The recently passed American Recovery & Reinvestment Act (a.k.a. The Stimulus Package) means a lot of changes to your taxes - some big, some small depending on your personal circumstances. Here are the highlights:
(Note: ranges are for full benefit - partial benefits may phase-out above the ranges)
If you make more than $250,000 Married Filing Jointly ($125,000 - single)
The Alternative Minimum Tax (AMT) exemption amount has been 'patched' for the 2009 tax year, raising it to $70,950 (from $45,000 - was $69,950 in 2008) for married couples filing jointly (MFJ) and $46,700 for singles.Note: The AMT 'patch' has been an annual tax relief item in recent years as the AMT exemption is not indexed to inflation. It is likely some relief would have been made outside this bill regardless. This change is applicable to all the ranges below, but it is increasingly less likely that they would have been impacted by the AMT.
If you make less than $250,000 ($125,000 - single)You may deduct state & local sales taxes for the purchase of new cars, light trucks, RVs, & motorcycles over & above the state & local income tax deduction. This is for 2009 only.If you make less than $160,000 ($80,000 - single)You can take advantage of the First Time Home Buyer Credit. This gives you a refundable (i.e. pays you cash if the credit is larger than your tax liability) tax credit of $8,000 (or 10% of the purchase price if lower) if you buy your home between January 1, 2009 and November 30, 2009. You do not have to pay the credit back and you can claim it on your 2008 return as well. If you purchased the home between April 9, 2008 and December 31, 2008, you can still get a credit up to $7,500, but this must be repaid over 15 years. Both credits are subject to recapture if the house is sold within three years. A 'first-time home buyer' is one who has not owned a principle residence in the past three years. Both spouses must qualify if MFJ.You can take a credit for up to $2,500 of post-secondary education expenses under the "American Opportunity" Education Tax Credit in 2009 & 2010.If you make less than $150,000 ($75,000 - single)You are eligible for the "Making Work Pay" tax credit of 6.2% of earned income up to $800 ($400 - single) in 2009 & 2010. This credit effectively refunds your FICA tax on the first $6,451.61 of pay. The tax credit will be pre-funded by adjusting withholding tables and letting you keep more of your paycheck.If you make less than $21,420 ($16,420 - single)If you have three or more children, your Earned Income Tax Credit (EITC) will increase 5% on the first $12,570 of earned income (maximum of $628.50).If you are unemployedWeekly unemployment benefits will increase by $25 through 2009 and benefits will be extended by 33 weeks or through December 31, 2009 whichever comes first.The first $2,400 of unemployment benefits will not be subject to Federal Income Tax in 2009.You may claim a 65% subsidy of COBRA payments if you were involuntarily terminated between September 1, 2008 and December 31, 2009.If you are retired or disabledThose collecting SSI or Veteran's Disability are eligible for a one-time payment of $250. The payment will offset any Making Work Pay credit the recipient would otherwise be eligible for.These changes account for only $292.275 billion of the approximately $800 billion act - for more detail, go to
www.recovery.gov or to see a summary of all aspects of the act, go to:
http://finance.senate.gov/press/Bpress/2009press/prb021209.pdf.
Labels: Taxes
