2009 Stimulus Package: What's In It For You, and When

There's good news ahead for most taxpayers. President Obama signed the American Recovery and Reinvestment Act into law Feb. 17 -- a new economic stimulus bill that gives tax breaks to a large portion of Americans of all ages and income levels, as well as to businesses.

Tax breaks apply mainly to 2009 -- no need to delay 2008 income tax filing

Note: The changes won't affect the 2008 tax returns that taxpayers
are filing now, except in a very small number of cases.

So most taxpayers can file with TurboTax now, and not miss out on the new tax breaks that begin this year.

Most taxpayers will get more money in their pockets in 2009

The new recovery act, according to the White House, will give a direct tax break to 95 percent of workers and their families, through the Making Work Pay Credit.

The law contains many other tax breaks that should provide a financial boost to everyone from the unemployed and low income, to families with children and children in college, to first-time homebuyers and taxpayers buying new cars.

The $787 billion legislation, which Congress approved Feb. 13,  is designed to get both individuals and businesses to open their wallets and to lift the economy out of its slump. Most of the cuts are good for only a year or two. 

As more details about the tax changes become available, TurboTax will post them here.

Tax breaks for individuals, families:

Workers

Making Work Pay Credit: Workers and the self-employed would get a payroll tax credit for 2009 and 2010 of up to $400 a year for single taxpayers, and up to $800 for couples filing jointly.

The IRS will get the money to taxpayers by adjusting the withholding tables, thereby boosting paychecks. The increase could be as much as $40 per month per worker, depending on when the withholding tables are changed. Self-employed workers will claim the credit on their tax returns. In the meantime, they can reduce their estimated tax payments for 2009.

For single tax filers, the credit will begin phasing out at an Adjusted Gross Income (AGI) of $75,000. For couples filing jointly, the phaseout zone will start at $150,000 of AGI. (Adjusted Gross Income is your total income from wages and other income minus certain adjustments, such as deductible IRA contributions and alimony paid.)

Unemployed

Reduced taxes on unemployment income: Normally, people receiving unemployment benefits must report them as income and can be taxed on them. The new bill makes the first $2,400 of unemployment income nontaxable.  

First-time homebuyers

First-time Homebuyer's Credit: The tax package increases the $7,500 first-time homebuyer credit to $8,000 for primary residences purchased between Jan. 1, 2009 and Nov. 30, 2009, and eliminates the requirement that the credit be repaid, as long as the house isn’t sold within three years. 

College students

Expanded Hope Credit: The Hope Credit for college costs is increased to $2,500 for 2009 and 2010, covering 100 percent of the first $2,000 of tuition and related expenses per year and 25 percent of the next $2,000.

The credit is available for all four years of college, up from only two years, and covers the cost of books. It is 40 percent refundable, and begins to phase out at $80,000 of Adjusted Gross Income for singles and $160,000 of Adjusted Gross Income for married couples.

The bill also allows tax-free distributions from Section 529 College Savings Plans to cover computer purchases.

New car buyers

New car sales tax deduction: Buyers of new cars, light trucks, SUVs, motorcycles or motor homes during 2009, can deduct the state sales or excise tax they pay, even if they don’t itemize their deductions.

This break starts phasing out for single taxpayers with Adjusted Gross Income over $125,000 and couples with AGI over $250,000.

Tax Breaks for Families

Expanded Earned Income Tax Credit (EITC): More couples who file jointly and have children will qualify for the Earned Income Credit.

The tax package starts the phaseout range at $21,420, an increase of $1,880. Also in 2009, the credit increases for families with three or more children to 45 percent of the first $12,570 of earned income, up from 40 percent.

Enhanced Child Tax Credit: Plus, the Child Tax Credit will cover more low-income earners: For 2008, the credit is refundable to the extent of 15 percent of an individual’s earned income in excess of $8,500; for 2009 and 2010, that floor drops to $3,000.

Retirees, veterans and the disabled

One-time payment of $250: Because the payroll tax credit only goes to employees and the self-employed, the bill adds something for others as well: a one-time payment of $250 to recipients of Social Security benefits, Railroad Retirement benefits, Supplemental Security Income payments, and pension and disability benefits from the Veterans Administration.

Government retirees who don’t get Social Security will also get a one-time refundable tax credit of $250 in 2009.

