arra2009ChartThis is a follow up to my February 27, 2009First Time Buyer $8,000 Tax”  Note my other linked blogs of Housing and Economic Recovery Act of 2008, Part I   and part II   and part III .

As a follow up o my February 2009 interview of Diane W Clough Cpa Ltd, 6130 W Elton Av, Las Vegas, NV, 1 (702) 870-0888; she reports the following:

Diane reminds us of the following in her most recent Report from July 2009:

The American Recovery and Reinvestment Act of 2009

On February 17, 2009 congressed passed the American Recovery and Reinvestment Act of 2009, authorizing approximately $787 billion in new spending and tax cuts to stimulate the economy.  How will the $787 billion legislation affect taxpayers?  Here are just a few of the highlights of the plan.

 First Time Homebuyer Credit

The American Recovery and Reinvestment Act of 2009 encourages first-time home buyers to purchase homes between January 1, 2009 through December 1, 2009 by giving them a refundable tax credit equal to 10 percent of the purchase price of their home, up to $8,000. Unlike the 2008 act, there is no 15 year repayment of the credit required.  A first time homebuyer is defined as any taxpayer who has not owned a home in the previous 3 years.  Additionally, the taxpayer can file an amended return for 2008 to claim the 2009 tax credit. It is advised to seek professional tax assistance to use the legislation favorably.

 Auto purchases
The sales tax paid on a new, not used, vehicle purchased in 2009 can be taken as an “above the line” deduction on 2009 taxes, meaning that taxpayers can claim the deduction even if they don’t itemize.  This applies to tax on the first $49,500 of the vehicle’s purchase price.  Income limitations apply. 

Plug-in electric vehicles qualify for a $2,500 tax credit for the first 200,000 vehicles sold.

 Tax Credits for Energy-Efficient Improvements

If you have been thinking about doing improvements to your home, consider going green.  Tax credits for energy efficient improvements to existing homes have been extended through 2010.  The amount of the current tax credit is 30 percent of the amount paid or incurred by the taxpayer for qualified energy efficient improvements made during the taxable year.  This tax credit is capped at $50 for any advanced air circulating fan, $150 for any qualified natural gas, propane, oil furnace or hot water boiler, and $300 for any item of energy-efficient building property such as insulation and storm windows and doors.

 COBRA health insurance assistance

Individuals who may be eligible for COBRA continuation coverage as a result of an involuntary termination of employment from September 1, 2008 through December 31, 2009 may receive 65 percent in financial assistance towards their health insurance premium payments for up to nine months, which leaves the individual paying only 35 percent of the health premium costs.  Former employers will pay the 65 percent of the premium costs and will be able to recover the financial assistance through quarterly payroll tax form 941.  To become eligible for COBRA and receive assistance:

  1. The individual’s termination must be involuntary
  2. The individual must not qualify for other group health coverage (i.e. spouse’s health plan, new employer health plan, or Medicare)
  3. The employer health plan continues to exist
  4. The employer reported 20 or more employees in the prior year.

 Making Work Pay

In lieu of a rebate check, such as taxpayers received in 2008, the new Making Work Pay provision lowers the amount of withholding in each paycheck.  The credit shows up as about an extra $10 per week in the paychecks of eligible individuals.  Most seniors and the disabled should receive a one-time $250 payment from social security arriving soon.

 College Credit

The tuition credit was raised to $2,500 a year for any year of college.  The change is only available in 2009 and 2010 and income limits do apply.  Taxpayers need to spend at least $4,000 to get the full credit.