This is a summary of some items in the 2009 Stimulus Bill which relate to individuals. Most of the items have very specific income phaseouts, so please consult with us as to whether these affect your specific situation.
Home Buyers Credit: For homes purchased between January 1, 2009 to December 1, 2009 a credit of up to $8,000 is available for a taxpayer who has not owned a US principal residence in the prior three years. The amount of the credit is 10% of the purchase price. This replaces the prior law, which provided a $7,500 credit for homes purchased between April 9 to December 31, 2008. That credit must be repaid over 15 years or less.
New Car Sales Tax Deduction: Sales-tax for a new car or truck purchase up to the cost of $49,500 may be deducted “above the line” and not as a Schedule A deduction, so it is more beneficial. This phases out, beginning at adjusted gross income of $125,000 and $250,000, respectively, for single or joint filers. This is effective for vehicles bought on or after the effective date, February 17, 2009.
Work Tax Credit: A temporary credit for 2009 and 2010 of 6.2% of earned income, up to a total credit of $400 for individuals and $800 for joint filers. This is retroactive to the beginning of 2009. The phaseouts for this provision are at $75,000 – $90,000 for individuals and $150,000 – $190,000 for joint filers. These benefits may be received by minor adjustments in federal withholding from paychecks, starting around June, 2009.
Higher Education Tax Credits: For 2009 and 2010, the maximum credit per student increases from $1,800 to $2,500 and the income phaseouts are increased significantly to $80,000 -$90,000 for single filers and $160,000-$180,000 for joint filers. Expenses are expanded to include textbooks.
Section 529 Plan and Computer Purchases: For 2009 and 2010, the cost of computers and related technology can qualify as section 529 plan distributions. Internet access charges and software are also covered, as long as they are not for sports or games.
AMT: As Congress has done in prior years, the AMT exemption has again been temporarily increased. We still anticipate that many taxpayers will continue to be affected by the AMT.
Social Security Tax Credit: Recipients will receive a $250 tax credit. This may be in the form of reduced withholdings or a check.
Energy Tax Credits: Homeowners who add energy-efficient windows, furnaces, heat pumps and air conditioners may be eligible for a tax credit of up to 30% of the costs, up to a total of $1,500. In the future, tax credits of up to $7,500 will be available for plug-in hybrids and battery power electric cars. These vehicles are not yet available.