The government has been offering multiple opportunities to the American public to benefit from the American Recovery and Reinvestment Act of 2009. The tax benefits range from buying a new home or making home improvements to education and income tax credits.
The first-time homebuyer tax credit has been widely publicized. This tax credit allows a taxpayer who has not owned a residence in the past three years to claim up to $8,000.00 on a 2008 or 2009 income tax return. There are deadlines and income restrictions attached to this tax credit but many taxpayers will qualify. Maybe not as widely publicized is the tax credit for energy efficient home improvements. The Recovery Act increases the rate to 30% of the total cost of qualifying improvements and raises the maximum credit limit to $1,500.00. Again time restrictions and types of improvements that qualify may limit this credit for some taxpayers but if you do qualify make sure to take advantage of these benefits.
In the past few weeks we have all heard of the “cash for clunkers” program that recently ended. What the Recovery Act Law allows for is qualifying taxpayers to deduct state, local taxes and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles up to $49,500.00. New vehicle purchases must be made after February 16, 2009 and before January 1, 2010. This deduction is available whether a taxpayer itemizes or not.
The most extensive tax break, affecting approximately 120 million, Americans is the lowered income tax rates. This
payroll tax stimulus rate change went into effect no later than April 1, 2009. Another tax credit is for the multitude of American workers who are collecting unemployment. Up to the first $2,400.00 in unemployment benefits tax free in 2009. Something for both businesses and workers to remember is the stimulus package allows for the Health Insurance Continuation Subsidy. The government will pay 65%, through a tax credit, of the COBRA costs for terminated employees. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009. An updated
941 form was released to accommodate the premium assistance payments. Employers should use this form to enter premium payments made for COBRA benefits.
These tax credits and more are available. The IRS reminds American taxpayers to take advantage of any and all tax credits for which they qualify.
