Where's MY Stimulus Money?

Can the average American expect to see any of that $787 billion American Recovery and Reinvestment Act economic-stimulus money? Whether or not you supported President Obama's stimulus bill, it is about to passed into law when he signs it on Tuesday, February 17^th in Denver, Colorado. But once it has become law, will you see any of that money ... and how?

Are you unemployed?

If you are one of the millions of recently unemployed, you should see some of this stimulus money to two different areas:

1. Unemployment Benefits: There will be no federal income taxes taken out of the first $2,400 of your unemployment benefits in 2009.

2. COBRA: If you were laid off after September 1, 2008, or if you become unemployed through layoff in 2009, your COBRA health insurance benefits will be 65% subsidized by the federal government for the first 9 months that you are unemployed, as long as your income in that year does not exceed $125,000 for individuals or $250,000 for couples. Important note: this benefit also allows you to sign up for COBRA coverage from your former employer even if you declined it at the time you were let go. Just call them before April 15^th, 2009 to find out how to sign up.

UPDATE: COBRA PREMIUM REDUCTION INFORMATION- 4/1/09

Here are the IRS and Department of Labor websites where you can get additional information regarding the COBRA subsidies:

For Employers:

IRS: www.irs.gov/newsroom/article/0,,id=204708,00.html
DOL: www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionER.html

For Employees who have been laid off:

IRS: www.irs.gov/newsroom/article/0,,id=204505,00.html
DOL: www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html

Do you get a paycheck?

3. Payroll Deductions: Then you will receive a tax credit ($400 for individuals and $800 for married couples filing jointly) in 2009 and 2010. This does not necessarily mean that you have to wait until you file your 2009 taxes. It is believed that this tax credit will be seen on your paycheck in the form of reduced tax withholdings. And if you don't have federal taxes withheld from your paycheck, the indication is that you will receive the money in the form of a check (details still to be determined).

• UPDATE: taxpayers will see the beginning of the tax credit on their paychecks by no later than April 1, according to President Obama. The changes to withholding will be made by employers - no new W-4 withholding form or any other action is required by the employee to begin receiving the credit. This will result in an approximate $13 per week increase on 2009 paychecks, and an approximate $7.70 per week on 2010 paychecks.

Is there a college student in your family?

This is the area where the most benefits from the stimulus package will be seen.

4. Tax Credit for Higher Education: If you spend $4000 in one year on college tuition and other related expenses during 2009 and 2010, you will receive a $2500 credit from the government, as long as you don't exceed some rather high income levels ($80K for individuals and $160K for couples).

5. Pell Grants: Low income college students who receive Pell Grants will see those increased $500 in 2009, to $5,350, followed by an additional $200 increase, to $5,550, in 2010.

6. 529 College Savings Plans: Before now, you could only use 529 withdrawals for tuition, books, room and board, and other related expenses. You will now be able to add "technology deductions" to that list for computers and related technology. It is possible that may even include Internet service for students who still live at home.

Do you ride public transportation to work?

7. Pre-tax deductions: if you are fortunate enough to work for an employer that allows you to deduct pre-tax dollars from your paycheck to pay for public transportation to work, the amount you will now be able to deduct will now be raised from a previous maximum of $120 per month to the $230 per month level allowed for people who must pay to park while on the job.

In the market for a car or a home?

8. Sales and excise taxes: if you purchase a new car in 2009, even if you don't itemize those types of deductions on your income taxes, you'll be able to deduct state and local sales taxes, as well as excise taxes. This deduction doesn't apply if you make more than $125,000 (or $250,00 for a couple), or if you buy a luxury car worth more than $49,500.

9. Buying your first home: first time homebuyers who purchase a new home in 2009 will receive a 10% refundable tax credit (not to exceed $8000), which doesn't have to be paid back like the credit that Congress provided last year. But don't sell the house within 3 years, or you will forfeit the credit.

Keep in mind that details regarding many of these stimulus package benefits are still unclear or yet to be fleshed out. This article is intended as a "heads up" to allow you to begin watching for stimulus package details that may benefit you.

Sources:

The Stimulus: What's In It for You, Ron Lieber, The New York Times
Workers will see a littlet extra in paycheck soon, Liz Sidoti, The Associated Press (2/22/09)