Congress was able to put together a compromised plan of the economic stimulus plan yesterday. The final price tag is $789.5 billion.
Trying to follow the stimulus plan is like following a moving target these days… but here’s what we know today!
Home Buyer Tax Credit
Many of you were waiting with high hopes for the $15,000 Home Buyer Tax Credit to be included. It appears that the proposed $15,000 tax credit is gone.
In its place is an $8,000 First Time Home Buyer Tax Credit that doesn’t need to be paid back, unlike the $7,500 First Time Home Buyer Tax Credit from 2008 which was really a loan. It would apply to homes purchased January 1 through November 30. You must keep the home for three years.
It looks like we’ll each get a $400 ($800 for married) tax credit in 2009 and 2010 from the Make Working Pay Tax Credit. The money will flow to our households through less withholding in paychecks (about $13 per week), starting this summer.
The tax credits begin to phase out at $75,000 ($150,000 for married). If you don’t make enough to pay income tax, you can file a return next year to get your money.
People on Social Security, SSI, and veterans (on disability and pensions) will get a one time $250 payment.
More Tax Breaks and Benefits
There are many more programs included in the plan, including spending on energy, infrastructure, security, and science. Here are some of the personal finance related items cited by The Associated Press via Mlive:
- Unemployment Benefits: Extended through Dec. 31 and increase by $25 per week.
- Food stamps: Increase by 14%.
- Health Care: Offer a 60% subsidy for unemployed people using COBRA health insurance.
- Education: Increase maximum Pell Grant by $500 to $5,350 and provide a $2,500 expanded tax credit for college tuition.
- Alternative Minimum Tax: Save 24 million people from paying AMT in 2009.
- Bonus Depreciation: Extend the increased depreciation schedules for businesses for 2009.
- New Cars: Allow you to deduct sales tax on new cars.
Both the House and Senate need to vote, and the President needs to sign the bill to become effective.
I’ve been wondering how the so-called “stimulus” is going to be paid to us self-employed. I will not have a traditional paycheck this summer. If I had to guess, I would say we will be able to take it as a credit on our 2008 tax returns. Hopefully, I can get something!
I’m waiting to see the updated version on the library of congress site. The last version on there still has the 15k home buyer text in it–this is moving too quickly to be able to say anything definitive about it.
@ Adam: I’m guessing we can just reduce our estimated tax payments.
@ Roman: They’re supposed to file it today, so hopefully we’ll see some answers soon!
You mention the $8,000 first time home buyer credit (free money) and the $7,500 first time home buyer credit (loan).
We purchased our first house May 19, 2008. Is the $7,500 “loan” replaced by the $8,000 “free money?” Is the new one retroactive to cover the previous group considering the money was going to be paid out this year 2009 through our 2008 IRS taxes?
In other words, am I going to get penalized for buying “too early” and still have to pay the money back?
@ Stephanie: The way I understand it, as it stands now is that the $7500 first time home buyer credit (in loan form) applies for house purchases in 2008. The $8,000 first time home buyer credit (in free money form) will apply to houses bought in 2009.
So unfortunately, unless they make it retroactive to last year, I think your only option will be the loan.
Your site mentioned the unemployment would be extended until December 31st. Can you expand on that for me? I’m on unemployment now, so does that mean I’ll for sure get it until that date?
Not sure what you meant by that. Thanks Madison!
My husband and I just bought a house and will not be closing until march 2009. We did take advantage of the 7500 tax rebate but since we bought it after jan 1 will we be able to do an admendment to our taxes to make it so we dont have to pay back the 7500 since we are falling in to the date brackets?
@ Joshua: Here’s a helpful explanation of the unemployment benefits: Unemployment Benefit Provisions in the 2009 Economic Stimulus Plan. Good luck!
@ Holley: Yes, you’ll be able to amend it. The form is available now from the IRS. More details are in $8,000 First Time Home Buyer Tax Credit.
When will the $250.00 for Social security be mailed? I know it is May but around what dates?
My husband and I live in and own a mobile home. It’s in a trailer park and we rent the land. We are looking at buying a house but we cannot determine if we qualify for the $8000 credit. Where do we find the answer definitively?