American Recovery and Reinvestment Act in header of articles
American Recovery and Reinvestment Act in content page of articles
In prior years, you might have received tax benefits courtesy of the American Recovery and Reinvestment Act of 2009 (ARRA). Some ARRA provisions have expired. However, some were extended through 2012 by the Tax Relief Act of 2010.
Benefits that apply to 2012 and returns for 2009-2011 include:
Earned Income Credit (EIC): Families with 3 or more children got an increased EIC. Also, if you’re married filing jointly, you received an additional penalty relief. When you file your 2012 return, confirm your EIC amount on the EIC chart.
Additional child tax credit:Lower-income families with children received increased eligibility for the refundable portion of the credit.
Residential energy efficient property credit: If you’re a homeowner who invests in energy enhancements, you’ll receive an increased credit when filing your 2009-2016 returns. You can claim a credit and get back up to 30% of your costs if you installed any of these energy enhancements:
Solar water heaters
Geothermal heat pumps
Small wind turbines
American Opportunity Credit:You can apply this enhanced Hope Credit to qualified education expenses for the first 4 years of higher education. The maximum credit is $2,500 , of which 40% is refundable. The credit phases out if you have an adjusted gross income (AGI) of more than $80,000 -- $160,000 if married filing jointly.
Plug-in electric vehicles credits: A modification to the credit benefits you if you bought a qualified plug-in electric motor vehicle after 2009. The credit is limited to $7,500 . The amount begins to decrease after the manufacturer sells 250,000 plug-in vehicles.
If you purchase a plug-in vehicle, ask the dealer about the credit. You'll claim the credit when you file your return for the year you purchased the vehicle.
If you're preparing your returns for 2008-2011, you might receive these benefits:
Making Work Pay Credit:This refundable credit was available in 2009 and 2010 only. You might have received the credit if you were employed or self-employed.
The credit was 6.2% of earned income up to $400 -- $800 if married filing jointly.
The credit began to phase out when your modified AGI reaches $75,000 -- $150,000 if married filing jointly.
The credit wasn't available if you made $95,000 -- $190,000 if married filing jointly.
Economic recovery payment (ERP): This 1-time payment of $250 was paid in 2009 only to people who received these benefits from November 2008 through January 2009:
Tier 1 railroad retirement benefits
Supplemental Security income (SSI)
Department of Veterans Affairs pension or disability benefits
If you qualified to receive this payment in 2009, but received it in 2010, you should have included the payment on Schedule L.
COBRA:If you were jobless in past years, you might qualify to receive a federal subsidy of 65% of monthly COBRA premiums for 15 months. You must have been involuntarily terminated between Sept. 1, 2008, and May 31, 2010. Employers should notify you if you’re eligible.
The subsidy isn't taxable to the recipient. However, eligibility for the subsidy phased out if you had a modified AGI between $125,000 and $145,000 -- $250,000 and $290,000 if married filing jointly.
For 2011, you might had to recapture your subsidy amounts if your income fell into the phase-out ranges.
Homebuyer credit: First-time homebuyers who purchased a home after April 8, 2008, and before May 1, 2010, could receive up to an $8,000 refundable credit. Phase-out of this credit started at $75,000 -- $150,000 if married filing jointly.
After Nov. 6, 2009, both of these applied:
The credit phase-out started at $125,000 -- $225,000 if married filing jointly.
The homebuyer credit was expanded to provide up to a $6,500 credit for long-time homeowners who purchased a replacement home.
The first-time homebuyer credit has expired. It's not available for 2012. It wasn't available for 2011, except in limited circumstances for service members serving overseas.
Nonbusiness energy credit:If you invest in energy improvements to your home, like new windows and doors, you could claim a credit. The lifetime maximum for 2011 was $500 -- $200 for windows. However, you must have reduced the credit by any amount of the credit you claimed in 2009 and 2010.
You also must have placed into service the improvements before Jan. 1, 2012.
Section 529 plan distributions: Qualified higher education expenses included the purchase of computers and related equipment for 2009 and 2010.
Vehicle credit: There was a $2,500 credit for either of these vehicles purchased between Feb. 17, 2009, and Dec. 31, 2011:
2- or 3-wheeled vehicle
Low-speed vehicle that maintains a speed between 20-25 miles per hour
The vehicles must also:
Be used mainly on public streets
Weigh less than 14,000 pounds
Draw power from battery with at least 4 kilowatt hours
Use an external source to recharge the battery
Be IRS certified
To learn more about how the government distributes stimulus-package money, visit www.recovery.gov.