President Obama has just signed the "American Recovery & Reinvestment Act." While much of the news focuses on the spending provisions, it also includes $287 billion in tax cuts:
-The act includes a new "Making Work Pay" credit for 2009-10 to offset the first $400 of Social Security tax you pay ($800 for joint filers). It phases out as your adjusted gross income (AGI) tops $75,000 ($150,000 joint).
-There's a new higher education tax credit of up to $2,500 for your first $4,000 in college expenses. The credit phases out as your AGI tops $80,000 ($160,000 joint). You can also use Section 529 plan funds for computer-related expenses, including software and online access (2009-10 only).
-Buying a car? You can deduct state and local sales and excise tax you pay on a new (but not used) car, light truck, RV, or motorcycle you buy between January 1 and November 30, 2009. The deduction is limited to purchase amounts up to $49,500 and phases out as your AGI tops $125,000 ($250,000 joint).
-Buying a home? The act increases the "first-time homebuyer" credit from $7,500 to $8,000, extends the purchase period through November 30, 2009, and eliminates the requirement to repay the credit for homes purchased in 2009. This credit phases out as your AGI tops $75,000 ($150,000 joint).
-Buying business equipment? The act extends the current $250,000 first-year expensing limit and 50% bonus depreciation provisions for purchases through 2009.
-Finally, the bill "patches" the Alternative Minimum Tax, to protect 24 million mostly middle-income filers from the AMT's bite.
Congress passed these new rules with less deliberation than usual, so there's bound to be confusion
Join me this and every Saturday morning at 10AM for "it's Your Money", part of Coaches Corner, Saturday Morning Street Smarts, on Newstalk Radio, WBLF, 970 AM. Call in during the show: 814-272-9700 or reach my office at 814-867-5745. You can also reach me via email at: email@example.com
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