedy your situation. Let’s discuss some of your options and see what is out there that can help you…

Renegotiate
If you have an ARM and its about to reset, or you just got some bad terms, one option you might look into is simply calling your mortgage company and begin some discussion about reformatting your loan. Many times, they have done things that aren’t even legal anymore and you were grandfathered in and they are taking money unfairly. Granted its every buyers responsibility but it takes two to tango. Lenders should now be in the position of trying to appease their customers and bending over backwards to keep you. In theory, they should be more than willing to renegotiate your terms and have everyone come to a new agreement. In theory.

Refinance
A more specific goal in the renegotiation process, would be to refinance. But, you are thinking, Isn’t it too late? No. No it is not. Rates have never been lower and banks have never wanted your business this bad. I can only imagine that given the right circumstances, they would want to keep you in your house as long as possible because at least its consistent. And if you are still the owner, the probability of you trashing it on your way out is much lower. In addition to going back to your original lender and telling them the deal, shop around. Where one lender might have a crazy scheme that sounds like a fool proof plan, find out if that is best-practice. See if you can get hold of someone knowledgeable and that you trust and ask them about the terms of your new loan. Refinancing is little expensive but it beats selling right now. Its very similar to when you consolidate a credit card: one card company basically pays off all your debt and you owe a new group at, hopefully, a more favorable rate.

Government? Help?
So what is the US Government doing to help out these home owners? Well they are trying to do quite a bit. I am not going to muddy things up and start an endless, irrelevant discussion about my personal politics here in this venue so I will stick strictly to the facts. The Democrats have been cranking away on a bill that would rescue quite a few homeowners at risk of foreclosure. Their ultimate goal is to slow the rate of foreclosures and trying to do something about the “sliding of home prices.” Not only has Barney Frank (D-Mass, the author of the Bill) made every effort to appease the current administration, but there is a majority of Republicans that are in favor of it as well. Even Bernanke is a fan of it and would like to see it go through. But President Bush would not. In fact he has threatened to veto this Bill “if and when it reaches his desk.” The reasoning for him is that it would constitute a “bail-out.” Bear-Stearns got a $30 billion bail-out, why not the taxpayers and hard working people of America? “It would reward speculators and lenders,” is Bush’s reply. There must be another reason that we don’t know about. Without tipping my hand as to what side of the political fence I am on, thats all I have to say about that. I can see both sides of the aisle.
[UPDATE: The House officially passed the Mortgage Bill...Watch as Bush vetoes it.]

Selling
It boils down to a sludge. If none of the above options are available, then it still might be best to due what you can to increase your income and muscle through it. I think that option is better than selling. Selling right now just seems to difficult and too expensive. If you are having a local financial crunch, and have paid a small fortune already, and would end up selling at a loss, THEN on top of that paying a realtor 5% of your selling price…You have lost much more money than if you refi/reformatted OR got another job and scrimped through this mess. Its hard to say that selling is even a last resort at the moment. Give it a year and see what happens…

It’s early May, the last two digits of my social security number are between 00-20 and I filed my taxes on time with a direct deposit and I have some serious spending to do – where is my stimulus? Well, serious spending is more like a new ceiling fan and light fixtures, but hey, I can’t do my part to stimulate the economy without my stimulus check.

It seems I’m not the only one who hasn’t received theirs either. Countless websites are reporting people who fulfill all of the requirements to receive their direct deposit by May 2 but haven’t. Are any of you still waiting? Don’t worry, your not the only one. More than likely, if you have not received your direct deposit yet, you will receive a paper check instead (look at the possible reasons why below).

If you wish to check on the status of your stimulus payment, click here.

Possible Reasons You Have not Received Your Stimulus Check
(If any of these apply to you, then you will receive a paper check instead.)
• If you had filing or preparation fees deducted from your 2007 refund
• If you received a rapid refund
• If you amended your original 2007 tax return.
• You owed taxes or paid into the federal government rather than received a refund.
• If the tax refund you received via direct deposit has “RALDEPT” in the transaction description at the bank. (This means that the refund went through a third party bank because the IRS didn’t have your banks information…not your fault but it still happens.)

As a reminder, the payment scheduled based off of the last two digits of you social security number is below.

Stimulus Payment Schedule for Tax Returns
Direct Deposit Payments
If the last two digits of your Social Security number are: Your economic stimulus payment deposit should be sent to your bank account by:
00 – 20 May 2
21 – 75 May 9
76 – 99 May 16

Paper Check
If the last two digits of your Social Security number are: Your check should be in the mail by:
00 – 09 May 16
10 – 18 May 23
19 – 25 May 30
26 – 38 June 6
39 – 51 June 13
52 – 63 June 20
64 – 75 June 27
76 – 87 July 4
88 – 99 July 11

Once you do finally get it, here is an article that discusses what we think you should do with it. Push down credit, save it, invest….just don’t blow it.

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