Category Archives: AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009
Electronic Health Records Incentive Payments
The American Recovery and Reinvestment Act of 2009 (ARRA) authorizes the Centers for Medicare and Medicaid Services (CMS) to make incentive payments to eligible professionals and hospitals that adopt, implement, upgrade or demonstrate “meaningful use” of certified electronic health record (EHR) technology to improve patient care. The funds for these incentive payments may be administered through the state’s Medicaid agency or directly from CMS via a Medicare contractor.
If the state agency or CMS makes incentive payments of $600 or more to an eligible professional or hospital, they are responsible for reporting such payments to the recipients on a Form 1099-MISC by January 31 of the next year. Therefore, if a state agency or CMS made payments of $600 or more in 2012, they should issue Form 1099-MISC to the recipients by January 31, 2013.
Professionals and hospitals should not consider EHR incentive payments to be reimbursements of expenses incurred in establishing an EHR system; instead, the recipient of the payments should consider the payments to be includible in gross income.
An eligible provider receiving an EHR incentive payment may be required to give the payment to the provider’s practice or group and not be allowed to keep it. In this situation, the eligible provider is not required to include the payment in gross income if the provider (1) is receiving the payment as an agent or conduit of the practice or group, and (2) turns the payment over to the practice or group as required. The state agency or CMS should send the Form 1099-MISC to the provider regardless of whether the funds are assigned or transferred to the provider’s practice group, or retained by the provider. The eligible provider, not the state agency or CMS, would bear the information reporting obligation, if any, for payments made to the provider’s practice group.
IRS Presents: Five New Things to Know About 2009 Taxes
As you get ready to prepare your 2009 tax return, the Internal Revenue Service wants to make sure you have all the details about tax law changes that may impact your tax return.
Here are the top five changes that may show up on your 2009 return.
1. The American Recovery and Reinvestment Act
ARRA provides several tax provisions that affect tax year 2009 individual tax returns due April 15, 2010. The recovery law provides tax incentives for first-time homebuyers, people who purchased new cars, those that made their homes more energy efficient, parents and students paying for college, and people who received unemployment compensation.
2. IRA Deduction Expanded
You may be able to take an IRA deduction if you were covered by a retirement plan and your 2009 modified adjusted gross income is less than $65,000 or $109,000 if you are married filing a joint return.
3. Standard Deduction Increased for Most Taxpayers
The 2009 basic standard deductions all increased. They are:
- $11,400 for married couples filing a joint return and qualifying widows and widowers
- $5,700 for singles and married individuals filing separate returns
- $8,350 for heads of household
Taxpayers can now claim an additional standard deduction based on the state or local sales or excise taxes paid on the purchase of most new motor vehicles purchased after February 16, 2009. You can also increase your standard deduction by the state or local real estate taxes paid during the year or net disaster losses suffered from a federally declared disaster.
4. 2009 Standard Mileage Rates
The standard mileage rates changed for 2009. The standard mileage rates for business use of a vehicle:
- 55 cents per mile
The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:
- 24 cents per mile
The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents per mile.
5. Kiddie Tax Change
The amount of taxable investment income a child can have without it being subject to tax at the parent’s rate has increased to $1,900 for 2009.
For more information about these and other changes for tax year 2009, visit IRS.gov.
Links:
- FS-2010-4, 2009 Tax Law Changes Provide Saving Opportunities for Nearly Everyone
- The American Recovery and Reinvestment Act of 2009: Information center
- 1040 Central
- Form 1040 instructions (PDF 941K)
IRS YouTube Videos:
- Tax Filing Season 2010 English | Spanish | ASL
- Earned Income Tax Credit English | Spanish | ASL
- Education Credits – Parents English| ASL
- Education Tax Credit-Claim it-Students English | Spanish | ASL
- Energy Tax Credits Claim It English | Spanish | ASL
- Haiti Earthquake Donations English | Spanish | ASL
- Making Work Pay – Claim It English | ASL
- New Homebuyer Credit-Claim It English | Spanish
- New Homebuyer Credit-Military English
- Split Refunds-Savings Bonds English | Spanish
- Unemployment Compensation English | Spanish
- Vehicle Tax Deduction – Claim It English | Spanish | ASL
IRS Presents: Are You Eligible to Claim the Government Retiree Credit
[Stacie says: If you are a retired government employee be sure to talk to your preparer about your eligibility to claim the Government Retiree Credit]
Certain government retirees who receive a government pension or annuity payment in 2009 may be eligible for the Government Retiree Credit. The American Recovery and Reinvestment Act of 2009 provides this one-time credit of $250 for certain federal and state pensioners.
