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American Recovery and Reinvestment Act

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. Some were further extended by the American Taxpayer Relief Act of 2012 (ATRA).

Benefits that apply to 2013 and returns for 2009-2012 include:

Earned Income Credit (EIC): Families with three or more children got an increased EIC. Also, if you’re married filing jointly, you received an additional penalty relief. When you file your 2013 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: You might be a homeowner who invests in energy enhancements. If so, 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 panels
  • Solar water heaters
  • Geothermal heat pumps
  • Fuel cells
  • Small wind turbines

Nonbusiness energy property credit: If you made energy improvements to your home, you might be able to claim this credit for your 2009-2013 returns. The credit is subject to a lifetime limit of $500.

Depending on the type of property, you can claim either of these:

  • 10% of the property’s cost
  • $50-$300 -- A specific amount allowed for the type of property

You might qualify if you made these improvements to your home:

  • Biomass stoves
  • Heating, Ventilating, Air Conditioning (HVAC)
  • Insulation
  • Roofs (Metal & Asphalt)
  • Non-solar water heaters
  • Windows & Doors

American Opportunity Credit: You can apply this to qualified education expenses for the first four years of higher education. The maximum credit is $2,500 , of which 40% is refundable. The credit begins to phase 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: 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 buy a plug-in vehicle, ask the dealer about the credit. You'll claim the credit when you file your return for the year you bought the vehicle.

Vehicle credit: There’s a credit for a qualified two- or three-wheeled plug-in electric vehicle you bought between Jan. 1, 2012, and Dec. 31, 2013. The credit is for 10% of the cost of the qualifying vehicle up to $2,500.

The vehicles must also be all of these:

  • Used mainly on public streets.
  • Weighs less than 14,000 pounds
  • Capable of speeds over 45 miles per hour
  • Draws power from a battery with at least four kilowatt hours
  • Uses an external source to recharge the battery
  • IRS certified

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. It was available based on your earned income:

  • The credit was 6.2% of your earned income up to:
    • $400
    • $800 if married filing jointly
  • The credit began to phase out when your modified adjusted gross income (AGI) reached:
    • $75,000
    • $150,000 if married filing jointly
  • You couldn’t get the credit if you made:
    • $95,000
    • $190,000 if married filing jointly

COBRA: If you were jobless in past years, you might qualify to receive a federal subsidy. It can be up to 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 have had to recapture your subsidy amounts if your income fell into the phase-out ranges.

Homebuyer credit: First-time homebuyers who bought a home could receive up to an $8,000 refundable credit. They must have bought the home after April 8, 2008, and before May, 1, 2010. Phase-out of this credit started at $75,000 -- or $150,000 if married filing jointly.  

After Nov. 6, 2009, both of these applied:

  • The credit phase-out started at $125,000 -- or $225,000 if married filing jointly.
  • The homebuyer credit was expanded to provide up to a $6,500 credit. This applied to long-time homeowners who bought a replacement home.

The first-time homebuyer credit has expired for 2013 and wasn’t available for 2012.

In 2011, it was only available in limited circumstances for service members overseas.

Section 529 plan distributions: For 2009 and 2010, qualified higher education expenses included:

  • Computers
  • Education related equipment

To learn more about how the government distributes stimulus-package money, visit www.recovery.gov.

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