The New Tax Stimulus Act for 2009 covers tax credits for unemployment benefits, earned income tax, new car sales tax, first-time homeowner’s tax credits and other important items. It is not too early to start thinking about 2009 and planning for tax savings.
Tax Stimulus Credits Benefits Unemployment
Benefits normally run for 28 weeks, or until a new job. The new law extends jobless pay by as many as 33 weeks or a total of 59 weeks. Extensions apply to states with unemployment rates of 6.5 percent so check with your state unemployment office to learn about benefits in your state.
Tax Stimulus Benefits Energy Conservation
A homeowner can claim up to $1,500 for energy-efficient home improvements to a primary residence. The old 10% credit rate is increased to 30% in 2009 and 2010. There is an even bigger tax credit for making energy. This credit, which is separate from the energy-efficiency credit, is 30 percent of the total cost of a new system. For details on what improvements qualify, see here.
Earned Income Tax Filers
More married couples now qualify for the maximum credit in 2009 and 2010. The income levels are higher, $12,470 for married couples with no children and $21,420 for married couples with one or more qualifying children. Families with three or more children can qualify for a 45 percent credit for the first $12,570 of earned income.
College Tax Credit
The government will now give a family up to $2,500 per year for each qualifying college student in tax credit. The maximum credit applies for at least $4,000 in qualifying expenses, which now include the cost of books as well as tuition and fees. This credit is also for a four year term, instead of just two.
Legislation designed to aid victims of the 2008 floods and other weather-related disasters had the old Hope credit system increased up to $3,600 in 2009. Check with local state and counties to see if students qualify for this advanced legislation. Seven states were involved: Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin.
Payroll Tax Deductions
A tax credit of $400 will be given to individuals ($800 if filing jointly) and payroll deductions can be lowered by this amount in 2009.
First-time Homeowners Credit
The new law offers first-time homeowners a credit of 10% of purchase on a primary residence, up to $8,000. When purchasing a new home between January 1, 2009 and November 30, 2009 a credit will be issued with elimination of repayment as long as the home is not sold for three years. Individuals cannot have had a primary residence for the past three years and if a couple applies, each person must qualify.
New Car Sales Tax Deduction
If a new car is purchased between February 17, 2009 and December 31, 2009 an individual or family can deduct the sales tax paid for the car at year end, along with their standard deduction. For more in depth information on this deduction, see here.
Note: This article in not intended to circumvent advice from a Tax Consultant or a CPA. Be sure to check with your personal advisor for counsel and specifics for each individual case. If any of these tax credits apply to you or your family, start planning now to take advantage of all tax savings!
For additional articles by this Author, see here.