Here are seven things the IRS wants you to know about the Government Retiree Credit:
- You can take this credit if you receive a pension or annuity payment in 2009 for service performed for the U.S. Government or any U.S. state or local government and the service was not covered by social security.
- Recipients of the Making Work Pay Credit will have that credit reduced by any Government Retiree Credit they receive.
- The credit is $250 for individuals and $500 if married filing jointly and both you and your spouse receive a qualifying pension or annuity.
- You must have a valid social security number to claim the credit. If married filing jointly, both spouses must have a valid social security number to each claim the $250 credit.
- You cannot take the credit if you received a $250 economic recovery payment in 2009.
- This is a refundable credit, which means it may give you a refund even if you had no tax withheld from your pension.
- To claim the credit, you must complete Schedule M, Making Work Pay and Government Retiree Credits, and attach it to your Form 1040A or 1040.
Links:
- The American Recovery and Reinvestment Act of 2009
- Schedule M, Making Work Pay and Government Retiree Credits
The IRS Presents: Tax Credit Helps Pay for Higher Education Expenses
The American Recovery and Reinvestment Act was passed in early 2009 and created the American Opportunity Credit. This educational tax credit – which expanded the existing Hope credit – helps parents and students pay for college and college-related expenses.
Here are the top nine things the Internal Revenue Service wants you to know about this valuable credit and how you can benefit from it when you file your 2009 taxes.
- The credit can be claimed for tuition and certain fees paid for higher education in 2009 and 2010.
- The American Opportunity Credit can be claimed for expenses paid for any of the first four years of post-secondary education.
- The credit is worth up to $2,500 and is based on a percentage of the cost of qualified tuition and related expenses paid during the taxable year for each eligible student. This is a $700 increase from the Hope Credit.
- The term “qualified tuition and related expenses” has been expanded to include expenditures for required course materials. For this purpose, the term “course materials” means books, supplies and equipment required for a course of study.
- Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year.
- Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.
- To be eligible for the full credit, your modified adjusted gross income must be $80,000 or less — $160,000 or less for joint filers.
- The credit begins to decrease for individuals with incomes above $80,000 or $160,000 for joint filers and is not available for individuals who make more than $90,000 or $180,000 for joint filers.
- The credit is claimed using Form 8863, Education Credits, (American Opportunity, Hope, and Lifetime Learning Credits), and is attached to Form 1040 or 1040A.
For more information about the American Opportunity Tax Credit visit the IRS Web site at IRS.gov/recovery.
Links
Last Day To Purchase a Home and Qualify for The First Time Homebuyers Credit is November 30, 2009
First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected.
WASHINGTON — With the deadline quickly approaching, the Internal Revenue Service today reminded potential homebuyers they must complete their first-time home purchases before Dec. 1 to qualify for the special first-time homebuyer credit. The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far
.
The credit of up to $8,000 is generally available to homebuyers with qualifying income levels who have never owned a home or have not owned one in the past three years. The IRS has a new YouTube video and other resources that explain the credit in detail.
The IRS encouraged all eligible homebuyers to take advantage of the first-time homebuyer credit but at the same time cautioned taxpayers to avoid schemes that help ineligible people file false claims for the credit. Currently, the agency is investigating a number of cases of potential fraud and is using computer screening tools to identify questionable claims for the credit.
