On February 17, 2009, President Obama signed “The American Recovery and Reinvestment Act of 2009”. Following is a list of some of the benefits the act provides: Individuals get a payroll tax credit for 2009 and 2010. The new credit is 6.2 percent of earned income, capped at $400 for singles and $800 for marrieds. For single filers, it starts phasing out as $75,000 of adjusted gross income and phases out at $95,000. The phase-out for couples filing married-jointly is $150,000-$190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check. This translates to about $10-20 extra per week.
According to HintonBurdick CPAs & Advisors partner Phillip Peine, “Retirees and pensioners will receive a one-time $250 check. The checks will go to recipients of Social Security benefits, Railroad Retirement benefits, and Supplemental Security Income or veterans pensions. Federal retirees will also get a $250 check who didn’t receive any Social Security.”
Credit for first-time home buyers. For primary homes purchased this year before December 1, 2009, the maximum credit increases to $8,000. This credit will not be required to be paid back. Unfortunately, the 15- year repayment rule will still apply to residences who bought a home in 2008. Taxpayers who buy homes in 2009 can also elect to accelerate their time credit and claim the credit on their 2008 returns.
For college students, the Hope credit is replaced by a new credit of up to $2,500 per student, per year, for four years of college. This credit is available for all four years of college. The credit also covers the costs of books.
People who buy new vehicles can deduct the sales tax paid on the purchase, even if they don’t claim sales tax as itemized deductions. They can add the tax they pay to their standard deduction. This applies to new cars, motor homes, light trucks and motorcycles purchased between February 16, 2009 and January 1, 2010. Sales tax paid on the first $49,500 of cost may qualify.
Another potentially big benefit is that small firms may now elect to carry back their 2008 losses for five tax years instead of two. Their average annual gross receipts for 2006-2008 must be $15 million or less, in order to qualify.
Learning how to make better use of the recent bill or if you have further questions, please feel free to contact our office at HintonBurdick CPA’s & Advisors, 435-628-3663. Also, visit our Web site at www.hintonburdick.com for weekly tax tips.
