In hopes of boosting the economy, the US government is now giving Americans incentives to go shopping and making billions of stimulus dollars available to you in the form of tax credits. Here are a few of the most significant credits available.
Sick of your car? Go buy a new one! The IRS announced March 30, 2009, that taxpayers who purchase a new vehicle in 2009 may be entitled to deduct the sales tax they pay on the vehicle. The amount of the deduction is limited to the first $49,500 of the purchase price and is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. This plan hopes to provide car companies much-needed money now, and reward you later. Warning: the vehicle must be purchased after February 16, 2009, and before January 1, 2010, to qualify for the deduction. Get details from the IRS.
Sick of your apartment? Go buy a house! Along with vehicle purchases, the IRS is rewarding first time home buyers with substantial tax credits for 2008 and 2009. The credit applies to purchases that close after April 8, 2008, and before December 1, 2009, in homes used as the taxpayer's principal residence. The terms vary depending on whether the home is purchased in 2008 or 2009, but a credit of up to $8,000 may be available. For details and necessary forms, as well as audio and video explanations go to the IRS's First-Time Homebuyer Credit page.
Sick of your electric bill? Go solar! Thanks to 2009's $787 billion economic stimulus package, homeowners can now receive a federal tax credit totaling thirty percent of the original cost of the system. Unlike the prior credit, there is no cap. Many state and local governments provide further incentives and rebates for solar panel installation. The federal credit is still available even if you are also getting state and local financing.
The credits don't stop at solar panels. Obama's stimulus bill also created energy efficiency tax credits for other eco-friendly home improvements. The maximum credit for most improvements has been raised from $500 to $1,500 total for 2009-2010. Improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum. For specific information on what home improvements are covered with this credit, log on to energystar.gov.
Sick of your mortgage? Look into refinancing and loan modification. The Obama Administration's Home Affordable Refinance Program gives up to 5 million "homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments." This program commits $75 billion to keep up to 4 million Americans in their homes by preventing foreclosures.
The road to economic recovery will be tough, but the government needs you to spend money, and they are willing to reward you with free money in the form of tax cuts and incentives.