Because the credit is only in effect for a limited time, those considering buying a home must act soon to qualify for the credit. Under the Recovery Act, an eligible home purchase must be completed before Dec. 1, 2009. This means that the last day to close on a home is Nov. 30.
The credit cannot be claimed until after the purchase is completed. For purchases made this year before Dec. 1, taxpayers have the option of claiming the credit on their 2008 returns or waiting until next year and claiming it on their 2009 returns.
For those considering a home purchase this fall, here are some other details about the first-time homebuyer credit:
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $80,000 or more.
The credit reduces the taxpayer’s tax bill or increases his or her refund, dollar for dollar. Unlike most tax credits, the first-time homebuyer credit is fully refundable. This means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible.
A home constructed by the taxpayer only qualifies for the credit if the taxpayer occupies it before Dec. 1, 2009.
The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on the taxpayer’s modified adjusted gross income (MAGI). MAGI is adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the range is $75,000 to $95,000. This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
The credit must be repaid if, within three years of purchase, the home ceases to be the taxpayer’s main home. For example, a taxpayer who claims the credit based on a qualifying purchase on Sept. 1, 2009, must repay the full credit if he or she sells the home or converts it to business or rental use at any time before Sept. 1, 2012.
Taxpayers cannot take the credit even if they buy a main home before Dec. 1 if:
The taxpayer’s income is too large. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
The taxpayer buys a home from a close relative. This includes a home purchased from the taxpayer’s spouse, parent, grandparent, child or grandchild.
The taxpayer owned another main home at any time during the three years prior to the date of purchase. For a married couple filing a joint return, this requirement applies to both spouses.
For example, if the taxpayer bought a home on Sept. 1, 2009, the taxpayer cannot take the credit for that home if he or she owned, or had an ownership interest in, another main home at any time from Sept. 2, 2006, through Sept. 1, 2009.
The taxpayer is a nonresident alien.
For details on claiming the credit, see Form 5405, First-Time Homebuyer Credit.
Wondering About Recovery Act Tax Benefits? Here is Some Information
WASHINGTON — As part of a larger effort to increase the awareness and use of tax benefits available through the American Recovery and Reinvestment Act (Recovery Act), the Internal Revenue Service announced the availability of a vast array of products that help explain several tax benefits currently available to American Families.
With time running out to qualify for some of the Recovery benefits, the IRS has unveiled new YouTube videos, radio public service announcements (PSAs) and multi-lingual informational flyers that provide basic information for taxpayers. The items are available on IRS.gov for partner groups, the media, web sites and other organizations whose audience could benefit from the new tax changes.
These products are in addition to earlier IRS efforts on YouTube (www.youtube.com/irsvideos) and iTunes to increase public awareness about the tax credits. The IRS.gov official web site also contains links and complete information about ARRA at www.irs.gov/recovery. The PSAs are in English and Spanish in either 30-second or 60-second formats. The flyers and posters are in English, Spanish, Chinese, Korean, Russian and Vietnamese.
Topics covered include:
The first-time homebuyer credit which provides a maximum $8,000 tax credit to people who meet eligibility requirements and complete the purchase of their homes before December 1;
The American Opportunity Credit expands education tax credits to $2,500 for tuition and a change in 529 plans allows for the purchase of computers for college use;
The energy credit expands to a maximum of $1,500 for certain energy-saving upgrades;
A new deduction for the sales or excises taxes paid on the purchase price of new vehicles;
The Making Work Pay tax credit, which many American workers received in April through reduced tax withholding in their paychecks. The Making Work Pay credit is $400 for single taxpayers and $800 for married taxpayers who meet certain income guidelines. However, some people, such as married spouses, workers with two jobs, pensioners, some Social Security recipients and dependents, should check their tax withholding to ensure they are not having too little withheld.
There’s Nothing Like Free CPE – Here’s How To Get Some
[Stacie says: You don’t need to be a tax professional to learn how to take advantage of the tax laws. The IRS offers free online classes to help taxpayers and professionals to learn more. Why not sign up? In fact, if you are a college student, here is a way to beef up your resume. It’s free, its convenient, heck – why not?]
