The American Recovery and Reinvestment Act of 2009 and its Implementation

On June 8, 2009, the IRS released to Software Developers the implementation of The American Recovery and Reinvestment Act of 2009.
November 6, 2009, Legislation passed a bill to further improve some of these benefits. Below we have listed this information for taxpayers.

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The American Recovery and Reinvestment Act of 2009 Information

Making Work Pay Credit
Payments to Recipients of SS, SSI, RRB and Veterans
Special Credit for Certain Government Retirees
Earned Income Tax Credit
Child Tax Credit Increases
American Opportunity Tax Credit
Qualified Higher Education Expense (529 Accounts)
First Time Homebuyer Credit
Unemployment Compensation
Sales Tax Deduction for Certain Vehicle Purchases
Alternative Minimum Tax
Investment Credit in lieu of Production Credit
Credit for Renewable Energy Property
Non-Business Energy Property Credit
Residential Energy Efficient Property
Credit for Alternative Fuel Vehicle Refueling Property
Carbon Dioxide used as a Tertiary Injectant
Qualified Plug-In Electric Drive Motor Vehicle Credit
Credit for Certain Plug-In Electric Vehicles
Conversion Kits
Alternative Motor Vehicle Credit as a Personal Credit
Special Allowance for Certain Property Acquired in 2009
Expensing of Certain Depreciable Business Assets
Build America Bonds
COBRA

Making Work Pay Credit	Top
For Tax Years 2009 and 2010 Credit of up to 6.2% of earned income/maximum of $400 Individual, $800 Joint Filers Phase out AGI for credit is $75,000 (150,000 Joint Filers) Credit is reduced by amounts received as SSA/VA/RRB payments and Special Credit for Government Pensioners New Schedule M will be used for this credit For more information on this credit, see the IRS Web Site.

Payment to Recipients of SS, SSI, RRB, and Veterans

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For Tax Year 2009
The economic recovery payment is a one-time payment of $250 that will be made in 2009 to retirees, disabled individuals and Supplemental Security Income (SSI) recipients receiving benefits from the Social Security Administration, disabled veterans receiving benefits from the Department of Veterans Affairs and those receiving benefits from the Railroad Retirement Board.
Checks will be certified and issued by Social Security, the Railroad Retirement Board, and Veterans Affairs.
Reduces Making Work Pay Credit
Identified on a new Schedule M

Special Credit for Certain Government Retirees	Top
For Tax Year 2009 One-time $250 refundable tax credit claimed on 2009 tax return for certain government retirees who are not eligible for the Social Security benefits. Reduces Making Work Pay Credit Claimed on a new Schedule M

Earned Income Tax Credit

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For Tax Years 2009 and 2010
Increases credit percentage to 45% for three or more qualifying children
Revised Forms 1040 and 1040A Instructions, including EIC Table/Worksheet changes.

The credit table for 2009 is as follows:

$13,440 ($18,400 if married filing jointly) if there is no qualifying child
$35,463 ($40,463 if married filing jointly) if there is one qualifying child
$40,295 ($45,295 if married filing jointly) if there are two qualifying children
$43,279 ($48,279 if married filing jointly) if there are three or more qualifying children

Before 2009, EIC Tables and worksheets for three children utilized the calculation for EIC for two or more children. Beginning in 2009, the table will include calculations for one child, two children and three or more children.

Child Tax Credit Increases	Top
For Tax Years 2009 and 2010 Reduces earnings threshold from $8,500 to $3,000 (taxpayers who earn $3,000 can now qualify to receive Child Tax Credit whereas in previous filing years, taxpayers must have income of at least $8,500 to qualify for the credit.)

American Opportunity Tax Credit	Top
For Tax Years 2009 and 2010 Credit modifies the existing Hope Credit to increase maximum amount per student Receive $2,500 higher education credit (increased from $2,000) Allows 40% refundable credit Allowed for up to 4 years post secondary education (increased from 2 years)

Qualified Higher Education Expenses (529 accounts)	Top
For Tax Years 2009 and 2010 Expands definition of qualified expenses for Section 529 accounts to include computer technology and equipment

First Time Homebuyer Credit

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For Tax Year 2009
Expands refundable credit for new home purchases by first-time homebuyers (10% of purchase price up to maximum of $8,000 credit)
New legislation allows the credit for entering into a binding contract by April 30, 2010 and must be closed by June 30, 2010
No repayment if primary residence retained for 36 months
The credit expands to long-time homeowners who buy a replacement principal residence. The credit is limited to $6,500 ($3,250 for Married Filing Separate taxpayers) who have lived in the same principal residence for five-consecutive years during an eight-year period for homes purchased after November 6, 2009 and before May 1, 2010 as the taxpayers principal residence.
Higher income taxpayers can now qualify for this credit. The phase out for individual taxpayers with modified AGI between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers.(The existing AGI phase-outs of $75,000 and $95,000 or $150,000 and $170,000 for joint filers still apply to purchases on or before November 6, 2009.)
For full details on this credit, see the First-Time Homebuyer Credit Changes on the IRS website.

Unemployment Compensation

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For Tax Year 2009
Temporarily suspends federal income tax on the first $2,400 of unemployment benefits (First $2,400 of unemployment benefits are non taxable income when generally all unemployment benefits are taxable income.)
For joint filers, if both spouses were unemployed in 2009 and received unemployment compensation during the year, they can each receive the $2,400 nontaxable unemployment benefit on their tax return.
Details for this can be found on the IRS Website.

