February 19, 2009

Economic Stimulus Package

Here is a partial breakdown of the Economic Stimulus Package:

What's In It for You and Your Family?

Unemployment Benefits

Ø       Extends Unemployment Benefits:  Helps an additional 3.5 million jobless workers by providing up to 33 weeks of extended benefits until the end of December 2009.  This will help approximately 145,000 Illinoisans.

Ø       Increases Unemployment Benefits:  Provides the first-ever federal increase of unemployment benefits of $25 per week.  This change could provide nearly an additional $1000 for an individual unemployed for the remainder of this year, helping approximately 20 million people in the nation and over 800,000 Illinoisans.

Ø       Encourages States to Expand Coverage to More Workers:  Provides incentives to states to improve coverage for low-wage, part-time, and other workers who can now be unfairly denied benefits when they lose their jobs.

Ø       Suspends Taxes on Unemployment Benefits:  Suspends temporarily the current law that taxes all unemployment benefits so that only unemployment benefits received in 2009 exceeding $2400 are taxable.

Ø       Extends Benefits to Railroad Workers:  Provides 13 weeks of extended unemployment benefits for railroad workers.

Ø       Extends Trade Adjustment Assistance (TAA):  Extends TAA through the end of 2010 for workers who lose their jobs because of increased imports or factory shifts to any foreign countries, helping at least 160,000 new workers.

Health Benefits

Ø       Helps Unemployed Workers Maintain Health Coverage:  Helps cover 65% of the cost for COBRA premiums for up to 9 months for workers who are involuntarily separated from employment between September 1, 2008 and December 31, 2009.  Unemployed workers currently may continue coverage for themselves and their families under their former employer's health plan if they pay 102% of the costs.  This change will help 7 million workers keep their health coverage.  The subsidy is only available if your adjusted gross income is below $125,000 for individuals ($250,000 for joint filers).  The subsidy also will end if you are offered new employer-sponsored health care coverage or become Medicare eligible. 

Ø       Improves the Health Coverage Tax Credit:  Expands the Health Coverage Tax Credit for workers who are eligible for Trade Adjustment Assistance and individuals who receive their pensions through the Pension Benefit Guaranty Corporation.  The changes will cover 80% of the premium cost of private insurance and allow TAA recipients who receive unemployment benefits to qualify for the credit.

Ø       Protects Health Care Coverage for Millions through Medicaid:  Protects health care coverage for millions of Americans by providing an estimated $87 billion over the next two years in additional federal matching funds to help states maintain their Medicaid programs in the face of massive state budget shortfalls.

Assistance for Struggling Families

The Recovery bill provides additional funding to government programs that provide critical support to struggling families.  Depending on your economic circumstances, you may qualify for assistance.

Ø       Food Assistance: The bill provides: $19.9 billion for additional Supplemental Nutrition Assistance Program (formerly food stamps) to increase benefits by 13.6% for more than 31 million Americans (half of whom are children); $100 million for grants to provide emergency food and shelter; $100 million for formula grants to states for elderly nutrition services such as Meals on Wheels; and $150 million for the Emergency Food Assistance Program to restock local food banks.

Ø       Housing Assistance:  The bill provides:  $2 billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties; and $1.5 billion for the Emergency Shelter Grant program to provide short-term rental assistance and other aid for families during the economic crisis.

Ø       Employment Assistance:  The bill provides:  $3.95 billion for job training for adults, dislocated workers, and youth (with $1.2 billion to create up to one million summer jobs for youth) through local Workforce Development Boards and organizations; $500 million for Vocational Rehabilitation State Grants to help persons with disabilities prepare for gainful employment; $500 million to match unemployed individuals to job openings through state employment agencies; and $120 million to provide community service jobs to an additional 24,000 low-income older Americans.

Ø       Temporary Assistance for Needy Families:  The bill provides: $2.4 billion to states to provide emergency income assistance and work support services to needy families; and $319 million to provide supplemental TANF grants to states.

Ø       Education and Child Care Assistance:  The bill provides:  $15.6 billion to increase Pell grants for college to $5,350 in 2009 and $5,550 in 2010; $200 million to expand Work-Study Program; $1.1 billion for Early Head Start and $1 billion for Head Start to provide comprehensive development services to low-income infants and preschool children, expanding services for 124,000 additional infants and children; and $2 billion for the Child Care Development Block Grant to provide child care services to an additional 300,000 children in low-income families while their parents go to work.