WASHINGTON — Experts from the Internal Revenue Service and the tax preparation industry will discuss the many tax credits, deductions and incentives contained in the American Recovery and Reinvestment Act for 2009 on the Oct. 6 Internet airing of Tax Talk Today.
The American Recovery and Reinvestment Act contained benefits for:
First-time homebuyers
People purchasing new cars
Energy efficient home upgrades
Parents and students paying for college
The October program for qualifies for one CPE credit for tax professionals. To access the web cast at no charge, viewers can register online at Tax Talk Today.
Panelists include: Virginia M. Tarris, IRS tax law specialist; Amy Stanton, IRS program manager; CPA Gerard H. Schreiber, Jr, partner, Schreiber and Schreiber; and CPA and attorney Donna Rodriguez, managing partner, Donna L. Rodriguez, PLLC. The moderator is Les Witmer.
Tax Talk Today is a free, live, interactive webcast aimed at educating tax professionals on the most contemporary and complex tax issues. Viewers are encouraged to submit questions during the live broadcast. Tax professionals in need of continuing education credits should select Continuing Education at the Web site for more information.
They can view Tax Talk Today with Windows Media Player and Real Player; both are free software that may already be installed on your computer. If not, click the link for Installing System Software to view Internet Broadcast under “How to View.”
Subscribers can view live web casts as well as archived programs; listen to audio podcasts or read show transcripts through Dec. 31, 2009. Subscribers also can order audio and video recordings. A transcript and audio of the July 14 Webcast, “OPR: A Balanced Approach,” is now available.
Beware – 110 Percent Penalty For Anyone Who Continues to Receive COBRA Subsidy After Becoming Eligible For Alternate Coverage.
[Stacie says: This reminder, issued by the IRS is a must read for anyone who has received a COBRA health insurance subsidy due to involuntary termination from a prior job. As indicated below, the American Recovery and Reinvestment Act of 2009 provided this 65 percent subsidy of COBRA health insurance premiums. ]
The IRS Say:
Individuals who have qualified and received the 65 percent subsidy for COBRA health insurance, due to involuntary termination from a prior job, should notify their former employer if they become eligible for other group health coverage.
The American Recovery and Reinvestment Act of 2009 provides a subsidy of 65 percent of the COBRA health insurance premium for employees who are involuntarily terminated from September 30, 2008, to December 31, 2009. The subsidy requires only 35 percent of the premium to be paid for COBRA coverage for individuals, and their families, who have involuntarily lost their job and do not have coverage available elsewhere.
The IRS announced the subsidy in a February 26, 2009, information release, IR-2009-15.
If an individual becomes eligible for other group health coverage, they should notify their plan in writing that they are no longer eligible for the COBRA subsidy. The notice that the United States Department of Labor sent to the individual advising them of their right to subsidized COBRA continuation payments includes the form individuals should use to notify the plan that they are eligible for other group health plan coverage or Medicare.
If an individual continues to receive the subsidy after they are eligible for other group health coverage, such as coverage from a new job or Medicare eligibility, the individual may be subject to the new IRC § 6720C penalty of 110 percent of the subsidy provided after they became eligible for the new coverage.
Taxpayers who fail to notify their plan that they are no longer eligible for the COBRA subsidy may wish to self-report that they are subject to the penalty by calling the IRS toll-free at 800-829-1040. In addition, taxpayers will need to notify their plan that they are no longer eligible for the COBRA premium subsidy.
Anyone who suspects that someone may be receiving the subsidy after they become eligible for group coverage or Medicare may report this to the IRS by completing Form 3949-A, Information Referral (PDF).
Did You Purchase a New Car This Year? – Here Are Some Facts about the New Vehicle Sales and Excise Tax Deduction
[Stacie says: Here are some great tips from the IRS if you purchased a new car this year.]