Homeowners

Extended energy-saving credits: The 10 percent tax credit for energy-saving home improvements climbs to 30 percent and is extended through 2010. Improvements that qualify for the credit include energy-efficient skylights, windows and outer doors, along with energy-saving water heaters, central air conditioners and biomass stoves.

The bill also eliminates individual credit caps for the different types of property, and instead imposes a $1,500 cap on all qualifying property.

 Middle-income taxpayers

One-year "patch" on the Alternative Minimum Tax: To keep millions of middle-income taxpayers from being forced to pay the Alternative Minimum Tax (AMT) for 2009, the measure increases the minimum tax exemptions to $70,950 for couples filing jointly and $46,700 for single filers. Otherwise, the exemptions would top out at just $45,000 for couples and $33,750 for singles.

Businesses will get a big share of the tax breaks

Small businesses would most likely be affected by the following changes:

Bonus depreciation

Special 50 percent, first-year bonus depreciation is revived for assets bought and placed in service during 2009.

Loss carrybacks

Businesses that averaged $15 million or less in gross receipts over the past three years will be allowed to carry back losses for five years instead of two. The easing applies only to 2008 losses.

How can I get a recovery rebate in 2009?

TurboTax Online will let you know if you qualify and guide you as your prepare your tax return. So relax, if you qualify TurboTax Online will ensure that you get one.

Comments

[natalie]

i think we as indivduals should get a check this year in 2009 to help us out and our families, instead of giving all the money to auto makers, it is crazy...... we are the ones who have to pay back the money not them. it is us and our tax dollars. there is too many families out here that are struggling and need help now, and noone is giving us anything....... take that back they are giving us a tax credit when we file taxes in 2009......... that is good, we need the money then too... and families count on that to get their families out of dedt and buy their kids and their family what they need........ but why can't they help us now too?? they are just throwing money out the window, and tring to make stupid laws to ban smoking and things... just another way for them to control our life.. they need to hear us, and listen to us, we are the citizens. it is us and our families who is struggling....

[JOAN DUBNI]

AND, AS USUAL, THE RETIRED AND DISABLED GET THE LEAST ....$250........... BUT BANKS, AUTO DEALERS, ETC. GET ACTUALLY BAILED OUT. I DON'T GET IT AND I AM LOSING EVERY DAY BUT WHO CARES????

[Jesse Coley]

Mr. President, the people of US need help now not tomorrow or next week but in a hurry. The fat cats on WALL STREET and others BIG EXECUTIVE have drained this country long enough. The Bail OUT from the STIMULUS PACKAGE is waiting of money. My suggestion is to give every taxpayer
And homeowner $10,000.00 to save our homes & pay debit that was honestly provided by the creditor. This will stimulate our economic, because money would be spent back in the US. Good to help the children of the US, but what about the MIDDLE CLASS that have always pave the way for our young people. 2009 is a critical time for everyone, the college student, banks, car dealers and WALL STREET, but the working people.

[Sam Newman]

What about the Cobra Plan. My wife just got the axe and she has some pre-existing medical issues that need to be carried over to the next job, and also some insurance while we are looking. We are lucky in that our children are grown and we can move around some, but I am 100% disable from 7 back surgeries and also have health problems from asbestos at the Veterans Hospital so we can not go to far. Can we get help with Cobra?

[Hunter Oaks]

Where's the Beef? More specifically, where is the substance of this plan? A plan like this might have been fine a year ago in a pre-recession economy, but not today in the middle of the recession. Much deeper and more sweeping expenditures need to be made in favor of the people, and fewer dollars spent on corporate bailouts for banks, automakers and the housing industry.

Large rebate checks, larger deductions for dependents, tax AND interest deductions on home and auto purchases, and more and bigger tax breaks for those making energy saving improvements to their homes and businesses.

If we allow the people to keep more of their money, and make it more affordable to purchase homes, autos and other economy stimulating purchases, then they will... If we don't, its going to be a very long, hard road, and "Yes we can" will turn to "No we can't" very quickly.

[TheOneRunner]

Natalie, no offense, but many people are sick in the country because of second hand smoke and from smoking. If smokers want to kill themselves before their "real" time, then let them do it in their own homes. I don't want to be breathing that crap nor does my family and friends. The government isn't trying to control our lives - have you looked at other countries around the world. Maybe communist countries, if you don't like it, you can leave the US....Anyways, if you want to make a difference, you have to get involved, you can't just sit back and complain about it. Too many Americans do that - is that solving the problem at all?? Think about it.

