[Nfbf-l] Take advantage of recovery act benefits

[elizabeth McNally]

Media Relations Office                           Washington, D.C.
Media Contact: 202.622.4000

 <http://www.irs.gov/newsroom/index.html> www.IRS.gov/newsroom
Public Contact: 800.829.1040

 

IRS Reminds Taxpayers to Take Advantage of Recovery Act Benefits

IR-2009-67, July 20, 2009


WASHINGTON - With 2009 now half over, the Internal Revenue Service reminds
taxpayers to take advantage of the numerous tax breaks made available
earlier this year in the American Recovery and Reinvestment Act (ARRA).

The recovery law provides tax incentives for first-time homebuyers, people
purchasing new cars, those interested in making their homes more energy
efficient and parents and students paying for college. But all of these
incentives have expiration dates so taxpayers should take advantage of them
while they can.

First-Time Homebuyer Credit

The Recovery Act  <http://www.irs.gov/newsroom/article/0,,id=204671,00.html>
extended and expanded the first-time homebuyer tax credit for 2009.

Taxpayers who didn't own a principal residence during the past three years
and  purchase a home this year before Dec. 1 can receive a credit of up to
$8,000 on either an original or amended 2008 tax return, or a 2009 return.
But the purchase must close before Dec. 1, 2009, and an eligible taxpayer
cannot claim the credit until after the closing date. This credit phases out
at higher income levels, and different rules apply to home purchases made in
2008. 

New Vehicle Purchase Incentive

ARRA also provides a
<http://www.irs.gov/newsroom/article/0,,id=204519,00.html> tax break to
taxpayers who make qualified new vehicle purchases after Feb. 16, 2009, and
before Jan. 1, 2010.

Qualifying taxpayers can deduct the state and local sales and excise taxes
paid on the purchase of new cars, light trucks, motor homes and motorcycles.
There is no limit on the number of vehicles that may be purchased, and you
may claim the deduction for taxes paid on multiple purchases. But the
deduction per vehicle is limited to the tax on up to $49,500 of the purchase
price of each qualifying vehicle and phases out for taxpayers at higher
income levels. This deduction is available regardless of whether a taxpayer
itemizes deductions on Schedule A.

Energy-Efficient Home Improvements

The Recovery Act also encourages homeowners to make their homes more energy
efficient. The credit for nonbusiness energy property is increased for
homeowners who make qualified energy-efficient improvements to existing
homes. The law increases the rate to 30 percent of the cost of all
qualifying improvements and raises the maximum credit limit to a total of
$1,500 for improvements placed in service in 2009 and 2010.

Qualifying improvements include the addition of insulation, energy-efficient
exterior windows and energy-efficient heating and air conditioning systems.

Tax Credit for First Four Years of College  

The American opportunity credit is designed to help parents and students pay
part of the cost of the first four years of college. The new credit modifies
the existing Hope credit for tax years 2009 and 2010, making it available to
a broader range of taxpayers, including many with higher incomes and those
who owe no tax. Tuition, related fees, books and other required course
materials generally qualify. Many of those eligible will qualify for the
maximum annual credit of $2,500 per student.

 

Certain Computer Technology Purchases Allowed for 529 Plans

 

ARRA adds computer technology to the list of college expenses (tuition,
books, etc.) that can be paid for by a qualified tuition program (QTP),
commonly referred to as a 529 plan. For 2009 and 2010, the law expands the
definition of qualified higher education expenses to include expenses for
computer technology and equipment or Internet access and related services to
be used by the designated beneficiary of the QTP while enrolled at an
eligible educational institution. Software designed for sports, games or
hobbies does not qualify, unless it is predominantly educational in nature.

 

Making Work Pay and Withholding

The Making Work Pay Credit lowered tax withholding rates this year for 120
million American households. However, particular taxpayers who fall into any
of the following groups should review their tax withholding rates to ensure
enough tax is withheld, including multiple job holders, families in which
both spouses work, workers who can be claimed as dependents by other
taxpayers and pensioners. Failure to adjust your withholding could result in
potentially smaller refunds or in limited instances may cause you to owe tax
rather than receive a refund next year. So far in 2009, the average refund
amount is $2,675, and 79 percent of all returns received a refund.

Related Information

For more on the Recovery provisions that may apply to individual taxpayers
see the
<http://www.irs.gov/newsroom/article/0,,id=204335,00.html?portlet=6> ARRA
page on IRS.gov.

Audio Files for Podcast

Tax Breaks for 2009 & 2010: In
<http://www.irs.gov/pub/newsroom/marketing/internet/arra_tax_credits_2009.mp
3> English and in
<http://www.irs.gov/pub/newsroom/marketing/internet/tax_breaks_for_2009-2010
_espanol.mp3> Spanish

Videos

 <http://www.youtube.com/watch?v=eanmhrlpqWE&feature=channel_page>
First-Time Home Buyer Tax Credit 

 <http://www.youtube.com/watch?v=SNnUR8Yc1W4&feature=channel_page> Home
Energy Credit

 <http://www.youtube.com/watch?v=k8GgEqYEN1A&feature=channel_page> Education
Credits - Parents

 <http://www.youtube.com/watch?v=18KLVJTrh8U&feature=channel_page> Making
Work Pay Credit

 <http://www.youtube.com/watch?v=sSzp8OdvOpc&feature=channel_page>
Unemployment Compensation

 

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