What are the main impact of the Economic Stimulus for lower to middle class taxpayers?
There are primarily 5 aspects of the main impact of the Economic Stimulus package that will direct affect the Lower to Middle Class taxpayers. These are as follows;
1. $8,000 first-time homebuyer tax credit.
If a taxpayers buys their first home between Dec. 31, 2008 and Dec. 1, 2009, than that taxpayer may be able to claim a tax credit of up to $8,000 for first-time homebuyers.
2. Additional tax credit, referred to as American opportunity tax credit of up to $2,500 for higher education expenses
The “American opportunity tax credit” is basically an expansion of the Hope lifelong learning tax credit. "The new perk provides 100% credit for the first $2,000 and 25% of the next $2,000 on qualified higher education expenses including tuition and textbooks. This credit is 40% “refundable”. That means that even if you are a full-time student and do not owe any income tax, you can earn a tax credit of up to $1,000 for these higher education expenses."
3. 400 individual/$800 couples “making work pay” tax credit in 2009 and 2010.
The making work pay tax credit would reduce federal income taxes owed by up to $400 for individual filers making less than $100,000 and $800 for couples earning less than $200,000. The credit was put into effect on July 1, 2009.
4. Temporary suspension of federal taxation on unemployment benefits.
The Stimulus bill suspends federal income tax on the first $2,400 of unemployment benefits earned in 2009.
5. Vehicle purchase tax incentives.
If a taxpayer purchased the vehicle before the end of 2009, than that taxpayers would be able to deduct the sales or excise taxes on their tax return. The great news is that this deduction is above the line, meaning taxpayers can claim it even if you don’t itemize. The deduction is allowable for sales tax on vehicle purchases of up to $49,500 and but, it phases out for individuals with incomes of more than $125,000 and couples with incomes of more than $250,000.