[Theresa Perez]

My suggestion to get this economy back on track is very simple. Enstead of giving money to the banks and auto industries, give it to the american people. Give it to us with a contract stating exactly how we have to spend it. The checks already made out to, example.... our mortgage co. to get caught up if behind. Our credit card companies, if behind. To an autodealership for a car. A lot of us need a new car. A miscellaneous amount to invest in the stock market. BAM! problem solved. American people are out of debt and so are the big companies! Just that simple!

[melanie]

I want to know if we will owe tax on the 2009 stimulus money we receive in our paychecks at the end of the year.

[USA]

The OneRunner,
How about if you leave the US? Then we would be free of small-minded people just like you. It's legal it stinks and it's our right.

[billie]

As foreclosures are the biggest problem facing our economy, I think the suggestion to give each mortgage holder a payment and rewrite the mortgage lowering the monthly payment would certainly help everyone. $50,000 to everyone would not be as much as the banks and autodealers have wasted while the economy continues to suffer

[felicia anderson]

when will we see the 2009 stim check arrive in the mail ,, on feb 17 presedent did sing , how long be for we see the money

[Andy]

Great information summarizing all the benefits here. I found this article had some good information as well on key stimulus dates and may be of assistance to some of the commenters here : http://www.savingtoinvest.com/2009/03/key-dates-and-deadlines-to-receive.html

[DANIEL DROEGE]

Wow no wonder we are in trouble. So many stupid people with credit... We must help the businesses because they pay for the majority of our schools, police, fire, and health clinics. Your personal property tax may be large (to you) but you also send kids to school which is much more expensive than what you pay. Businesses that have no schools pay a much larger portion of taxes, and so since they are tax payers they desirve a tax break as well. If all the jobs lay off all the workers, then it doesn't matter how BIG your check is. Once it's gone you will be standing their, poor, with your hand out once again. This is absurd. Let's take almost 800 billion dollars of OUR money and send it back to us, only to then pay taxes on it AGAIN next year. Its the governments way of saying "You are all to stupid to spend your money the right way, so we will hold it all for you, and let you use it when you NEED it." Meanwhile people are lossing houses, jobs, and faith. So say goodbye to the strength of the American Dollar and say hello to years of "stimulus" check bail-out plans that do not work. With our system of economics we must go through a purging of our debt by being in a reccession for a short time. It has happened over and over again since capitalism has become popular. The longer the government tries to ignore the fact that this is unavoidable, the worse they are actually making it. Stop reading this BS and go read about the Great Depression.

[Susan]

We can all sit here and complain about what is going on and that we all need money right now. My question to everyone is how is that going to benefit us at all? You have to decide how you are going handle this situation we are in now. We are Americans and we have to remember that. We have to keep our heads up high and make the best of what is going on. I do admit that it really sucks that we are in debt as a country, as companies and as individuals but we have to make the best of every situation that we are in. We can let this debt run our lives but where is that going to get us. Being happy is our responsibility!!!

[monica]

I have to agree with the person that said to go read about the great depression. My grandma was born in 1929 and they say that is when it was, the truth is it lasted for a a little over a few years... I have recentlly talked to an 80 yr old man, who remembers those times as though they were times from just a mo ago. He told me in those days everyone was in lines (at the soup kitchen) they called it. Blacks on one side and whites on the other side... but colored or not they were both there, to get any crumb for their family. He told me of the trucks coming in to Houston with food, it looked like a third world country people running up bombarding the truck, taking whatever they could before the drivers could even stop to unload. He told me stories of eating armadillos, rats, coons to survive- and he was sharing with his neighbors. That is real stuff!!! Nothing gets cheaper in America. Grama would tell me how gas was 5cents a gal, when she was growing up, I remember when I was growing up it was 99cents (for years). I have seen it up to 4-5 dollars now. The gas hasn't changed, how they produce it hasn't changed. Now it is back to 1.60. I believe it will be back up in no time. Our government is to work for us the people- and if we are struggling- we should get help. It is obvious we are struggling- losing our jobs, our transportation, our homes. Good education is an expense that will automatically put you in debt. We need to start educating ourselves on our history- and make real changes- that will impact Americans in a positive way, so our children don't have the trials and burdens we have.

