2009 Economic Stimulus

More economic stimulus is upon us. Some highlights of the recently passed "American Recovery and Reinvestment Act of 2009" are detailed below. We ask that you please contact our office if you think something may impact you from this bill or if you would like more detailed information.

The "Making Work Pay" refundable tax credit is up to $400 per taxpayer for individuals earning less than $75,000, and for married couples earning less than $150,000, for a maximum of $800 per couple. Unlike the 2008 economic stimulus tax rebates, taxpayers will not receive a check. The credit will be distributed in the form of reduced tax withholdings from taxpayer paychecks (details on the specifics can be found in IRS Pub. No 15-T). Estimates about the actual benefit vary, between $8 and $13 per week per taxpayer. The program extends for two years, through December 31, 2010. The cost to Americans spread over a ten-year period is expected to be $116 billion.

The "First-Time Homebuyer" refundable tax credit replaces the 2008 refundable tax credit for first time homebuyers, which was equal to 10 percent of the purchase price of a home up to $7,500. Recipients of the old credit were required to pay back the funds over a period of 15 years. The new 2009 tax credit is the same 10 percent of the purchase price with a raised maximum of $8,000 ($4,000 if single), subject to income limits (less than $150,000 for married couples or $75,000 for single individuals), and without a requirement to repay. The credit is available for the purchase of a principal residence by a first-time homebuyer after December 31, 2008. For purposes of this credit, a first-time home buyer is someone who has not owned a home in the past three years.

These are just a couple of the new tax cuts, for more information about the stimulus package and how it affects you, please contact our office at mlr@vofcpa.com or 269.492.7220.