Taxpayers who buy new motor vehicles this year may be entitled to a special tax deduction for the sales or excise taxes on those purchases when they file their 2009 federal tax returns next year. This tax break is part of the American Recovery and Reinvestment Act of 2009.
Taxpayers in states that do not have state sales taxes may be entitled to deduct other fees or taxes imposed by the state or local government.
Here are nine important facts the IRS wants you to know about the deduction.
State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. Motor homes are not subject to the weight limit.
Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
Taxpayers who purchase new motor vehicles in states that do not have state sales taxes may be entitled to deduct other fees or taxes assessed on the purchase of those vehicles. Fees or taxes that qualify must be based on the vehicles’ sales price or as a per unit fee. These states include Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.
Taxpayers who purchase qualified motor vehicles may claim the deduction when they file their 2009 tax return in 2010.
The deduction may not be taken on 2008 tax returns.
This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction.Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
For more information on this and other key tax provisions of the Recovery Act visit the official IRS Website at IRS.gov.
Links:
Sales Tax Deduction for Vehicle Purchases
YouTube Video: Vehicle Tax Deduction
Audio File for Podcast – ARRA Vehicle Tax Deduction: English Spanish
The American Recovery and Reinvestment Act of 2009: Information Center
Tax Credits and Incentives You Should Know About
The American Recovery and Reinvestment Act provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient, and parents and students paying for college.
Here are six things the IRS wants you to know about ARRA tax incentives for individuals:
First-Time Homebuyer Credit Taxpayers who haven’t owned a principal residence during the past three years prior to the purchase date of a home before Dec. 1 of this year may be eligible to receive a credit of up to $8,000 on an original or amended 2008 tax return. They can also wait and claim the credit on their 2009 return.
New Vehicle Purchase Incentive Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels.
Making Work Pay and Withholding The Making Work Pay Credit lowered employees’ tax withholding rates this year and has already put more money into the pockets of wage earners. Self-employed individuals will have an opportunity to claim this credit when they file their 2009 return. Taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is currently being withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers, workers without a valid social security number, some social security recipients who work and pensioners. Failure to adjust your withholding in these situations could result in potentially smaller refunds or in limited instances may cause you to owe tax rather than receive a refund next year.
Tax Credit for First Four Years of College The American Opportunity Credit can help parents and students pay part of the cost of the first four years of college. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student.
Certain Computer Technology Purchases Allowed for 529 Plans ARRA adds computer technology to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services.
Energy-Efficient Home Improvements The credit for nonbusiness energy-efficient improvements is increased for homeowners who make qualified improvements to existing homes. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/Recovery.
Links:
The American Recovery and Reinvestment Act of 2009: Information Center
YouTube Videos:
First-Time Homebuyer: English Spanish ASL
Check Your Withholding; Making Work Pay: English ASL
Home Energy Credit: English ASL
Education Credits (Parents): English ASL
General Recovery (ARRA) Message: English Spanish ASL
529 Plan Qualified Tuition Programs – Technology Expenses Special Break
Taxpayers who purchase computer technology for higher education purposes may be eligible for a special tax break. The American Recovery and Reinvestment Act of 2009 added computer equipment and technology to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan.
A qualified, nontaxable distribution from a 529 plan during 2009 or 2010 now includes the cost of the purchase of any computer technology, equipment or Internet access and related services. To qualify the beneficiary must use the technology, equipment or services while enrolled at an eligible educational institution.
Here are some things the IRS wants you to know about 529 plans.
A 529 plan is an educational savings plan designed to provide tax-free earnings for the benefit of a student. Withdrawals must be used for qualified higher education expenses at an eligible educational institution.
Qualified higher education expenses include tuition, reasonable costs of room and board, mandatory fees, computer technology, supplies and books.
An eligible educational institution includes any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education.
Contributions to a 529 plan cannot be more than the amount necessary to provide for a student’s qualified education expenses.
For more information about 529 plans, see IRS Publication 970, Tax Benefits for Education. For more information on other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/Recovery.
