Wednesday, December 2, 2009

The IRS and the ARRA

Here's a link to the IRS publication explaining provisions of the American Recovery and Reinvestment Act which explains the act's importance to individuals and business taxpayers. I've copied the front page of the publication below for readers to review for items of possible interest. Expansion of Sec 179 allowance for the deduction of purchases of new and used equipment is one item worth reviewing. Extending the roll back period for losses is another. If you visit the linked site and click on captions of interest you may learn more. Feel free to give us a call for guidance in areas you think might apply to tour 2002 tax return.

The American Recovery and Reinvestment Act of 2009: Information Center

Updated Nov. 6, 2009: The newly-enacted Worker, Homeownership And Business Assistance Act Of 2009 extends and expands the first-time homebuyer credit.

InformaciĆ³n en EspaƱol

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.

First-Time Homebuyer Credit Expands. Homebuyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement. New legislation extends and expands this credit.

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. Businesses have until Oct. 17 to request certification for the tax credit for some new hires.

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.