Phases out at modified adjusted gross income $75,000 - $95,000 ($150,000 - $190,000 married filing jointly)
Most
wage earners have been receiving the credit as a boost in their
paychecks since April 2009, qualified taxpayers will receive the credit
in their paychecks via decreased income tax withholding
Credit amount must be reduced by economic recovery payment or government retiree credit (see below)
Not available for non-residents and taxpayers claimed as a dependent
Economic Recovery Payment
Recipients of
Social Security, Supplemental Security Income (SSI), railroad
retirement benefits, and veterans disability compensation or pension
benefits between Nov. 1, 2008 and Jan. 30, 2009, will receive a
one-time Economic Recovery Payment of $250 ($500 if married filing
jointly and spouse qualifies). Recipients should have received the
check after Feb. 2009.
Only one payment will be awarded even if individual is eligible for more than one program
Must be deducted from the Making Work Pay Credit amount
Additional Child Tax Credit
For taxpayers who receive less than the full amount of the child tax credit (it may give you a refund even if you do not owe any tax)
Earned income threshold needed to qualify for this credit decreases to $3,000 to cover more low-income families (was $8,500 in 2008)
Credit is equal to 15% of the taxpayer's earned income in excess of $3,000
Families with 3 or more children can choose to use an alternative formula under which the credit equals the amount by which the taxpayer's Social Security taxes exceed the taxpayer's earned income credit, if that produces a greater refundable amount
Expanded Earned Income Credit
Increase in credit for families with 3 or more qualifying children from 40% to 45%, up to $5,657
Deduction of state and local sales tax for certain new cars, light trucks, motorcycles and motor homes purchased after Feb. 16, 2009 and before Jan. 1, 2010
Limited to tax imposed on first $49,500 of purchase prices
Recipients can count up to $2,400 of unemployment benefits received in 2009 as non-taxable income; only pay taxes on benefits received in excess of $2,400
Unemployment benefits are temporarily increasing by $25 per week
American Opportunity Tax Credit
Maximum credit
of $2,500 per student (covers 100% of the first $2,000 and 25% of the
next $2,000) for tuition, fees and course materials (books) for the
first 4 years of post-secondary education in a degree or certificate
program (was previously the first 2 years)
40% of the credit is refundable unless student is subject to kiddie tax rules (new line on Forms 1040 and 1040A)
Phased out at modified adjusted gross income $80,000 - $90,000 ($160,000 - $180,000 if married filing jointly)
Students attending schools in a Midwestern disaster area can choose to use special rules
Expanded Definition of Qualified Tuition Programs
Qualified expenses for Section 529
College Savings plans are expanded to include qualified computer
technology, equipment and Internet service for students living at home
Items
must be used by beneficiary and beneficiary's family during the years
beneficiary is enrolled at an eligible educational institution
First-time Homebuyer Credit
Refundable 10% credit
on homes purchased after Dec. 31, 2008 and before May 1, 2010, up to
$8,000 (previously $7,500) – if the sale doesn’t close by April 30,
2010, you still qualify for the credit if you have a binding contract
to purchase a home as of that date and as long as the closing is
completed before July 1, 2010. The credit may not be claimed before the
closing date.
First-time homebuyers are
those who have not owned a primary residence during the 3 years prior
to the purchase date (married taxpayers must both qualify as
"first-time homebuyers" in order to receive the credit when filing a
joint return).
Repayment only required if, within 3 years of purchase, the home either ceases to be the primary residence or it is sold
Credit phases out for homes purchased after November 6, 2009 for taxpayers whose modified adjusted gross income
exceeds $125,000 ($225,000 if married filing jointly) – credit ends for
those with income of $145,000 ($245,000 if married filing jointly)
For
homes purchased after Nov. 6, 2009: You must be at least 18 on the date
of purchase and cannot be claimed as a dependent (for a married couple,
only one spouse must meet this age requirement)
Property cannot be acquired from a relative
For
homes purchased after Nov. 6, 2009: A properly executed settlement
statement must be attached to the return (at this time, qualifying
taxpayers will have to mail their returns since the statement cannot be
submitted electronically)
For homes purchased after Nov. 6, 2009: No credit available for homes where the purchase price exceeds $800,000
Residential Energy Efficient Property Credit Limitations
Credit
of 30% for expenditures related to larger residential energy
improvements (solar hot water property, geothermal heat pumps, wind
energy property)
Limit on credit amount removed for solar electric property
Credit
caps eliminated for qualified solar water heating, geothermal pumps,
and small energy property; $500 cap for qualified fuel cell property
remains
Homebuyer Credit for Current Homeowners
***Part of the Worker, Homeownership and Business Assistance Act of 2009 signed into law on November 6, 2009
A
refundable credit of up to $6,500 (up to $3,250 for a married
individual filing separately) for long-time homeowners buying a
replacement principal residence – buyers must have lived in the same
principal residence for any five-consecutive year period during the
eight-year period that ended on the date the replacement home is
purchased
Eligible taxpayer must buy, or
enter into a binding contract to buy, a principal residence between
November 7, 2009 and April 30, 2010, and close on the home by June 30,
2010
Phases out for individual taxpayers
with modified adjusted gross income (MAGI) between $125,000 and
$145,000 or between $225,000 and $245,000 for joint filers
2009 purchases must be claimed on your 2009 return, but 2010 purchases can be claimed on your 2009 or 2010 return
Nonbusiness Energy Credits
Individual homeowners can now claim 30%
for property improvements, up to $1,500 for 2009 and 2010 combined (was
previously 10%, up to $500) – taxpayers must claim the credit on the
tax return for the year that the improvements are made
Definition
of qualifying property revised - includes qualifying insulation;
exterior windows, skylights and doors; electric heat pumps; central air
conditioners; natural gas, propane or oil water heaters; biomass
stoves; furnaces and boilers
