Bullet Point Summary of “American Recovery and Reinvestment Act of 2009”

Individual and Family Tax Relief

• Extension of AMT relief for 2009 – Impacts 26 million Americans
• Exclude Private Activity Bonds from the Alternative Minimum Tax – Now excludes all PABs from AMT issued in 2009 & 2010
• Sales Tax Deduction for New Vehicle Purchases - Provides for a deduction for State and local sales and excise taxes if purchased in 2009
• Plug-in Electric Drive Vehicle Credit - Increases a tax credit passed into law at the end of last Congress
• Parity for Transit Benefits - Equalizes the tax-free benefit employers can provide for transit and parking
• Computers as Qualified Education Expenses in 529 Education Plans – Computers/computer technology now qualify as qualified education expenses
• “American Opportunity” Education Tax Credit – New tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year 2009 & 2010
• Refundable First-time Home Buyer Credit – Amended and expanded

 Business Tax Incentives

• Small Business Capital Gains – 50% exclusion moves to 75%
• Temporary Reduction of S Corporation Built-In Gains Holding Period from 10 Years to 7 Years – Impacts conversions to S-Corps
• Extension of Enhanced Small Business Expensing – Extends temporary increases into 2009
• 5-Year Carryback of Net Operating Losses for Small Businesses – Up from 2 years
• Extension of Bonus Depreciation – Extends 2008 bonus schedule into 2009
• Delayed Recognition of Certain Cancellation of Debt Income – Over 10 years
• Incentives to Hire Unemployed Veterans and Disconnected Youth – Creates 2 new groups of targeted employees

Families and Unemployed Assistance

• “Making Work Pay” Tax Credit - $400 to $800 for working individuals and families
• Economic Recovery Payment to Recipients of Social Security, SSI, Railroad Retirement and Veterans Disability Compensation Benefits – One-time $250 payment
• Refundable Credit for Certain Federal and State Pensioners – One-time $250 credit
• Increase in Earned Income Tax Credit – From 40% to 45%
• Increase Eligibility for the Refundable Portion of Child Credit – Reduces floor calculation from $8,500 to $3,000 for 2009 & 2010
• Tax Credits for Energy-Efficient Improvements to Existing Homes – Extends & increases credits
• Temporary suspension of taxation of unemployment benefits – For 2009
• Increase in Unemployment Compensation Benefits – Additional $25/week in 2009
• Extension of Emergency Unemployment Compensation – continuation of 33 weeks
• Premium Subsidies for COBRA Continuation Coverage for Unemployed Workers – 65% subsidy

Gregory E. Crawford, CFP®