So the stimulus package has been signed… and many taxpayers are asking, “Who is eligible for the stimulus package?” Are you eligible for its benefits? Let’s take a look.
Depending on eligibility, you should find a rebate check in your mailbox sometime in May. Individuals with adjusted gross income of less than $75,000 can expect up to $600 and couples with adjusted gross incomes of less than $150,000 can expect up to $1,200. If you make more you will see less or nothing at all. Additionally, families can expect to receive $300 for each child 17 or younger who lived with them for at least half of 2007.
Good news… those of you who did not receive a stimulus check in 2008, based on your 2007 return, you may now qualify for a recovery rebate check. This will be based on your 2008 earnings that you file in 2009. Parents who welcomed a child in 2008 may be eligible. Of the many changes since the revision to the original proposal, one of the biggest may surprise those who paid no income taxes. They may receive $300 as long as they earned at least $3,000. Again, you will need to file your tax return to determine eligibility. Who else is eligible for the stimulus package rebate checks? Social Security recipients, disabled veterans, and recipients of Supplemental Security Income (SSI) are scheduled to receive a one-time payment of $250.
The twist in this rebate is that the government will not automatically send you a check even if you qualify. In order to receive your check, you must claim this rebate on your 2008 tax return. Many are recommending using some type of tax software to prepare your return. Software such as TurboTax automatically alerts the user if they qualify and guides them sep-by-step.
There is more to this package than just rebate checks:
- Homeowners: A tax credit of 30% (or up to $1500) of the cost of energy-efficient improvements such as windows, furnaces and air conditioners in 2009 and 2010 is available. Energstar.gov has more details.
- New car buyers: Whether you itemize or not, you can now deduct sales tax paid on new (not used) cars and light trucks purchased after February 17, 2009 and before January 1, 2010. A one-year deduction for state or local sales or excise tax paid on new car purchases up to $49,500 is available. The interest you pay each year on the loan is not deductible.
- Homebuyers: “First-time” homebuyers, those who have not owned a home in the past three years – who purchase on or after January 1, 2009 and before December 1, 2009 – are eligible for the $8000 tax credit. Eligibility is set at $75,000 adjusted gross income for single taxpayers, and $150,000 for couples filing jointly. For more information read my previous article at: https://lonestarfinancing.com/blog/2009/02/26/8000-tax-credit-for-first-time-home-buyers/
- Education Expenses: College students and/or their parents are eligible for tax credits of up to $2,500 helping to pay tuition and related expenses in 2009 and 2010. Families who don’t earn enough to pay income tax could still get up to $1,000 in extra tuition help. Under the stimulus plan, computer expenses will now be considered an allowable expense for 529 College Savings Plans. One wrinkle…the new credit can’t be collected until filing a tax return in 2010. More information is available at: http://www.investmentadvisor.com/news/2009/2/Pages/College-Savings-Watch-Stimulus-Bill-Permits-Use-of-529-Funds-for-Computers.aspx
- Alternative minimum tax relief: AMT exemption is increased to $46,700 for individuals (up from $46,200) in 2008, and $70,950 for married couples (up from $69,950.)
- Unemployment Benefits: The first $2,400 of unemployment tax compensation received during 2009 won’t be subject to income tax under the plan. Currently all unemployment payments are taxed.
- COBRA Benefits: If you have been laid off, you may better afford health coverage because the stimulus package slashes 65% of the cost of maintaining insurance through a former employer. The subsidy would lower the cost of COBRA premiums to about $130 a month for single coverage and $350 a month for a family. Additionally, this subsidy is for up to nine months.
- Making Work Pay tax credit: The stimulus package asks employers to withhold less tax. Eligible employees may receive 6.2% of earned income up to a maximum credit of $400 ($800 for two-earner couples). And what is the bottom-line? Some employees may pocket an extra $12 to $20 per weekly paycheck. This depends entirely on whether the government pays it out over six months or more.
The 2009 stimulus package is full of tax savings for you and your neighbors. So, the next time someone asks, “Who is eligible for the stimulus package?” the answer just might be… you!
More information on tax provisions and credits can be found at: http://www.taxfoundation.org/publications/show/24338.html.