American Recovery and Reinvestment Act of 2009 was signed into law on Feb. 17, 2009. CCH once again published a great summary for the tax provisions in the law.
The most significant items for individuals are:
- Making Work Pay: For 2009 and 2010, $400 per person tax credit for AGI under $75,000; phased out to $95,000 (double everything for married filing jointly).
- One-time $250 payment to Social Security and other fixed income recipients.
- AMT patch for 2009: increase AMT exemption amount from 2008 levels by $500 per person or $1,000 per couple.
- First-time homebuyer tax credit: If you never owned a home in the last three years and your AGI is under $75,000/$150,000 (phaseout to $95,000/$170,000), and you buy a primary residence between Jan. 1 and Nov. 30, 2009, you get an $8,000 refundable tax credit, which does NOT have to be repaid if you hold the home for three years. Sorry for folks who bought in 2008.
- Tax deduction for buying a new car: If your AGI is under $125k/$250k (phaseout to $135k/$260k), and you buy a new car (not used car) under $49,500 after the law is signed until the end of 2009, you get a tax deduction for the sales tax. No deduction for car loan interest. Non-itemizers are also eligible for this deduction.
- Expanded HOPE credit for education and renamed to American Opportunity Tax Credit.
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Check mortgage rates in your state.