Sales Tax Deduction for Certain Vehicle Purchases	Top
For Tax Year 2009 Applies to purchase of new vehicles on or after February 17, 2009 through December 31, 2009 Allows taxpayers to deduct the sales, local and excise tax paid on a new car up to the purchase price of $49,500 Phase out with AGI of $125,000 ($250,000 joint filers) For more information on this credit, visit the IRS Website.

Alternative Minimum Tax	Top
For Tax Year 2009 Extends AMT relief for nonrefundable personal credits Increases the AMT amount exemption to $46,700 for individuals; $70,950 for joint filers

Investment Credit in lieu of Production Credit

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For Tax Years 2009 and later years
Businesses who place in service facilities that produce electricity from wind and some other renewable resources after December 31, 2008 can either:
* Elect the energy investment tax credit which generally provides a 30% tax credit for investments in energy projects, OR
* Elect the production tax credit which can provide a credit of up to 2.1 cents per kilowatt-hour for electricity produced from renewable resources

Credit for Renewable Energy Property	Top
For Tax Year 2009 and later years Repeals limitations on: * The $4,000 limit on the 30% energy tax credit for qualified small wind energy property; and, * Property financed by subsidized energy financing Applies to property placed in service after December 31, 2008 Further information on this credit is available on the IRS Website.

Non-Business Energy Property Credit	Top
For Tax Years 2009 and 2010 Energy tax credit for energy efficient improvements made to existing homes * Insulation * Energy efficient exterior windows * Energy efficient heating and air conditioning systems Increase to credit rate * 30% of the cost of all qualifying improvements * $1,500 maximum credit limit

Residential Energy Efficient Property	Top
For Tax Year 2009 and later years Removes limitations on the tax credit for residential energy efficient property such as * Solar hot water heaters * Wind turbines * Geothermal heat pumps Allows 30% of cost of qualified property More information on this credit can be found on the IRS Website.

Credit for Alternative Fuel Vehicle Refueling Property

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For Tax Years 2009 and 2010
Property placed in service in 2009 and 2010
Qualified property (other than property related to hydrogen) increased to 50% credit with per location limit increase to $50,000 for business property ($2,000 for other/residential locations)
Property related to hydrogen keeps the 30% rate with per-business location limit increase to $200,000
More information on this credit is available on the IRS Website.

Carbon Dioxide used as a Tertiary Injectant

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For Tax Year 2009
Applies to carbon dioxide captured after February 17, 2009
Requires carbon dioxide used as a tertiary injectant and otherwise eligible for a $10 per metric ton credit be sequestered by the taxpayer in permanent geological storage in order to qualify for such credit.
Permanent geological storage includes oil and gas reservoirs in addition to unminable coal seams and deep saline formations.

Qualified Plug-In Electric Drive Motor Vehicle Credit

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For Tax Year 2009
Applies to new vehicle purchases after December 31, 2009
Modifies the tax credit for qualified plug-in electric drive motor vehicles
* 4 or more wheels
* Gross vehicle weight rating less than 14,000 lbs
* Draw propulsion using battery with at least 4 kilowatt hours that can be recharged from an external source of electricity
Minimum amount $2,500; Maximum amount $7,500 (depending on battery capacity)
Reduction in credit after 200,000 vehicles sold
More detailed information about this credit can be found on the IRS Website.

Credit for Certain Plug-In Electric Vehicles

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For Tax Year 2009
Applies to purchases after February 17, 2009 and before January 1, 2012
Certain low-speed electric vehicles
* Low speed vehicle propelled by electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more, or
* Two or three wheeled vehicle propelled by electric motor that draws electricity from battery with capacity of 2.5 kilowatt hours
10% of the cost of the vehicle up to maximum credit of $2,500

Conversion Kits	Top
For Tax Year 2009 Tax credit for Plug-in electric drive conversion kit Applies to vehicles converted to qualified plug-in electric drive motor vehicle * placed in service after February 17, 2009 * Does not apply to conversions after December 31, 2011 10% of the cost of the conversion kit, up to a maximum credit of $4,000

Alternative Motor Vehicle Credit as a Personal Credit	Top
For Tax Year 2009 Allows the Alternative Motor Vehicle Credit to be applied against the Alternative Minimum Tax

Special allowance for certain property acquired in 2009	Top
For Tax Year 2009 (2010 for certain longer-lived and transportation property) Extends the additional first-year depreciation deduction Permits corporations to increase the research credit or minimum tax credit

Expensing of certain depreciable business assets	Top
For Tax Year 2009 Extends the temporary benefit for capital expenditure amounts ($250,000 and $800,000)

Build America Bonds	Top
For Tax Years 2009 and 2010 Authorizes state and local governments to issue two general types of Build America Bonds as taxable governmental bonds with Federal subsidies for a portion of their borrowing costs Subsidies tax form of either: * Tax credits provided to holders of the bonds, or * Refundable tax credits paid to state and local governmental issuers of bonds New Form 8038-CP

COBRA	Top
For Tax Years 2009 and 2010 Involuntarily separated workers between September 1, 2008 and December 31, 2009 eligible for 65% premium subsidy for up to 9 months Former employee pays 35% of the premium cost; employer pays 65% Employer eligible for credit for payments made. Repayment of subsidy for taxpayers with AGI over $125,000 ($250,000 joint filers)