[AnotherAmericanMan]

Here let us all sit back and think. There are reasons that we are in debt. First of all we as Americans believe that everything should be handed to us. 50% of our population these days do not want to work for anything. Now think back in 2008 when they issued the first stim package to try and revive our fast falling economy, what do you think 30% of the people that REALLY needed that spent it on? Their Credit card debts? Their late car payment? Their overdue bills? My guess is probably none of the above.

You see if you think about it...It is harder to, for lack of better words, "survive" today than it was 4-30 years ago. Gas is a dominate resource, thus meaning they can do whatever the hell they want to with the price. Why? Because we as Americans MUST have it to get from point A to point B in our lives. I don't know about alot of you but i live 45 minutes from where I work. So honestly the gas industry knows the answer to how high they can take the gas prices and we will continue to buy it.

Now moving on to groceries. It is just me and my wife and honestly it is ALOT cheaper to eat out now than it is to make a good home cooked meal. With families im sure that can add up to a pretty penny a week on groceries/eating out. I am no smart guy by any means i know what i know and thats about it. This is just my opinion on "todays people". Now given their are people out there that are smart with their money and know how to manage it. But honestly...their wouldnt be any debt if people would learn the difference between "I NEED" and "I WANT".

In my line of work i see it every day. It amazes me how people can go out and buy a new 56" HDTV and the next week wonder how they are going to pay their car payment on time. We as citizens of a very hard time need to be as cautious as ever with our earnings.

So i say Kudos to Barack Obama for at least trying to save us. He wants us out of war, he wants our troops home. I understand that we went over there for a reason. and i pay my respects to those fighting for our freedom, but their comes a time when you need to fight for your own and not the other side. Now let me break this down for you. I live in Tennessee and this is why i am saying that:

Taxpayers in Tennessee will pay $10.1 billion for total Iraq war spending approved to date. For the same amount of money, the following could have been provided:

2,111,437 People with Health Care for One Year OR

7,489,990 Homes with Renewable Electricity for One Year OR

280,999 Public Safety Officers for One year OR

189,305 Music and Arts Teachers for One Year OR

1,799,352 Scholarships for University Students for One Year OR

105,201 Affordable Housing Units OR

3,535,664 Children with Health Care for One Year OR

1,405,190 Head Start Places for Children for One Year OR

203,030 Elementary School Teachers for One Year OR

139,699 Port Container Inspectors for One year.

To date, $656.1 billion dollars have been allocated to the war in Iraq.

Now if you live in a higher taxed state you do the math.

And someone is going to sit there and tell me that it wasn't possible to do a bail out before now? You see what our tax dollars went to? It wasn't for new roads, better schools, hell even unemployment and disability. No it went to the destruction of many families losing their loved ones, fathers, mothers, sons, daughters...whatever it may be.

Now i agree with the reason that we went to war. I am not saying that i am against it. But their comes a time where you need to protect your own.

Bush is the sole reason that our economy is the reason that it is today. And i for one will stand by my word on that.

[Shi Yi an]

What we need to do is to do something ourselves not sit back and watch stuff happening-if we work together, then great things will happen

[Beverly Hathcock]

It just really "ticks" me off that the banks made such bad "greedy" loans and the REALTORS have taken them slam. I've been in real estate 30 years and have never experienced the lack of business (not even in the late 80's with such high interest rates) as I have since 9/07. I'm 63 years old with a 77 yr old husband with alzheimers & a 16 yr old daughter, Jr. in high shool - That is financially demanding. It is on my shoulders to support the family. Yes, we get social security but we had established a lifestyle years ago and saved. However, due to extensive medical & RX costs, our savings are depleted. NOW, with real estate still in a slump, we're about to loose everything we have. WHERE IS THE BAILOUT FOR THE HONEST, HARD WORKING CITIZENS WHO HAD LOOKED FORWARD TO THE GOLDEN YEARS - Those dreams are BURNED and now we're suffering. NOT FAIR THAT THE ONES THAT MADE BAD/GREEDY DECISIONS ARE BAILED OUT AND WE STRUGGLE BECAUSE OF THEIR MISTAKES & HAVE TO SUFFER!! With me having to furnish high deductible/high copay insurance, our premiums are STILL $621/yr - on top of that $2500 deductible and heaven forbid, you have to have an MRI or CT Scan!! INSURANCE IS OUTRAGEOUS. I'm seriously considering getting separate insurance for my daughter and letting mine lapse, because of necessity. Guess I'll just try sitting in line for Medicaid - after all, anyone can get it, especially if your not an American & haven't contributed to the system for it!! again - insurance & allowances for medical care are so unfair!!!

