Taxes: Benefiting from the Stimulus Plan

April 9, 2009 12:00:00 AM PDT
When President Obama signed his American Recovery and Reinvestment Act in February, he was hoping to jump start the economy with a whole slew of tax incentives for Americans.The new law could affect some 2008 tax returns; for example, first-time homebuyers or some small businesses with a net operating loss. However, most of the tax breaks in the president's plan will affect 2009 individual tax returns filed next year.

There are two things you can count on in life, death and taxes. But this time around, tax time might not be that bad. President Barack Obama signed a stimulus bill aimed at jump starting the slumping economy and putting more money in Americans hands.

"A lot of provisions in this recovery act give you incentives to spend money and specific items to spend money on," said Amy McAnarney with the Tax Institute at H&R Block.

For example energy improvements to your home such as a new heater, air conditioner or new doors could get you up to $1,500 dollars back in taxes.

A new car in '09 can save you money. You can deduct the state and local sales tax for the purchase. There's also credit for hybrid plug in vehicles purchased after this year.

Married couples can expect an increased credit of up to $800 dollars, singles around $400 dollars.

There's a tax credit of up to $2,500 dollars for undergraduates this year and in 2010. Also a child tax credit of up to a thousand dollars per child, depending on the family's income.

First time home buyers can get a credit of up to $8,000 dollars on their tax return that never has to be paid back.

Unlike past stimulus packages, you won't be getting a check in the mail, instead the government is adjusting withholdings, so you should already be seeing a boost in your paycheck.

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