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American Recovery and Reinvestment Act of 2009

American Recovery and Reinvestment Act of 2009. Publication 553 – Highlights of Changes. Making Work Pay Credit. Refundable Credit Line 63 Form 1040 – Schedule M Up to $400, $800 MFJ Based on 6.2% of earned income Phased out AGI $75,000 ($150,000 joint) Based on Earned Income

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American Recovery and Reinvestment Act of 2009

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  1. American Recovery and Reinvestment Act of 2009 Publication 553 – Highlights of Changes

  2. Making Work Pay Credit • Refundable Credit • Line 63 Form 1040 – Schedule M • Up to $400, $800 MFJ • Based on 6.2% of earned income • Phased out AGI $75,000 ($150,000 joint) • Based on Earned Income • Reduced by $250 if SSA, VA, RRB • Government Retirees not covered SS • not elig for SSA, VA, RRB - receive $250

  3. First Time Homebuyer Credit • 2009 purchases until Nov 30, 2009 • $8000, is refundable and may not be repaid • 2008 rules unchanged • Purchases Apr 9-Dec 31, 2008 • $7500, 15-year repayment

  4. New Vehicle Taxes Deduction • State and Local Sales Tax and Excise Taxes • On first $49,500 of purchase price • Purchases after Feb 16, 2009 and before 2010 • Available to non-itemizers • Schedule L to calculate deduction

  5. Increased Credits • Residential Energy Credits – expired in 2007 has been reinstated • Temporary increase in EITC • Up to three or more qualified children – up to $5,657 • Maximum income $43,279 ($48,279 joint) for three or more qualified children • Reduction of earned income needed to claim ACTC

  6. Education • American Opportunity Tax Credit – (Hope Credit Expanded) • Increase to $2500 per student • First four years post-secondary education • 40% of the credit is refundable • Required course materials allowed • Expenses for computers, software and internet access allowed

  7. Other Changes • Definition of Qualifying Child Revised • New rules for children of divorced or separated parents • After July 2, 2008 • Effective calendar year following year release is provided • Form 8332 release attached to return • Unemployment Compensation • Exclude up to $2400 from Gross Income

  8. More Information • Pub 533, Highlights of 2008 Tax Changes • ARRA will be included in training and the test Questions

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