The American Recovery and Reinvestment Act of 2009: Information Center

The American Recovery and Reinvestment Act of 2009: Information Center

The IRS is implementing the tax-related provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) as quickly as possible. More information on these and other provisions of the recovery program will be available on this Web site as it becomes available.

Information for Individuals

Some of the provisions of the law primarily affect individuals.

• Making Work Pay Tax Credit. This tax credit means more take-home pay for many Americans. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.
  
  
• First-Time Homebuyer Credit Expands. Homebuyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement.
  
  
• Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.
  
  
• Enhanced Credits for Tax Years 2009, 2010. Find details on the earned income tax credit, additional child tax credit and the American Opportunity Credit, a new higher education benefit.
  
  
• Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.
  
  
• Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.
  
  
• $250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.
  
  
• Energy Efficiency and Renewable Energy Incentives. See what individuals can do to reap tax rewards.
  
  
• Health Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.

Information for Businesses

Some of the provisions of the law primarily affect businesses.

• Making Work Pay Tax Credit. Businesses should use the new withholding rates for their employees. For pension plan administrators, new optional withholding procedures are available to supplement the February withholding tables.
  
  
• Work Opportunity tax credit. This newly-expanded credit adds returning veterans and "disconnected youth" to the list of new hires covered by the credit that businesses may claim. Certification by the state work force agency is required.
  
  
• COBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941, as well as information for qualifying individuals.
  
  
• Energy Efficiency and Renewable Energy Incentives. See what businesses can do to reap tax rewards.
  
  
• Net Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. Information on the carryback, an expanded section 179 deduction and other business-related provisions, is now available.
  
  
• Municipal Bond Programs. There are new ways to finance school construction, energy and other public projects.

2008 and 2009 Tax Returns

The law could affect some 2008 tax returns due in 2009. However, most of the changes in ARRA will affect 2009 individual tax returns filed next year and due April 15, 2010.

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Prepare for Hurricanes by Safeguarding Tax Records

Prepare for Hurricanes by Safeguarding Tax Records

IR-2009-61, June 22, 2009 Podcast: English Spanish WASHINGTON — With the 2009 hurricane season now underway, the Internal Revenue Service encourages individuals and businesses to safeguard themselves by taking a few simple steps. Create a Backup Set of Records Electronically Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set. Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies home, etc. –– is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD. Document Valuables Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings. A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area. Update Emergency Plans Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes. Check on Fiduciary Bonds Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. IRS Ready to Help If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues. Back copies of tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return. Likewise, transcripts can be ordered using Form 4506-T, Request for Transcript of Tax Return. Returns or transcripts can also be ordered by calling 1-800-829-1040. There is no fee for a transcript or tax return copy for a taxpayer located in a federal disaster area qualifying for individual assistance. Taxpayers should put the assigned Disaster Designation in red ink at the top of the request form. -Via IRS www.expresstaxrefund.com

Recovery Rebate Credit

Recovery Rebate Credit Available This Year

The recovery rebate credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.

For more information, see the Recovery Rebate Credit Information Center.

Recovery Rebate Credit Information Center

En Español Video: Recovery Rebate Credit The recovery rebate credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion. Generally, a credit adds to the amount of your tax refund or lowers the amount of taxes owed. Therefore, the amount you receive for the recovery rebate credit will be included as part of your refund, as shown on your tax return. You May Be Eligible People who fall into the categories described below may be eligible for the recovery rebate credit this year: Individuals who did not receive an economic stimulus payment. Those who received less than the maximum economic stimulus payment in 2008 — $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low. Families who gained an additional qualifying child in 2008. Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008. Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008. How to Get the Recovery Rebate Credit You need to claim the recovery rebate credit on Form 1040, 1040A or 1040EZ. The instructions for these forms will show you which lines to use. Unlike the economic stimulus payment, the recovery rebate credit will be included in your tax refund for 2008 and will not be issued as a separate payment. The IRS Will Figure the Credit for You in Most Cases You can let the IRS figure the credit when you file your 2008 Form 1040, 1040A or 1040EZ. If you're filing on paper, simply follow the line-by-line instructions to choose this option. If you're filing electronically, the software will figure the credit for you. Or You Can Figure It Yourself Likewise, you can figure and claim the recovery rebate credit on your 2008 Form 1040, 1040A or 1040EZ. Two interactive online tools will be available to help you with the calculation, the Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment? The Recovery Rebate Credit Calculator will help you figure the amount you should claim on your 2008 tax return. The worksheet in the Form 1040 instruction booklet can also help you figure your credit by hand. To use the Recovery Rebate Credit Calculator or complete the worksheet, you'll need the amount of your 2008 economic stimulus payment, if any. This amount was provided on Notice 1378, Economic Stimulus Payment Notice, sent by the IRS to taxpayers who received a payment. You need to know the amount of your 2008 economic stimulus payment to determine if you are eligible for the Recovery Rebate Credit. You will need the total amount of your stimulus payment to complete the Recovery Rebate Credit worksheet that is in the Form 1040, 1040A and 1040EZ instruction booklets. Even if your payment was reduced to satisfy other debts, as would be stated on your Notice 1378, you still need to include the total. If you received more than one payment — and more than one Notice 1378 — enter the total of all payments you received. If you don't have Notice 1378, you can use How Much Was My 2008 Stimulus Payment? to look up the amount you received. Has Your Filing Status Changed? If your filing status changed for 2008, follow these directions to determine the amount of your total 2008 stimulus payment. You'll need to use this amount when you calculate your 2008 Recovery Rebate Credit.

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