Signs of the Stimulus

We have all seen those signs at road construction sites letting us know that are tax dollars are being put to use. Some of these signs are for your local taxes, and others promote the American Recovery and Reinvestment Act. What you may not realize is how much money is being spent on these signs, and who is really paying for it. Check out the following article from ABC News on the topic below.

As the midterm election season approaches, new road signs are popping up everywhere – millions of dollars worth of signs touting "The American Reinvestment and Recovery Act" and reminding passers-by that the program is "Putting America Back to Work."

On the road leading to Dulles Airport outside Washington, DC there's a 10' x 11' road sign touting a runway improvement project funded by the federal stimulus. The project cost nearly $15 million and has created 17 jobs, according to recovery.gov.

However, there's another number that caught the eye of ABC News: $10,000. That's how much money the Washington Airports Authority tells ABC News it spent to make and install the sign – a single sign – announcing that the project is "Funded by The American Reinvestment and Recovery Act" and is "Putting America Back to Work." The money for the sign was taken out of the budget for the runway improvement project.

ABC News has reached out to a number of states about spending on stimulus signs and learned the state of Illinois has spent $650,000 on about 950 signs and Pennsylvania has spent $157,000 on 70 signs. Other states, like Virginia, Vermont, and Arizona do not sanction any signs.

Continue reading at ABC News.com…

7 New Tax Credits Now Available Through the Recovery Act

This year the average tax refund is up by around 10% from 2008, and according to Representative John Larson, this increase can be attributed to the numerous tax savings in the Recovery and Reinvestment Act. In a new Huffington Post piece Larson explains the 7 new tax incentives created by the act, you can find some of them below or click here for the full list.

The Making Work Pay tax credit - Ninety-five percent of working families are already receiving the Recovery Act's Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their 2009 paychecks - and will continue to see these benefits in 2010.

Tax credits for college expenses - Families and students are eligible for up to $2,500 in tax savings under the American Opportunity Credit as well as enhanced benefits under 529 college savings plans, which help families and students pay for college expenses.

The Homebuyers tax credit - Homebuyers can get a credit - up to $8,000 for first-time home buyers and up to $6,500 for upgrade homebuyers - for homes under contract by April 30, 2010 and purchased by June 30, 2010 under the Homebuyer tax credit. Over 1.7 million households have already taken advantage of the First Time Homebuyers tax credit.

Tax credits for energy efficient renovations - Taxpayers are eligible for up to $1,500 in tax credits for making energy-efficient improvements to their homes, such as adding insulation and installing energy efficient windows.

The vehicle sales tax deduction - Taxpayers can deduct the state and local sales taxes they paid for new vehicles purchased from Feb. 17, 2009 through Dec. 31, 2009 under the vehicle sales tax deduction.

Continue reading at Huffington Post.com…

Finding the Facts in the Stimulus Debate

It has been about one year since President Barack Obama signed the well-known American Recovery and Reinvestment Act. Taxpayers across the country are asking where the money has gone, how much is left, and what has been accomplished due to the spending. DailyFinance.com put together a post with answers to these questions, and a few facts surrounding the stimulus debate. Check out a section of the article below, or head over to DailyFinance.com for the full text.

Facts are sometimes a casualty in the struggle for power. This comes to mind in the discussion of President Obama's biggest legislative accomplishment, the $787 billion stimulus bill -- more formally called the American Recovery and Reinvestment Act (ARRA) -- which he signed into law about a year ago.

Given the intensity of emotions on either side of the debate over the value of the ARRA, it is worth finding some factual answers to the most basic questions about the program. For example, how much of the stimulus money has actually been spent? How many jobs has that money created? How much remains to be spent and how many more jobs will it create?

Finding Some Answers

The answer to the first question is that over a third of the money has already been paid out. According to Recovery.gov, of the $787 billion ARRA, $272.2 billion or 34.6% of the funds had been paid out by the end of January 2010. That money has been spent in three areas: $105 billion (38.6%) on entitlements -- such as unemployment benefits, $92.8 billion (34.1%) on tax benefits, and $74.4 billion (27.3%) on contracts, grants and loans.

