Making Work Pay credit

Most employees will receive a $400 ($800 for joint returns) tax credit in tax years 2009 and 2010. You should see this credit almost immediately in the form of reduced taxes withheld from your paycheck throughout the remainder of 2009. The IRS has revised the withholding schedules that your employer uses to calculate taxes withheld from your paycheck. You should receive the credit automatically. The tax credit begins to phase out if your income is above $75,000 or $150,000 for joint returns.

First-time Homebuyer credit

First-time homebuyers that purchase between January 1, 2009 and December 1, 2009 may be eligible for a credit of $8,000. Unlike the 2008 credit, the 2009 credit does not have to be repaid. The definition of a first-time homebuyer is more generous than you may think. To be eligible, you must not have owned a principle residence within the three year period prior to the purchase in 2009. Just like the Making Work Pay credit, this credit also begins to phase out if your income is above $75,000 or $150,000 for joint returns.

New Vehicle Sales Tax Deduction

If you buy a new car, truck, motorcycle or motor home between February 17, 2009 and January 1, 2010, you may be eligible to deduct the sales taxes. The limit of the deduction is $49,500 and begins to phase out for tax payers with modified adjusted gross income above $125,000 and $250,000 for joint returns.

The Obama Stimulus package encompasses many different areas. In fact, President Obama referred to it as the “most sweeping economic recovery package in the nation’s history.” Meet with your tax advisor to discover if these or other parts of the package can help you.