[Stephanie Hannum]

I think that getting a little bit on our paychecks is just about useless. How it that supposed to "stimulate" anything? $40 extra bucks a month is not going to help people get caught up on their bills, encourage them to buy a new vehicle, or go spend money on something frivolous. I am a collector for a car company and I hear the problems, first hand, that people are going through. If they want to give people some cash back, cut them a check! the lump sum will not get lost in everyday living and help out a lot more. This plan is going to do nothing for the geneal public and just make the country go more into the red.

[insanenomore]

How about some else. If the government is paying out theses companies try pay out our student(can't pay off until your dead)loans. that will put some money in peoples pocket.

[Doreen Davis]

I am so saddened by the way the U.S. takes care of their citizens. Many years ago, as a separated single parent (receiving only $60 a week in child support) of seven (7) children, I was forced to accept Medicaid and food stamps for one (1) year, when I could not find a job. I can't describe the humilitation I felt, as I consantly looked for employent. I found employment and worked for over 20 years, before I was forced to take apply for early SS payments, because of depression. I didn't apply for SSI because foolishly thought that my country would take care of me after all of my years of working. I can't believe how stupid was! Not only is my Social Security a minimal payment of what I paid into Social Security and Medicare. I actually have to pay an additional fee for Medicare insurance which leaves me with a monthl check of $825.00! Something is very wrong with a government that is willing to dole out bilions and billions of dollars to corporations and not take care of the millions and millions of tax payesrs who have trusted faithfully in their conuntyr.

[Norm]

President Obama says one thing and signs bills into law that contradict what he just said. This most recent debacle with the AIG executive bonuses is a perfect example. This administration wrote those bonuses into the bill that President Obama just signed. Now they are using the weight of the congress to retract those bonuses through Taxation. This never should have been a situation in the first place. The people of the United States of America had better wake up to the fact that anyone can be demonized and then the government brought to bear on them—even your group. This is so serious it can change America into a socialist country within a short term. We the people need to keep President Obama in check and Empower voices against the things he wants to put forth that will cripple our country and economy. For example, President Obama wants the Cap and Trade Tax implemented. Paraphrasing, President Obama says all men, woman, children, elderly and anyone else paying for utilities (gas, electric, home heating fuel, diesel) in America will pay exceedingly more for those commodities. When he was asked about this plan and specifically what it would do to the cost of electricity, he said, “…the cost of electricity would skyrocket.” The reporter was stunned, because she heard and understood his words, then listened as he justified his position. He further explained that people, US citizens, were wasteful and careless with their use of these carbon emitting products and the only way to reduce usage was to raise the price (artificially) so high that people would curb their use. When the small detail of fixed income persons came up, he said that the government would probably have to make a program to pay the difference for the poor. Timothy Geithner was asked about the Obama Cap and Trade plan by a Senate panel—late Feb 09, early Mar 09. When Senator Grassely asked him about what Cap and Trade would do to the cost of electricity for everyone who turns on the light in the bathroom at night or heats their home, I was shocked to hear him justify the plan much in the same way I had heard President Obama. He also said the cost would skyrocket. Do not marginalize what I am saying. Americans need to be efficient with our resources, but when Government’s solutions are to punish you to conserve, that is tyranny. America will reach toward freedom and meet goals through incentives to achieve and win. We do that through working for a prize that motivates the population to overcome. In the future when you hear President Obama say we are going to punish anyone to get them to do anything, do not be fooled. If you are a Democrat or Republican you should be outraged, if you are a citizen you should be furious, and if you are an American you should not tolerate this BOLD indifference to our way of life and President Obama’s flippant disregard for the Americans that are intrusting him to our Government’s leadership. Sincerely, sent to inform all that will listen.
PS There is no $400 or $800 checks to be sent out. It will just be nickled and dimed out to you through your pay check. $10-$20 more a payday than you would normally get. So I guess when I received our $1800 check (family of four) from the Evil George Bush administration I should have wished a GOOD LIBRAL DEMOCRAT like President Obama would have been in there to pay me pennies on installments. You have got to be kidding!

