What do homebuyers, working families, and upper income households have in common right now? All stand to benefit from the tax initiatives that are written into the 2009 economic stimulus program.
The Feds have finally enacted an economic stimulus plan that's supposed to help working folks. So now what? This is the time to act like tough guy Mike Hammer, the fictional private detective who once famously asked, "What's in it for me?"
Something for everyone
The new stimulus initiatives will lower taxes for various categories of taxpayers, including working families, retirees, college students, the unemployed, and buyers of homes and cars. How much you receive and when you receive it depends on your circumstances. Browse through the scenarios described below to see how the new programs might impact you. Are you:
* One half of a dual-income household? If you and your spouse make less than $150,000 combined, you can expect to receive about $800 extra this year via higher take-home pay.
* A single, working person making less than $75,000 annually? You're probably eligible for a $400 credit, to be distributed through your paycheck.
* Self-employed and not subject to payroll deductions? If you earn less than $75,000 annually (or $150,000 for joint filers), you can adjust your quarterly tax payments to reflect the $400 (or $800 for joint filers) credit.
* In retirement and receiving Social Security? You can expect your retirement income to be supplemented by a one-time Social Security payment of $250.
* Worried about getting hit with the Alternative Minimum Tax (AMT)? This is a secondary system for taxes that disallows certain exemptions and deductions. The stimulus program temporarily increases the AMT exemption, which will protect millions of households from getting hit with the higher AMT liability.
* Unemployed? You won't have to pay income taxes on the first $2,400 of unemployment benefits received. Another non-tax provision promises to subsidize up to 65 percent of the cost of COBRA health insurance if you lost your job after September 1, 2008.
* In college? Spend more than $4,000 on education-related expenses and you may be eligible for the American Opportunity tax credit, which is worth up to $2,500. If you typically receive a Pell Grant, you may also be awarded a higher dollar amount.
* Ready to make the first-time homebuyer/first-time mortgage borrower leap? Purchase a home this year, and you may qualify for the refundable $8,000 first-time homebuyer credit. Even better, when you complete the purchase before November 1, you have the option of amending your 2008 return and getting your cash back sooner. How's that for mortgage assistance?
Let's get back to Mike Hammer's question, "What's in it for you?" Play your cards right, and the economic stimulus could be worth $10,000 or more. That's a far cry from the billions handed out to the automotive and financial companies, but it's still enough to make a difference.
