How can the ARRA benefit for you?

What is the ARRA’ 09?

On Tuesday, February 17, 2009 P.L. 111-5(H.R.I) the American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law by the President.  ARRA includes key provision that impact individuals and families.

The “Making Work Pay”Tax Credit will cut taxes for working families in 2009 and 2010 by providing a refundable credit of up to $400 for working individuals and $800 for those who are married filing jointly. The credit is phased out once your income exceeds a certain limit. It is being paid to employees through a reduction in their federal income tax withholding starting in April 2009. The IRS has a “Withholding Calculator” available at WWW.IRS.gov, check it out and make sure you are having the proper amount withheld to avoid owing the IRS.

The “Economic Recovery Payment”is provided for individuals who no longer work and are receiving SS,  SSI, RR benefits or Veterans Disability payments. This $250 payment will come directly through the same channels in which you’re now receiving benefits and will reduce the amount of “Making Work Pay” credit you may receive.

Earned Income Tax Credit and Child Tax Credits will increase, allowing for a larger credit for 3 or more children and a higher threshold of income eligible to receive the credits

The American Opportunity Education Credit is now expanding from and replacing the former “Hope” credit, to cover the first 4 years of qualifying post secondary education expense. A 40% credit up to $2,500 per year.

First-Time Home-Buyer credit has increased to $8000, from homes purchased from 01/01/2009- 11/30/2009. If you live in the home for at least three years, you wont have to pay it back!!

Energy Conservation Incentives for a variety of energy saving upgrades or additions to your home, including : Windows, doors, insulation,roofing, HVAC,water-heaters,bio-mass stoves and more. This credit of up to $1500, could also help you save on your electric bill.

Unemployment Benefits, a temporary suspension of federal income tax is now available on the first $2400 of unemployment benefits received in 2009. Voluntary with-holdings be requested on form W-4V.

New Car Sales Tax Deduction for sales taxes paid on the first $49,500 of the cost of a vehicle purchased after 02/16/2009. (For individuals with income limits under $125,000/$250,000 if jointly) And you don’t have to itemize to get it!

For more information on the ARRA ’09 provisions see the website: WWW.IRS.GOV

All information above is from the IRS website

Home Buyer Tax Credit: How It Works

First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

[Editor’s Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]

Source: Chicago Tribune, Mary Umberger

Illegal Immigrants Are Good Lending Risks

 

Illegal immigrants can make good home buyers, according to a new study.

Undocumented immigrants — those who aren’t legal permanent residents — who have an individual taxpayer identification number (ITIN), good credit, and proof of tax filing can qualify for a fixed-rate “ITIN mortgage.”

Less than 1 percent of ITIN loans have gone into foreclosure, according to the Hispanic National Mortgage Association. That compares with 1.2 percent for prime mortgages and nearly 11 percent for subprime mortgages given to borrowers with poor credit history, according to the Mortgage Bankers Association.

The Internal Revenue Service has issued more than 12.5 million taxpayer ID numbers since 1996 to foreigners who weren’t eligible for a Social Security number, including visa holders legally in the United States, spouses of U.S. citizens, and undocumented workers.

Community banks and credit unions began accepting the nine-digit numbers from mortgage applicants in 2000, most of them illegal immigrants with modest incomes. Most large banks are still reluctant to accept these numbers. By law, banks must verify customers’ identity, but they don’t have to check immigration status.

Source: Charlotte Observer, Deborah Hirsch

 

Make Some Money With Your House

For owners of vacation homes or properties in tourist-friendly areas, here’s a money-making tip.

If there’s a major sporting event or arts festival in their town, make some extra money by renting your primary or vacation home to tourists and moving elsewhere for a couple of weeks.

If you rent your home for 14 days or less in a given year, you don’t have to pay any tax on the rental income, says Bob Scharin, senior tax analyst for Thomson Reuters. You don’t even have to report the income to the IRS, he says.

If you rent your vacation home for more than 14 days, you’ll have to report the income on Schedule E when you file your tax return. That’s not as bad as it sounds, because you’ll also be permitted to deduct expenses, such as insurance, utilities, property management fees, and depreciation.

Source: USA Today, Sandra Block