Will The Stimulus Act Benefit Your Family?
On Feb. 17th, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. In addition to government spending initiatives intended to revive the economy, the nearly $800 billion act provides hundreds of millions of dollars of tax cuts expected to benefit 95% of taxpayers.
This act is extensive and includes many more spending and tax-saving provisions than we could mention here that may be a benefit to you and your business. To learn how you can take full advantage of all of the applicable ARRA tax benefits, feel free to contact the Tax Group at Brown Smith Wallace, LLC at 314-983-1200.
NEW TAX BREAKS FOR INDIVIDUALS
RELIEF FOR MOST WORKERS, RETIREES AND OTHER SOCIAL SECURITY RECIPIENTS
For 2009 and 2010, ARRA creates the Making Work Pay credit of up to $800 for joint filers and $400 for other filers. The credit generally is phased out for joint filers with AGIs (adjusted gross income) exceeding $150,000 and for other filers with AGIs exceeding $75,000.
The act also provides a one-time payment of $250 to:
Retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration
- Railroad retirement beneficiaries
- Disabled veterans receiving benefits from the U.S. Department of Veteran Affairs
- Certain government retirees not eligible for Social Security benefits
SALES TAX DEDUCTION FOR VEHICLE PURCHASES
ARRA creates a new above-the-line deduction (even if you don’t itemize) for state, local sales and excise taxes paid on the purchase of new cars, light trucks,motorcycles and recreational vehicles.
The deduction is available for vehicles purchased from Feb. 17, 2009, through Dec. 31, 2009 for vehicles valued under $49,500 and phased out for joint filers with AGIs over $250,000 and other filers with AGIs over $125,000.
EXPANDED TAX BREAKS
CREDIT FOR FIRST-TIME HOMEBUYERS
Last year, a refundable credit equal to 10% of the purchase price of a principal residence was made available to qualified first-time homebuyers. Under ARRA you will receive a refundable credit equal to 10% of the purchase of a principal residence for first-time homebuyers for purchases made before Dec. 1, 2009. For qualifying purchases made after Dec. 31, 2008, the act also increases the maximum credit from $7,500 to $8,000 and changes the credit from a repayment obligation to a genuine tax credit.
AMERICAN OPPORTUNITY EDUCATION CREDIT
(previously called the Hope Credit)
For 2009 and 2010, ARRA expands this credit to cover 100% of the first $2,000 of tuition and related expenses (including books) and 25% of the next $2,000 of such expenses. The maximum credit is $2,500 per year for the first four years of postsecondary education.
The credit phases out for joint filers with AGIs exceeding $160,000 and for other filers with AGIs exceeding $80,000.Download the PDF.