We started off 2009 with President Obama signing this huge economic stimulus package, the American Recovery and Reinvestment Act of 2009 on February 17, 2009. This piece of legislation that was approved by the House and signed by the president is now the law. This new law contains nearly $300 billion in tax relief to both individuals and businesses. Some of the tax changes that may apply to you this year are listed below.
Making Work Credit:
This credit may have benefited you if you are a wage earner since your employer should have made the adjustments to the withholding schedule which would have resulted in a larger take home pay for you. The maximum Making Work Pay tax credit is $400 for single working individuals and $800 for working married couples.
$250 Economic Recovery Payment:
This is a one-time payment to individuals on fixed income such as Social Security, SSI, VA pension or disability benefits, or Tier 1 railroad retirement benefits. The Federal government will automatically send you the checks sometimes in 2009 if you qualify.
First-Time Homebuyer Tax Credit:
Did you buy a house this year or are you planning to purchase one this year? If you purchase a house this year (closing before 12/1/09), you might qualify for the First-Time Homebuyer Tax Credit (maximum of $8000). Call us to see if you qualify for this credit.
New Car Deductions:
If you have or plan to purchase a new car for after February 17, 2009 and before January 1, 2010 you may be able to take an above the line deduction for the state and local sales taxes or excise taxes paid on the purchase. Please be sure to let us know if you did purchase a new vehicle during your next tax appointment as you might benefit from the provision.
Those receiving unemployment compensation will not be taxed on the first $2,400 of unemployment benefits.
Earned Income Credit:
Based on income, there is an increased tax credit for families with 2 or more children. For married couples filing joint returns, there is additional marriage penalty relief.
Additional Child Tax Credit:
Lower income families with children will receive increased eligibility for the refundable portion of the tax credit for lower income families with children when they file their 2009 and 2010 tax returns.
The IRS warns taxpayers to be on the alert for e-mails and phone calls they may receive which claim to come from the IRS or other federal agency and which mention their tax refund or economic stimulus payment. These are almost certainly a scam whose purpose is to obtain personal and financial information — such as name, Social Security number, bank account and credit card or even PIN numbers — from taxpayers which can be used by the scammers to commit identity theft. The e-mails and calls usually state that the IRS needs the information to process a refund or stimulus payment or deposit it into the taxpayer's bank account. The e-mails often contain links or attachments to what appears to be the IRS Web site or an IRS "refund application form." However genuine in appearance, these phonies are designed to elicit the information the scammers are looking for.
The IRS does not send taxpayers e-mails about their tax accounts. Additionally, the way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return.