Economic Stimulus 2009 (FAQ's)

Question:  Will I receive a stimulus payment like last year?

Answer:  No for most taxpayers.  For most of the American working families, their refundable tax credit is up to $400 for working individuals and up to $800 for working couples.  This will be paid through a reduction of withholding tax which is scheduled to began no later than April 1st of 2009. 
*However, certain retirees and veterans will be receiving a $250 check  sometime this year.

Question:  How do I know if I qualify?

Answer:  The tax credit is calculated at a rate of 6.2% of your earned income.  If you earn at least $6,450 and are not phased out of the credit, then, you will receive $400.
(Eligibility for the"Making Work Pay" credit starts to phase out for individual with adjusted gross incomes of over $75,000 and phases out completely at $95,000.  For couples who are filing Married Filing Jointly, the phaseout starts at $150,000 and completely phases out at $190,000.

Question:  What if I'm self-employed and pay estimated taxes?

Answer:  You can adjust your quarterly estimated tax payments to account for the "Making Work Pay" credit. 

Question:  Does this affect my unemployment benefits?

Answer:  The first $2,400 of benefits in 2009 is now exempt from federal income taxes.  And unemployment benefits will temporarily increase by $25 per week.

Question:  I've heard something about a First-time Homebuyer Credit... what's that?

Answer:  For eligible first-time home buyers who buy a home between December 31st, 2008 and December 1st, 2009, there is a refundable credit equal to 10% or the purchase price of the home, up to $8,000.  (Click on the "FIRST-TIME HOMEBUYER CREDIT" tab for more information.

Question:  My child will be going to college soon, do I qualify for the "American Opportunity" Education Tax Credit?

Answer:  This credit provides eligible taxpayers in 2009 and 2010 with a credit of up to $2,500 of the cost of tuition and other related expenses paid during the taxable year.  You will need to spend at least $4,000 to receive the full credit.  For 2009 and 2010, the Hope Credit applies to the first 4 years of college, rather than the first 2 years.  The Hope Credit can be claimed each year the student has qualifying expenses.
Taxpayers receive a tax credit based on 100% of the first $2,000 of qualified expenses paid during the tax year and 25% of the next $2,000 ($500).  40% of the credit is refundable.
The credit begins to phase out for taxpayers with adjusted gross income in excess of $80,000 for individuals and $160,000 for couples filing jointly.

Question:  Is there going to be another "Energy Credit" given?

Answer:  Yes.  The new law increases energy property credits from 10% to 30%, for property improvements placed in service from between December 31st, 2008 to before January 1st, 2011.  Also, the lifetime maximum cap on the credit was increased from $500 to $1,500.
(The maximum cap means if you have claimed any of the credit in 2006 or 2007, then, you can only claim the difference up to $1,500.)

Question:  What is the news about the sales tax on purchasing a new vehicle?

Answer:  Under the new law, eligible taxpayers will be allowed to deduct sales tax on new vehicle purchases on or after February 17th, 2009 till the end of the year for your 2009 tax return.