Over the last few weeks, there’s been a great deal of media focus on the $787 billion American Recovery and Reinvestment Act (ARRA) – a.k.a., the most recent Stimulus Act. The Act will soon be followed by the “Making Home Affordable” Program. While government spending isn’t always the answer, the Stimulus Act presents a number of opportunities for individuals to save some serious money and get help when they need it the most – a silver lining if you will.
One of the “winners” in the legislation is those who have lost their job. David M. Reape, CPA, a senior manager with Ciuni & Panichi in Cleveland and chair of the OSCPA Tax Committee, told OSCPA’s editors: “Individuals, particularly those who have recently lost their jobs, stand to gain the most from this package. For the individual who has been laid off, the government is subsidizing much of their COBRA payment. There is also a provision that allows individuals to exclude from income up to $2,400 of unemployment benefits received in 2009. Those are huge benefits for the recently unemployed.”
Former employees must have been enrolled in their employer’s health plan at the time they lost their jobs. The former employees will now only have to pay 35% of the cost of the COBRA coverage – not the full 100%.
More silver lining: the legislation extended the qualifying period for the homebuyer credit to 12/1/2009. For purchases made after 12/31/2008, the credit is $8000 and repayment is not required.
According to Michael Mares – one of OSCPA’s most popular tax instructors and a federal tax expert, “Homebuyers can treat a purchase made in 2009, as if it was made in 2008. Homebuyers can even file a modified return for 2008 and get the credit in 2009, rather than having to wait until filing your 2009 return.”
Mares joined Lynn Nichols in an OSCPA hot topic webinar on March 6 and reviewed the many credits, extensions and incentives contained in the Stimulus Act with over 150 participants. “This is a very complex set of rules,” Mares told the virtual audience. “But one that is filled with significant benefits for those that really need them right now.”
An even larger silver lining: The Stimulus Act provided AMT relief – extending the individual and MFJ exemption.
“The problem with this is they haven’t increased the phaseout number since 1986, which means there are people that shouldn’t be burdened with the AMT but they still are,” Nichols said.
Mares added, “The basic problem is that since Congress has waited so long to reform the AMT, it will be cheaper to repeal the Internal Revenue Code than it would be to repeal the AMT.”
Now here’s a silver lining for you: this webinar is now in the OSCPA Online Library. That means that any OSCPA member can listen to this webinar – and any of the other 100+ titles – any time at no charge. Get up to speed on the most significant business and individual credits, extensions and incentives without reading through 3,000 pages – unless you have a lot of time on your hands!