[John Platt]

Once again the Senior Citizens of the United States of America are being forgotten about. A one-time stimulus check of $250.00 is almost like a slap in the face. Tax credits for me and many other seniors are no help. With health insurance premiums at an all time high , along with high deductibles, co-pays, prescription medicine, etc...our itemized deductions wipe out any income. Hence, with no taxable income, there can not be any tax liability. If there is no tax liability, there is nothing to apply a tax credit against. Why does the USA treat their senior citizens like second-rate citizens? Surely, somebody should figure out that our spending could help
stimulate the economy as well as any one else.Just once I would like to see our government think of its senior population and help them out. It seems that the strongest country in the world can not help its elders like so many of the not so strong countries.

[RHONDA]

OH, EVERYTHING IS ABOUT THE MIDDLE CLASS INDIVIDUALS, HOMEOWNERS, ETC. I UNDERSTAND THAT THERE IS A PROBLEM GOING ON THERE, BUT WHAT ABOUT THE POVERTY STRICKEN INDIVIDUALS (AS MYSELF). SINGLE PARENT OF FOUR WONDERFUL CHILDREN AGES 18, 17, 15, 14...MY 18 YEAR OLD HAS A 4 YEAR OLD DAUGHTER (RESULT OF RAPE) I HAD MY CHILDREN EARLY, VERY TRUE AND I PROBABLY COULD HAVE WAITED, BUT THEY ARE HERE AND THEY SHOULD NOT HAVE TO SUFFER AS THEY DO. ALONG MY WAY, I FELL AND MADE MANY MISTAKES, BUT MY CHILDREN ARE SUFFERING. I WORK, AM A STYLIST, BUT I CAN'T AFFORD TO GET MY THREE BOYS A HAIR CUT, PURCHASE FOOD, BUY CLOTHING, GAS FOR MY BROKE DOWN TRUCK, CAN'T EVEN AFFORD THE INSURANCE FROM MONTH TO MONTH AND THAT'S ONLY 60 DOLLARS A MONTH! AND I AM FACING EVICTION ON A RENTAL, NOT A HOME!!! THE FUNNY PART IS EVERYONE IN THE HOME WORKS, EVERYONE AND THEY HAVE TO BUY THIER OWN PERSONAL ITEMS, CLOTHES, SOMETIMES HOUSEHOLD ITEMS, WHEN I CAN'T!!!! AND WE ARE STILL STRUGGLING TO SURVIVE. I WROTE A BOOK, HAD IT PUBLISHED IN HOPES OF BETTERING THINGS FOR MY CHILDREN WHO HAVE NEVER GONE ON A VACATION. NEVER!!!! IT HURTS ME TO KNOW THAT I COULDN'T DO FOR MY CHILDREN WHAT YOU MIDDLE CLASS PERSONS HAVE. I MAKE SURE THEY ATTEND SCHOOL, HAVE A SUCCESSFUL PLAN FOR THIER FUTURE, ENTER INTO THE MAGNET PROGRAM TO ENSURE A DEGREE OF SOME SORT, JROTC, ETC. SO, WHILE YOU ALL ARE COMPLAINING ABOUT YOUR "MIDDLE CLASS" LIFE, WE DOWN HERE ARE CONTINUOUSLY BEING FORGOTTEN.... HELP US AS WELL.

[where's my right's]

To the one runner, Ok so u are offended by smokers, instead of us leaving the country how about you dont frequent places when smokers are present. We all have the freedom of choice, everyone so y should we be segregated. If we lay down and let state government tell us "NO SMOKING IN PUBLIC BUILDINGS" because of health risks or no smoking in public because its offensive what is going to stop them from banning other things. Oh I know how about we ban hog farms and cattle farms. I mean they release methane gas into the enviroment u breathe everyday. But we cant do something like that because that affects everyone. Right? The biggest problem these days is we pick and choose what we think is right. Everone says dont do this dont do that. So where did the freedom of choice and freedom of expression go?