Don't Mess With Taxes

It's official. The American Recovery and Reinvestment Act of 2009 is now law.

There's been lots of coverage, in blogs and traditional media, of the various provisions. I'm working on a story on the Making Work Pay credit. I'll pass along the finished product link when it's published.

However, I already touched on the highlights in "Stimulus yes, rebate check no" and "OK, some rebate checks."

Below is a quick rundown of some other key individual taxpayer provisions in the new law.

AMT again: There is another one-year alternative minimum tax patch that will keep millions of taxpayers from facing this costly parallel levy. For 2009 returns, the AMT exemption is $46,700 for single filers and $70,950 for joint filers.

Expanded educational benefits: An expanded credit for educational expenses in 2009 and 2010 with a maximum $2,500 tax break versus the $1,800 available under current law. Also, qualified expenses for up to four years of higher education will count, meaning this provision will essentially replace the Lifetime Learning Credit for the next couple of years.

More credit for your kids: Some parents will get extra credit for their kids via a more generous refundable portion of the child tax credit. Now income in excess of $3,000 rather than above the $8,500 threshold now in place can be used to figure how much of the credit can be refunded to parents.

New homeowner help: First-time home buyers get a better break. The current law allows for a $7,500 interest free loan to eligible home buyers. Now, for first homes bought between Jan. 1, 2009, and Dec. 1, 2009, can get an $8,000 credit. Even better, it doesn't have to be repaid as long as you stay in your first residence for three years.

Automotive tax advances: New car purchases also might be more attractive thanks to a new above-the-line deduction. Even if you don't itemize, you can claim the sales tax directly on your Form 1040, up to the tax amount on the first $49,500 paid for the vehicle. The drawback here is that you can't then take the itemized deduction for other sales tax amounts. But if you don't plan to itemize or live in a state where you'll be claiming a state income tax deduction instead, this is icing on the deduction cake.

There are lots of more goodies, but these are likely to apply to a large number of filers.

Read all about it: If you want to read the full bill, something that stimulus critics say Congress didn't do before signing off on the measure, you can do so via these two large PDF files, Part A and and Part B.

Thanks to Consumerism Commentary for the links, and for noting that Part B contains many of the provisions that affect individual taxpayers.

You also can search the stimulus and its various incarnations before it became law at Read the Stimulus.

And the White House has released its own series of fact sheets related to the new law.

The final grade: Now that it's a done deal, it's time for the final grade of the first piece of legislation under the Obama Administration.

As it did for the House and Senate stimulus bills, The Tax Policy Center graded the compromise that became the American Recovery and Investment Act of 2009.

The group's analysts looked at key tax provisions of the conference bill based on how much "bang for the buck" each would provide in boosting the economy in the short run.

The folks who melded the previous two versions didn't do so well. As I did with the first two report cards, I averaged the grades and it came to 76, or a C. The prior versions each did a few points better, posting C+ grades.

Sometimes, with legislation as with class work, it pays to leave well enough alone.

And the final grade, of course, will come from all of us, as we find out just what the new law will do for our own and the country's economic situations.

Report card clip art licensed from
the Clip Art Gallery on DiscoverySchool.com