What is the American Recovery and Reinvestment Act (ARRA) of 2009?

The American Recovery and Reinvestment Act of 2009 was signed into law on February 17^th , 2009 by President Obama. It is one of the key items in a $787 billion dollar economic recovery plan. The ARRA portion of the plan calls for $288 billion in tax incentives and credits for individuals.

Making work pay credit:

Taxpayers with earned income can receive $400 in refundable income tax credit on their 2009 tax return. Some taxpayers will receive this credit in lowered federal income taxes on their paycheck during the year. An additional benefit of $250 is available to those receiving social security and veterans benefits.

Alternative minimum tax credit:

The deductibles have been raised for the alternative minimum tax. It is now $46,700 for single tax payers, $70, 950 for people married and filing jointly and $$35,475 for those married and filing separately.

Earned income credit:

The qualifications for the Earned Income Credit have been expanded to include more taxpayers. The credit has also been increased to allow for three qualifying children.

Child tax credit:

The child tax credit has been modified to increase the amount of refundable credit under the additional tax credit. If the $1,000 per child tax credit exceeds the taxpayer's liability they can receive a refundable credit up to 15% of their income in excess of $3,000.

First-time homebuyers credit:

First-time homebuyers that meet the qualifications can receive a refund of up to $8,000 towards the purchase of their home. New and used homes qualify under this program and some income limitations do apply.

Unemployment benefits:

Under this plan unemployment benefits have been expanded and increased by $25 per week. The first $2,400 of unemployment benefits received are also not federally taxable under this plan.

Other portions of this program:

A subsidy is provided for laid off workers that are eligible for health insurance under COBRA. The government offers a subsidy of 65 percent of the cost for up to nine months.

$14 billion has been set aside for tax incentives for producing and using renewable energy sources. $4 billion is set aside for tax incentives to make residences and other building more energy efficient.

Nearly $17 billion is allowed for hospitals, clinic and doctors, that provide care under Medicare and Medicaid, to begin the use of Electronic Health Records. The use of the electronic system should help to reduce the administrative costs of the health care provided.

The ARRA also provides $1 billion in funding to the National Center for Research Resources for alterations, repairs and construction. NIH Institutes will receive over $8 billion to invest in grant programs and are expected to fund projects that will stimulate the economy and increase jobs while having a potential for scientific progress.

This is only a partial list of programs and benefits provided by the American Recovery and Reinvestment Act of 2009. Many of these items can help individual taxpayers lessen their burden at tax time and it is recommended to learn about all of the new credits available for 2009.

References:

http://www.recovery.gov/Pages/home.aspx

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf

http://trackthestimulus.com/default.aspx