AMERICAN%20RECOVERY%20AND%20REINVESTMENT%20ACT%20OF%202009%20(ARRA) - PowerPoint PPT Presentation

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AMERICAN%20RECOVERY%20AND%20REINVESTMENT%20ACT%20OF%202009%20(ARRA)

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Phase out for taxpayers with modified AGI $75,000 ($150,000 MFJ) ... property for solar water, wind, and geothermal heat pump property expenditures ... – PowerPoint PPT presentation

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Title: AMERICAN%20RECOVERY%20AND%20REINVESTMENT%20ACT%20OF%202009%20(ARRA)

1
AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009
(ARRA)

The Recovery and Your Family
2
Making Work Pay Tax Credit

Will cut taxes for working families
Up to 400 (800 if MFJ)
Refundable
Phase out for taxpayers with modified AGI gt
75,000 (150,000 MFJ)
Claim credit on 2009 tax return
Tax withholding decrease (begin by 4/1/2009) to
anticipate credit
Revised Form W-4 not necessary for automatic
withholding change

3
New Withholding Tables Caution Avoid Being
Under Withheld

Employee with multiple jobs or married couples
whose combined incomes place them in higher tax
brackets may elect to submit a revised Form W-4
Ensure enough withholding is held to cover the
tax on combined income
Optional adjustment procedures available for
pension plans
Obtain Publication 919, How Do I Adjust My Tax
Withholding?
Use the Withholding Calculator on IRS.gov

4
Making Work Pay - Example of new withholding
tables two jobs

Jan March 13 weeks X 17 221 withholding
(old tables)
April Dec 39 weeks X 8 312 withholding
(new tables)
Withholding for Job 1 533
Withholding for Job 2 is the same 533
Total projected withholding 1,066
Total projected tax liability 2,280
Balance due 1,214

5
Making Work Pay - Example of new withholding
tables one job

Jan March 13 weeks X 17 221 withholding
April Dec 39 weeks X 8 312 withholding
Total projected withholding 533
Tax Liability 165
Total projected refund due 368

6
Important Message

Taxpayers that have more than one job at the same
time are at risk for being under withheld, since
they are entitled to only one credit
Taxpayers who are married with both spouses
working may also be under withheld
Combined income from two jobs or spouses who both
work put taxpayers in a higher tax bracket
Only taxpayers with valid Social Security numbers
are eligible for the Making Work Pay Credit (or
at least one taxpayer, if MFJ)
Pension recipients with no earned income are not
eligible for the Making Work Pay Credit and may
be under withheld
Taxpayers who can be claimed as dependents on
someone elses tax return are not eligible for
the credit and may be under withheld

7
Economic Recovery Payment

SS, SSI, RR, Veterans Disability Recipients
250 one-time payment (not from IRS)
Reduces Making Work Pay Credit, if eligible
No phase out
Not income for income tax purposes
Contact respective agency for more information

8
Credit for Certain Government Federal and State
Retirees

Certain government retirees will receive a one
time 250 refundable credit on their 2009 tax
return filed in 2010
For government retirees who receive a pension
from work not covered by Social Security

9
Earned Income Tax Credit (EITC) Increase

New credit percentage for 3 or more qualifying
children
Maximum credit increase 5,028 to 5,657
Maximum AGI increase 43,415 to 48,279

10
Child Tax Credit

1,000 per qualifying child
Refundable portion eligibility increased
More lower income families qualify
2008 threshold amount 8,500
2009 threshold amount 3,000
2010 threshold amount 3,000

11
American Opportunity Education Tax Credit

Expands HOPE Credit available for first 4 years
of post-secondary education
For 2009 and 2010 maximum credit is 2,500
40 refundable
Phase out for taxpayers with modified AGI gt
80,000 (160,000 MFJ)

12
First-Time Homebuyer Credit Amended

Increased to 8,000
Refundable
Homes purchased from 1/1/2009 through 11/30/2009
No repayment (must live in home 3 years)
Can choose to claim on 2008 return
Phase out for taxpayers with modified AGI gt
75,000 (150,000 MFJ)

13
Portion of Unemployment Benefits are Nontaxable

Temporary suspension of the federal income tax on
first 2,400 of unemployment compensation
Unemployment compensation over 2,400 will be
subject to federal income tax
Any requested withholding on unemployment
compensation will continue to apply to the full
amount paid.

14
Energy Conservation Incentives

Federal Tax Credits for Energy Efficiency
includes
Modification in residential energy efficient
property for solar water, wind, and geothermal
heat pump property expenditures
Tax credits are available at 30 of the cost, up
to 1,500, in 2009 2010 (for existing homes
only) for
Energy-Efficient windows and doors, insulation,
roofs (metal and asphalt), HVAC, water heaters
(non solar), biomass stoves

15
Sales Tax Deduction on New Vehicles

State, local excise taxes paid in 2009
Cars, light trucks, motor homes, motorcycles
Purchases after 2/16/2009
Taxes paid on first 49,500 of cost
Phase out for taxpayers with modified AGI gt
125,000 (250,000 MFJ)
Do not have to itemize to take deduction

16
Qualified Higher Education Expense (Sec 529
Accounts)

Qualified Tuition Programs (QTPs)
Computer technology and equipment allowed as a
qualified higher education expense
Effective for expenses paid or incurred in 2009
and 2010.

17
More Information?