How the Stimulus Package Impacts You
Everyone is aware that the government has taken steps they believe will fuel the economy. But you might be wondering how these steps directly impact you? Below you will find a summary of the American Recovery and Reinvestment Act of 2009 and how individuals, like us, will be directly affected.
- Tax benefits for the employed: Individuals will receive a credit of $400 and couples $800. Unlike last time when we received a check in the mail, this credit will be in the form of lower federal income-tax withholding taken from our paychecks. However, this tax credit will not apply to individuals with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly. This program is expected to start around June and remain in effect throughout the remainder of 2009.
- For those who have lost their jobs: The first $2,400 of unemployment compensation received in 2009 will not be taxed; and benefits may be extended for up to an additional 33 weeks. For those who no longer have health insurance and wish to continue under COBRA, the government may cover up to 65% of premiums for a maximum of nine months.
- For homeowners: To encourage spending, homeowners who install certified energy-efficient windows, furnaces and air conditioners may qualify for a tax credit tax credit equal to 30% of their costs, up to a total of $1,500.
- For students: If you are a college student or a parent with a dependent in college, you may qualify for up to a $2,500 tax credit for 2009 and 2010 tuition and related expenses.
- For seniors, disabled vets, and SSI recipients: A one-time payment of $250 to individuals who get Supplemental Security Income (SSI) or Social Security benefits should be sent by late May 2009. This benefit is to help those living on a fixed income with the rapidly rising costs of healthcare.
The government is also offering incentives to individuals that will directly impact the auto and housing industries.
- First- time homebuyers in 2009: This year, if you are a qualifying taxpayer who buys a home before Dec. 1, 2009, you may claim a credit up to $8,000 or up to $4,000 for married filing separately on either your 2008 or 2009 tax returns. You will not have to repay the credit, provided the home remains your primary residence for 36 months after the purchase.
- For those purchasing a new car: If you buy a new car, light truck, motor home or motorcycle this year you will be able to deduct state and local sales and excise tax from your taxable income. The deduction is limited to the tax on up to $49,500 of the eligible purchase. The deduction is phased out for individual with modified adjusted gross between $125,000 and $135,000 and joint filers with modified adjusted gross income between $250,000 and $260,000.
The bill’s $787 billion in spending and tax cuts are supposed to stimulate the economy by helping and encouraging spending. In addition to helping individuals, the government is giving tax cuts to small businesses, funding infrastructure projects and increasing the amount spent on science and technology with a specific goal of advancing our energy independence.
For further information please visit www.irs.gov , www.whitehouse.gov or http://usgovinfo.about.com/
And as always, please feel free to send us any questions or give us a call, we can be reached at info@smart401k.com or 877.627.8401.
Jessica Slaters, Investment Advisor