Links:
Tax Benefits for Education: Information Center
Publication 970, Tax Benefits for Education
Fact Sheet 2009-12, How 529 Plans Help Families Save for College; and How the American Recovery and Reinvestment Act of 2009 Expanded 529 Plan Features
529 Plans: Questions and Answers
YouTube Video: English Spanish ASL
Audio file for Podcast
IR-2009-78, Special IRS Web Section Highlights Back-to-School Tax Breaks; Popular 529 Plans Expanded, New $2,500 College Credit Available
Treasury News Release – Highlights of The Recovery Act Impact
WASHINGTON – As part of an effort to highlight the success of the American Recovery and Reinvestment Act (Recovery Act) in revitalizing communities across the country, the U.S. Department of the Treasury today released a report providing state-by-state data on Treasury program funding. The report, issued around the 200 day anniversary of the Recovery Act, details funds provided to states, local communities, and families through a variety of programs, including the Making Work Pay Tax Credit, payments for renewable energy production, funds for affordable housing development, and Build America Bonds.
“In 200 days, the Recovery Act has made significant progress in revitalizing our communities and providing the basis for economic growth,” said Treasury Deputy Secretary Neal Wolin. “Through innovative programs established by the Recovery Act, the Treasury Department has provided tax relief to millions of families, supported increased development of affordable housing and clean energy projects, and provided new tools for states and communities to fund much needed infrastructure projects.”
Highlights of the impact from Treasury’s Recovery Act programs during the first 200 days include:
· $66.1 billion in estimated tax benefits provided to individuals, families, and businesses through the implementation of various tax provisions. The Making Work Pay credit has been a significant element of these provisions.
· $502 million in payments made to promote renewable energy production throughout the country
· $2.3 billion provided to 37 states to spur the development of affordable housing
· $28.2 billion in Build America Bonds issuances to help 37 states finance a variety of public improvement projects
The report also provides information on the First Time Homebuyer’s Tax Credit, the $250 one- time stimulus payments, New Markets Tax Credits, Qualified School Construction Bonds, and Recovery Zone Bonds. The comprehensive report is available here. Additional information on Treasury’s Recovery Act programs follows:
Making Work Pay Tax Credit: In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act provides a credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns. The tax credit is calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
Recovery Zone Bonds: Recovery Zone Economic Development Bonds are one type of taxable Build America Bond that allow state and local governments to obtain lower borrowing costs through a new direct federal payment subsidy, for 45 percent of the interest, to finance a broad range of qualified economic development projects, such as job training and educational programs. Recovery Zone Facility Bonds are a type of traditional tax-exempt private activity bond that may be used by private businesses in designated recovery zones to finance a broad range of depreciable capital projects. Both of these are allocated directly to counties and large municipalities.
Qualified School Construction Bonds: Investors who buy these bonds receive tax credits worth 100 percent of the interest, allowing state and local governments to obtain financing without having to pay any interest. States may directly issue the bonds on behalf of eligible schools or provide school districts with the authority to issue the bonds within the state.
Qualified Energy Conservation Bonds: These bonds are authorized under an expanded tax credit bond program of the Recovery Act of 2009 for states and large local governments based on population data. The bonds are tax credit bonds that provide a federal subsidy for repair and rehabilitation of public schools and related authorized purposes through a federal tax credit to investors intended to cover 70 percent of the interest on the bonds.
Build America Bonds: Under the Build America Bonds program, Treasury makes a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds. Potential investors include pension funds that traditionally do not hold tax exempt bonds and foreign investors. These investors have been important additions to the market for municipal debt.
One-time $250 Payments: Treasury’s Financial Management Service, in coordination with the Social Security Administration, the Railroad Retirement Board, and the Department of Veterans Affairs, have issued more than 54 million Economic Recovery payments to beneficiaries totaling more than $13 billion.
