Hello from Sycamore!
The 2009 Stimulus Package
The stimulus package has been passed by Congress, signed by President Obama and is coming to our rescue as I write this note. Since we're all going to live with and pay for the stimulus, we thought you may be interested in knowing if there is anything in it that you may want to pursue. What follows is a brief overview of the package and its benefits (hopefully) to you.
Tax Cuts - About $380 billion of the stimulus program is tax cuts to individuals and programs to help individuals such as extended unemployment benefits. Many of you will receive or are now receiving these tax reductions. For practical purposes, these reductions will come in the form of credits. $800 per year for couples and $400 for individuals. This credit is refundable, so even if you pay no federal tax, you will receive a refund.
Businesses - The ability to expense as much as $250,000 as part of the 2008 stimulus package under President Bush has been extended to 2009. Additionally the 50% bonus depreciation allowed under the 2008 stimulus plan has been extended for 2009.
Help After a Job Loss - The first $2,400 of unemployment benefit received each year is no longer subject to income tax. If after losing your job, you use COBRA for health coverage, the premium will be reduced to 35% of the total. The balance is paid by the former employer and reimbursed by the government.
Alternative Minimum Tax Relief - The AMT exemption amount is $70,950 for couples and $46,700 for individuals.
Energy Efficiency - Increased credits are available for installing solar panels or making other improvements to your home that will make it more energy efficient. The maximum credit has been increased to 30% with a cap of $1,500 combined over two years. There are specific limits for different types of improvements.
Electric Car - Purchasing an electric car could get you a $2,500 credit. This phases out after the manufacturer has sold 200,000 units.
Education - A credit of $2,000 on the first $2,000 of expense and 25% of the next $2,000 is available to help offset college expenses. The credit is for years 2009 and 2010, and is phased out for taxpayers with gross incomes starting at $80,000 for single filers and $160,000 for joint filers.
Buying a new car - State, local and county taxes paid on the purchase of a new car can be deducted for the first $49,500 paid for a car, truck, motor home or motorcycle. This benefit phases out if your gross income exceeds $250,000 for joint filers or $125,000 for single filers.
First time homebuyers - A first time homebuyer is defined as anyone who has not owned a home for at least three years. Once again, this is an extension of the credit established under the prior administration. This credit is equal to 10% of the home purchase amount up to a maximum of $8,000 and is available to those with gross incomes of up to $75,000 for single filers and $150,000 for joint filers. You lose this credit if you sell your home within three years.
This has been a very general and brief review of the stimulus package. If you have any specific questions, please feel free to contact us.
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Speaking of the economy (we were talking about the economy right?), several leading indicators appear to be improving and, considering that the stimulus has not had time to really cause any significant effect, we feel that we may be turning the corner on this recession. We are very optimistic about the next 12 months and the next 12 years.
As always, thank you for your business and trust.
Sycamore Financial Group
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