Unfortunately, this is rather old news. In early May we had warned readers that those few extra bucks you were receiving in your paycheck each week, thanks to the president’s Making Work Pay tax credit, may need to be paid back come tax time.

“Uncle Sam will want your tax cut back,” 5/2/09: Read the rest of this entry »

Or some of it, at least. An Associated Press article warns that the extra $40 or so that you’re now seeing in your paycheck under President Obama’s “Making Work Pay” tax credit may boost the amount of money you owe Uncle Sam:

The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.

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President Obama’s Economic Recovery and Reinvestment Act (stimulus package) includes several consumer incentives and tax breaks designed to help Americans stimulate the economy.

So here’s the big question: How many of the following items will help you?

1. Employee Tax Credit - Provides American workers with about $45 extra each month, up to $400 for single tax filers, $800 for joint filers.
2. New Car-Sales Tax Deduction – From about the middle of February through year’s end, taxpayers can deduct the sales tax of their new vehicle on their 2009 tax return.
3. Better Benefits for the Unemployed – Weekly unemployment benefits automatically increase by $25 for the entire year, up to 33 weeks. Also, the application period is extended.
4. New Home-Buyer Tax Credit – If a new home is purchased before December 1, the home buyer is eligible for a tax credit of up to $8,000 which does not need to be paid back.
5. Health Care Subsidy for the Unemployed – The government will subsidize 65% of COBRA coverage for up to nine months.
6. AMT Tax Relief – The tax relief measure increases the income threshold by $500 for single tax filers and $1,000 for joint filers, so that 26 million taxpayers will avoid paying more.
7. College Aid Gets Fresh Funding – Additional funds have been dedicated to certain college programs and grants.

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Just one incentive amongst President Obama’s wide-ranging plan to fix the housing market, the New Home Buyer Tax Credit will provide first-time purchasers — between the first of January and the first of December 2009 — with $8,000. What started out as a $15,000 tax credit was reduced during the negotiation process between the House and Senate.

Luke Mullins of U.S. News & World Report put together a list of seven things you need to know about the tax credit, here is a sampling: Read the rest of this entry »

Like anything else, it all depends on who you ask. The Senate is set to vote today on their version of the Economic Recovery and Reinvestment Act which includes a non-refundable tax credit of 10% of a home’s purchase price — capping at $15,000. From a homebuyer’s perspective, the Senate’s version is undoubtedly the better deal as opposed to the House’s $7,500 tax credit that has to be repaid over 15 years.

Some critics fear the Senate’s aid to homebuyers is not only a waste of money, it’s addressing the wrong issues. For months many of the government initiatives aimed at  righting the housing market — specifically foreclosures — were only aimed at borrowers who had fallen behind on their monthly payments. Critics say this tax credit is abandoning that focus, giving aid to borrowers who can already qualify for today’s strict lending standards: Read the rest of this entry »

If you’re thinking the new housing bill won’t benefit you because your mortgage is paid off, think again. A component of the bill offers a tax deduction for those who pay state and local property taxes, but do not itemize their federal taxes.

Borrowers who don’t itemize most likely include elderly homeowners with no mortgages or borrowers with small loans. In order to take advantage of the mortgage interest deduction, a taxpayer must itemize, and their tax credit needs to exceed the standard deduction ($5,450 for single filers, $10,900 for joint filers) presently.

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