Feature Articles: Taxes
The American Recovery and Reinvestment Act of 2009
The IRS is implementing the tax-related provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) as quickly as possible. More information on these and other provisions of the recovery program will be available on the IRS Web site as it becomes available.
Information for Individuals
Some of the provisions of the law primarily affect individuals.
- Making Work Pay Tax Credit. This tax credit means more take-home
pay for many Americans. To make sure enough tax is withheld from
their pay, taxpayers can use the
IRS withholding calculator. See
Making Work Pay for more
information.
- First-Time Homebuyer Credit Expands. Homebuyers who purchase
in 2009 can get a
credit of up to $8,000 with no payback requirement.
- Money Back for New Vehicle Purchases. Taxpayers who buy certain
new vehicles in 2009 can
deduct the state and local sales taxes
they paid or other taxes and fees they paid in
states with no sales
tax.
- Education benefits. The new
American opportunity credit and enhanced
benefits for
529 college savings plans help families and students
find ways to pay higher education expenses.
- Enhanced Credits for Tax Years 2009, 2010. Find details on the
earned income tax credit and the
additional child tax credit.
- Increased Transportation Subsidy. Employer-provided
benefits
for transit and parking are up in 2009.
- Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals
should check their
tax withholding.
- $250 for Social Security Recipients, Veterans and Railroad Retirees.
The Economic Recovery Payment will be paid by the Social Security
Administration, Department of Veterans Affairs and the Railroad
Retirement Board.
- Energy Efficiency and Renewable Energy Incentives. See what individuals
can do
to reap tax rewards.
- Health Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.
Information for Businesses
Some of the provisions of the law primarily affect businesses.
- Making Work Pay Tax Credit. Businesses should use the
new withholding
rates for their employees. For pension plan administrators, new
optional withholding procedures are available to supplement the
February withholding tables.
- Work Opportunity tax credit. This
newly-expanded credit adds
returning veterans and "disconnected youth" to the list of new hires
covered by the credit that businesses may claim. Certification by
the state work force agency is required.
- COBRA: Health Insurance Continuation Subsidy. The IRS has
extensive
guidance for employers, including an updated Form 941, as well as
information for qualifying individuals.
- Energy Efficiency and Renewable Energy Incentives. See what businesses
can do
to reap tax rewards.
- Net Operating Loss Carryback. Small businesses can offset losses
by getting refunds on taxes paid up to five years ago.
Information
on the carryback, an expanded section 179 deduction and other business-related
provisions, is now available.
- Municipal Bond Programs. There are new ways to finance school construction, energy and other public projects.
2008 and 2009 Tax Returns
The law could affect some
2008 tax returns due in 2009. However,
most of the changes in ARRA will affect
2009 individual tax returns
filed next year and due April 15, 2010.
This information came from The American Recovery and Reinvestment Act of 2009: Information Center on the IRS Web site.
For additional information, contact Andrew Zumwalt, Associate State Specialist, Personal Financial Planning, University of Missouri Extension at zumwalta@missouri.edu.
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Last update: Wednesday, October 07, 2009
