The details of the 2009 economic stimulus recovery plan have been released, and even though they aren’t quite official, it looks like the economic stimulus plan should pass in this format, or something very similar. The final tally is roughly $798 billion, a hefty sum by any standard.
Here is a breakdown of how the new stimulus plan may affect your 2009 tax status:
Personal Tax Breaks in the 2009 Economic Stimulus Plan
The stimulus bill may put more money directly into your pocket, depending on your current situation and income level:
Making Work Pay tax credit
$400 – $800 payroll tax credit. The new stimulus bill calls for a payroll tax credit of $400 for low and middle-income workers and $800 for couples. A full credit will be given to individuals making $75,000 or less, or $150,000 or less for couples. Partial credits will be given up to $100,000 for individuals or $200,000 for couples.
No stimulus check this year. It is important to note that this is not a stimulus check like last year – individuals who qualify for the payroll tax credit will have fewer taxes withheld from their paycheck and will receive an additional $15 or so per check (assuming 26 pay periods per year). Update: The tax credit will begin April 1, 2009, so the weekly addition to your paycheck should be around $11. More information about how to make these small tax credits work for you.
Additional personal tax breaks in the 2009 stimulus plan
One-time $250 payment to people who don’t work. This $250 one-time payment will be sent out to retirees, people on disability and others who don’t work.
Alternative Minimum Tax (AMT) relief. The economic recovery bill calls for a higher exemption limit on the AMT. This should equate to an average tax savings of $503 on taxable income levels between $66,354 and $111,645.
Tax provisions for home buyers and car buyers in the 2009 stimulus plan
The government wants you to spend money to keep our economy going. Here are some tax benefits your may be eligible for:
$8000 first time home-buyers credit
There was previously a $7,500 credit which had to be repaid and was set to expire on July 31, 2009. The new stimulus bill changes the $7,500 first time home-buyers credit to an $8,000 tax credit that does not have to be repaid. To qualify for the $8,000 first time home-buyers credit, one needs to purchase their first home between January 1, 2009, and December 1, 2009.
New car buyer’s tax credit
To say the auto industry is hurting would be an understatement. The US government wants to prop up the auto industry and to do that they are offering consumers the opportunity to deduct state and local sales taxes and excise taxes from a new car purchase made in 2009.
Eligible vehicles will include new cars, motorcycles, light vehicles, and RV’s. There are income limitations involved: the deduction will only be available to individuals earning less than $125,000 or $250,000 for joint filers. The added benefit of this deduction is that you don’t have to itemize your taxes to take advantage of this tax write-off.
The new economic stimulus plan is more than just personal tax breaks
The 2009 economic stimulus recovery plan will affect people in may ways, not just their personal taxes. Also included will be provisions for those collecting unemployment and COBRA benefits, people receiving personal support such as food stamps or welfare, increased educational tax credits and Pell Grants, and a host of other benefits for states, companies, and certain industries.