The number of jobs that the stimulus has saved or created is in dispute. According to The New York Times, the nonpartisan Congressional Budget Office (CBO) estimates that ARRA has saved or created between 900,000 and 2.3 million jobs. Why the big range? The answer is in the growth assumptions used. CBO Director Douglas W. Elmendorf testified to Congress in January 2009 that the number of jobs created by ARRA would vary depending on how much additional economic output it produced -- which he assumed would range from 1.3% and 3.6% in 2009. The more output, the more jobs created.

Continue reading at Daily Finance.com…

'Cash For Appliances' Coming to a State Near You

The Government’s $300 million ‘Cash for Appliances’ program first introduced through the American Recovery and Reinvestment Act has started to go into effect in some states. According to CNN Money.com, it will allow taxpayers to receive rebates for purchasing qualifying energy efficient appliances. The program was designed to act similarly to the recently successful Cash for Caulkers and Cash for Clunkers incentives from last year.

Under the program, consumers are eligible to receive rebates on new, energy-efficient appliances such as refrigerators or washing machines. The rebates vary by state, type of appliance, and level of efficiency.

Rebates are only available on appliances with the Energy Star logo, which meet the energy efficiency guidelines set by the Environmental Protection Agency and Department of Energy.

The goal of Cash for Appliances is to help American's conserve energy, while also boosting retail sales and ultimately helping spur the economic recovery.

In New York, where the program went into effect Friday, rebates range from $75 to $105 on refrigerators, freezers and clothes washers. The rebates can be as high as $555 for bundled purchases of all three appliances.

Continue reading at CNN Money.com…

IRS Reminds Taxpayers of the Expanded Recovery Act Tax Credits

As the seasons change, the IRS is reminding taxpayers that they can weatherize their homes and be rewarded for their efforts. According to this recent press release, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the non-business energy property credit and the residential energy efficient property credit.

Non-business Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

IRS Reminds Taxpayers to Take Advantage of Recovery Act Benefits

According to a new press release earlier this week, the IRS is reminding “taxpayers to take advantage of the numerous tax breaks made available earlier this year in the American Recovery and Reinvestment Act.”

The recovery law provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient and parents and students paying for college. But all of these incentives have expiration dates so taxpayers should take advantage of them while they can.

First-Time Homebuyer Credit

The Recovery Act extended and expanded the first-time homebuyer tax credit for 2009.

Taxpayers who didn’t own a principal residence during the past three years and purchase a home this year before Dec. 1 can receive a credit of up to $8,000 on either an original or amended 2008 tax return, or a 2009 return. But the purchase must close before Dec. 1, 2009, and an eligible taxpayer cannot claim the credit until after the closing date. This credit phases out at higher income levels, and different rules apply to home purchases made in 2008.

New Vehicle Purchase Incentive

ARRA also provides a tax break to taxpayers who make qualified new vehicle purchases after Feb. 16, 2009, and before Jan. 1, 2010.

Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. There is no limit on the number of vehicles that may be purchased, and you may claim the deduction for taxes paid on multiple purchases. But the deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels. This deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A.

Energy-Efficient Home Improvements

The Recovery Act also encourages homeowners to make their homes more energy efficient. The credit for non-business energy property is increased for homeowners who make qualified energy-efficient improvements to existing homes. The law increases the rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to a total of $1,500 for improvements placed in service in 2009 and 2010. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

Law Offers Special Tax Breaks for Small Business

According to the IRS’ newest press release, they are urging “small businesses to act now and take advantage of tax-saving opportunities included in the recovery law.”

The American Recovery and Reinvestment Act (ARRA), enacted in February, created, extended or expanded a variety of business tax deductions and credits. Because some of these changes—the bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes. Here is a quick rundown of some of the key provisions.

Faster Write-Offs for Certain Capital Expenditures

Many small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. The new law extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction, named for the relevant section of the Internal Revenue Code. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage these investments by enabling businesses to write them off more quickly.

The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.

The section 179 deduction enables small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.