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Tax Changes Under American Recovery and Reinvestment Act of 2009

Learn about the key highlights of the American Recovery and Reinvestment Act of 2009, including updates on tax credits, deductions, and eligibility criteria. This publication outlines changes such as the Making Work Pay Credit, First-Time Homebuyer Credit, New Vehicle Taxes Deduction, Increased Credits, Education Tax Credits, and more. Stay informed about the provisions that can impact your taxes and financial planning.

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Tax Changes Under 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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