Tax Relief for Individuals and Families

Ø       Making Work Pay Tax Credit:  Provides tax relief to 95% of American workers by giving a tax credit of up to $400 per worker ($800 per couple filing jointly) for individuals earning less than $75,000 ($150,000 for joint filers).  If you earn between $75,000 and $95,000 as an individual ($150,000 and $190,000 for joint filers), you should qualify for some level of credit but not the entire amount.  You (or your spouse if filing jointly) must have a Social Security Number to qualify for this credit.  Because this tax credit is "refundable," you may still qualify for the credit if you don't owe any taxes. You can only receive one $250 Economic Recovery Payment.  If you qualify for any payment to retirees described below, your Making Work Pay Tax Credit will be reduced by $250.  You can either claim this credit next year on your 2010 tax return or chose to reduce the amount of income tax that is withheld from your paycheck in 2009 by changing your tax withholdings on your W-4 with your employer.   To help determine what level set your withholdings, you can use the IRS Withholding Calculator:  www.irs.gov/individuals/article/0,,id=96196,00.html

Ø       Payments to Retirees and Persons on Disability:  Provides a one time payment of $250 to recipients of Social Security, Social Security Income (SSI), Railroad Retirement, and Veterans Disability Compensation Benefits.  Both you and your spouse can receive payments if you are both eligible. The Treasury should send your check within 4 months.  You can only receive one $250 Economic Recovery Payment, even if you qualify as a retiree in multiple categories.  If you also qualify for the Making Work Pay credit, that credit will be reduced by $250 if you qualify for the retiree payment.  You are not eligible for this credit if you get SSI and live in a Medicaid institution or if your federal program benefits have been suspended because you are in prison or jail, if you have committed fraud, or if you are in violation of probation or parole.  

Ø       Tax-Free Transit Benefits:  Increases the tax-free benefit employers can provide to employees for taking public transportation up to $230 a month during 2009 and at the same level as parking benefits in 2010.

Ø       Tax Credit for Certain Federal and State Pensioners:  Provides a one-time $250 tax credit on your 2010 tax return to government retirees who are not eligible for Social Security benefits and who received a pension or annuity during 2009 for service performed while employed by federal, state, or local governments.  This payment will count as a deduction to your allowable Making Work Pay Credit.  Both you and your spouse can qualify for the credit if you are both eligible.  You can only receive one $250 Economic Recovery Payment.  If you also qualify for the Making Work Pay credit, that credit will be reduced by $250 if you qualify for the pensioner credit.

Ø       Child Tax Credit:  Cuts taxes for the families of millions of children by allowing families to begin qualifying for the child tax credit with every dollar earned over $3,000 starting on your 2010 tax return.   Families can receive a maximum credit of $1000 per each eligible child. This credit starts to decrease for taxpayers whose adjusted gross income exceeds $75,000 ($110,000 for joint filers). You may qualify for this credit even if you don't owe any taxes.

Ø       Earned Income Tax Credit:  Eases the marriage penalty and also provides tax relief to families with 3 or more children on your 2010 tax return. For married couples filing jointly, the bill eases the marriage penalty, increasing the credit for joint filers by $1,880.  For working families with 3 or more children, it provides greater tax relief by increasing the credit to 45% of the family's first $12,570 of earned income.  The credit starts to decrease for taxpayers with an adjusted gross income of $16,420 ($19,540 for married couples filing jointly).

Ø       American Opportunity Education Tax Credit:  Increases the higher education tax credit to a maximum of $2,500 to cover tuition, fees, and course materials.  Extends this credit to nearly 4 million low-income students who were not eligible in the past by making it partially refundable. The credit will start to decrease for taxpayers whose modified adjusted gross income exceeds $80,000 ($160,000 for joint filers).  This change applies to your 2010 and 2011 tax returns.

Ø       Alternative Minimum Tax (AMT):  Protects 26 million middle-class families from this tax by increasing the AMT exemption amount by $46,700 for individuals and $70,950 for joint filers.  This will apply to your 2010 tax return.

Ø       529 Plans:  Includes computers as a qualified education expenses under 529 plans on your 2010 and 2011 tax returns.

Ø       First-Time Homebuyer Credit:  Helps first-time homebuyers by increasing the current credit up to $8000 for first-time home purchases between April 9, 2008 and December 1, 2009 with the removal of the repayment requirement for homes purchased after January 1, 2009.  You must repay the credit if you sell the home within three years of the purchase date.  This credit decreases for taxpayers with adjusted gross incomes over $57,000 for individuals ($150,000 for joint filers). 

Sales Tax Deduction for Vehicle Purchases:  Provides incentives during 2009 to buy new cars, light trucks, or SUVs by allowing you to deduct State and local sales taxes paid on the purchase on your 2010 tax return. The deduction starts to decrease for taxpayers with an adjusted gross income over $125,000 for individuals ($250,000 for joint filers).