Community Development Financial Institutions: The CDFI Fund makes monetary awards (grants, loans and other investments) on a competitive basis to certified CDFIs. A CDFI is a specialized financial institution that works in low-income communities or serves individuals or businesses that lack access to mainstream financial institutions. Among many financial services, CDFIs provide capital to small businesses and micro-enterprises; mortgage loans to first-time homebuyers; financing to support the development of affordable housing projects and community facilities; and retail banking services to the unbanked.
New Markets Tax Credit: With the increased investment authority made available through the Recovery Act, this program incentivizes private-sector capital investment in distressed communities across the country to create jobs, stimulate economic growth, and jumpstart the lending necessary for financial stability. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period.
Affordable Housing Payments: Under this program, state housing agencies that apply receive funds to finance the construction or refurbishment of qualified affordable housing developments. Applicants agree to forgo tax credits down the line in favor of an immediate payment. Through this program, the Treasury Department works with state housing agencies to jump start the development or renovation of qualified affordable housing across the country.
Renewable Energy Payments: The Recovery Act authorized Treasury to make direct payments to companies that create and place in service renewable energy facilities. Previously, these companies could file for a tax credit to cover a portion of the renewable energy project’s cost. Under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate payment.
First Time Homebuyer’s Tax Credit: Taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before December 1 have a special option available for claiming the tax credit either on their 2008 tax returns or on their 2009 tax returns next year. The maximum credit is $8,000.
Treasury News Release -$500 Million in Recovery Act Awards for Clean Energy Projects
WASHINGTON– Marking a major milestone in the effort to spur private sector investments in clean energy and create new jobs for America’s workers, Treasury Secretary Tim Geithner and Energy Secretary Steven Chu today announced $502 million in the first round of awards from an American Recovery and Reinvestment Act (Recovery Act) program that provides cash assistance to energy production companies in place of earned tax credits. The new funding creates additional upfront capital, enabling companies to create jobs and begin construction that may have been stalled until now.
“The Recovery Act is investing in our long-term energy needs while creating jobs in communities around the country,” said Treasury Secretary Tim Geithner. “This renewable energy program will spur the manufacture and development of clean energy in urban and rural America, allowing us to protect our environment, create good jobs and revitalize our nation’s economy.”
Said Secretary Chu: “These grants will help America’s businesses launch clean energy projects, putting Americans back to work in good construction and manufacturing jobs. The initiative will help double our renewable energy capacity over the next few years and make sure America leads the world in creating the clean energy economy of the future.”
Created under Section 1603 of the Recovery Act, the program is expected to provide more than $3 billion in financial support for clean energy projects by providing direct payments in lieu of tax credits. These payments will support an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities in all regions of the country over the life of the program. As a result of this first round of funding, more than 2,000 Americans will have access to jobs in the renewable energy industry – both in construction and in manufacturing – while moving the nation closer to meeting the Administration’s goal of doubling renewable energy generation in the next few years.
The Treasury Department opened the application process for the 1603 program on July 31, 2009 and is today making the first awards in half the statutorily mandated turnaround time of 60 days. The following is a chart of projects funded as part of today’s announcement. Additional awards under the program will be announced in the coming weeks.
Movement Gym PV System (Solar), Boulder, CO, $157,809
Solaire Development, LLC Danbury, CT, $2,578,717.00
Evergreen Wind Power V, LLC, Danforth, ME, $40,441,471
Moraine II Wind Farm, Woodstock, MN, $28,019,520
NY
Canadaigua Power Partners, LLC (Wind), Cohocton, NY, $52,352,334
Canadaigua Power Partners II, LLC (Wind), Cohocton, NY, $22,296,494
Wheat Field Wind Farm, Arlington, OR, $47,717,155.00
Hay Canyon Wind Farm, Moro, OR, $47,092,555
Pebble Springs Wind Farm, Arlington, OR, $46,543,219
Highland Wind Farm, Salix, PA, $42,204,562
Locust Ridge II, LLC (Wind), Shenandoah, PA, $59,162,064
Penascal Wind Farm, Sarita, TX, $114,071,646
Total Amount $502,637,546
Stacie's Tax Tips and Other Stuff 