[Updated with new 2010 extensions] Based on a number of reader questions, there is still some confusion around the key dates for receiving or claiming the economic stimulus tax credits. The IRS and Social Security administration (SSA) have published these, but not always in the most obvious places. So here’s a straight forward summary of when the main tax credits and stimulus payments will be paid or when you have to claim them by. You can refer to the detailed articles for eligibility rules and qualifications for each of the tax credits and deductions.
Making Work Pay – $800 (Families) and $400 (Singles) Tax Credit
More than 90% of Americans will be eligible for receiving some part of the center piece tax credit in the Obama economic stimulus plan. This credit is available to joint filers making less than $190,000 and $95,000 for single filers.
When will it be paid : For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated (i.e. you have to do nothing) withholding changes in early spring 2009. The average worker will see this tax credit in the form of a $10 to $20 bump in weekly paychecks. If you do not have withholdings or prefer not to adjust your withholding amount and can get your stimulus in a lump sum payment as a tax refund when you file your 2009 taxes.
The 2010 working credit will start to be paid from January 1, 2010 and will result in a $7 – $15 increase in take home pay (the reason it is less than 2009, is that payments are spread over a 12 month period versus 8 months for this year’s tax credit)
Taxpayers will not get a separate, special check mailed to them from the IRS like last year’s economic stimulus payment.
One Time $250 Social Security Payment
This stimulus package provided a one-time payment of $250 to individuals who get Supplemental Security Income (SSI) or Social Security benefits. To receive payment, the beneficiary’s address of record must be in a valid US state or territory. Only individuals eligible for Social Security, SSI, Veterans, or Railroad Retirement benefits at any time during the months of November 2008, December 2008, or January 2009 may be eligible for the one-time payment.
You can see more details and questions on this payment here. Everyone who is entitled to a payment should receive it by late May 2009. No action is required on your part, unless the payment is not received. In which case you should contact your local SSA office (who are making this payment) or at 1-800-772-1213 (toll-free) and not the IRS.
The $250 payment will be delivered in the same way your current Social Security or SSI benefit is sent. If we deliver your monthly benefit by check, we will deliver your one-time payment by check. If you receive a monthly direct deposit or Direct Express debit card payment, that is how you will receive your one-time payment.
There is talk of another $250 payment in 2010 to make up for the lack of a COLA increase. See this article – “An Extra $250 Social Security Stimulus Payment in 2010 for Retirees, Veterans and the Disabled ” for more on this.
$8000 versus $7500 First Home Buyer Tax Credit [Extended into 2010]
The new home buyer credit has been extended into 2010 with new income limits and a $6500 credit for qualifying existing home owners. See this post – 2010 $8,000 First-Time Home buyer Tax Credit Extension Approved and Expanded with $6,500 For Existing Home Owners” – for more information on the extension.
This tax credit has generated the most confusion because of the fact a home buyer credit of $7,500 was also passed last year under the Bush administration, versus the improved and more favorable $8,000 credit approved under 2009 economic stimulus package. You can read the details and differences, plus the over 200 comments/questions at this detailed post. But here are the key dates and deadlines for the home buyer credit:
~ Taxpayers who qualify for the first-time home buyer credit and purchase a home this year before Dec. 1 have a special option (via form 5405) available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers who buy a home this year before April 2010 can get up to $8,000, or $4,000 for married filing separately.
~ They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date.
~ The new stimulus payment is not available to people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax y
This amendment in the stimulus package provides tax breaks for the purchase of new cars, light trucks, motor homes and motorcycles by providing a federal-income-tax deduction on local sales and excise taxes. It is applicable to any new vehicle purchased after February 17th 2009, until the end of the year (December 31st, 2009). The deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle
Any purchases made outside of the qualifying period are not eligible for the credit. See more in this detailed post.
Sources : IRS and SSA