In early 2009 Congress passed a Temporary Economic Recovery & Reinvestment Act of 2009. This nearly $800 billion stimulus package offers wonderful temporary tax incentives. Many of the incentives that are presently set to expire at the year of the year include the following credits/deductions/incentives:
- The First-Time Homebuyers Tax Credit: First time home buyers (taxpayers) are eligible for (up to) $8,000 in tax credits when they purchase a new home between January 1, 2009 and November 30, 2009. The home buyers can file an amendment to their 2008 tax return (as an effort to receive their refund earlier). This tax credit is not available to ALL first time buyers. It’s only available to “buyers” who fall under the specified income restrictions.
- The Motor Vehicle Sales Tax Deduction: Taxpayers who purchase a new automobile between the months of February 17, 2009 and December 31, 2009 may take an extra standard deduction (local & state) based on the purchase price of the automobile. The amount of the deduction is limited to the portion of the state sales or tax on the first $49,500 of the purchase price of the automobile. Residents who live in states that do not have state sales tax offer individuals several deduction alternatives.
- COBRA Premium Assistance: This assistance is strictly available to individuals who were laid off from their jobs between September 1, 2008 and December 31, 2009. These individuals must fall under the specified income restrictions. Individuals who qualify are able to apply for (up to) 9 months of COBRA assistance under the 2009 Recovery Act. Individuals pay 35% of the COBRA premium and employers must treat that as full payment. Employers claim a credit for the other 65% of the premium on their payroll tax returns.
- Economic Recovery Payments: This is a $250.00 payment to disabled veterans, taxpayers on fixed income, and for those who are currently receiving Social Security Benefits. In May 2009 the Social Security Administration began sending these payments via mail and direct deposit.
- Exclusion of Unemployment Benefits: Individuals receiving unemployment benefits in 2009 can exclude the first $2,400 from their income. This exclusion is only available for 2009.
- Tax Evasion Forgiveness: The IRS is encouraging taxpayers to give the government full disclosure on all foreign bank accounts and unreported assets. The IRS agrees not to criminally prosecute tax evaders (and will waive the 75% “fraud” penalty). The taxpayer that falls under this stimulus is responsible for paying back all taxes plus interest and penalties. The IRS agrees not to prosecute. This relief expires September 23, 2009.
The State of Georgia also passed the Georgia Homebuyer Credit, which targets distressed properties. Hopefully, if you live in Atlanta, you’ll be able to take advantage of some of the federal and state tax breaks to offset the massive tax increase the City of Atlanta recently passed.
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