The Stimulus Plan in Plain English

Are you finding it difficult to make heads or tails of all this Stimulus Plan talk? Here is a simple explanation of what it means to you.

More Money in Your Paycheck

There has been a reduction in the amount withheld from your paycheck for Federal income taxes.

Individuals: $400/year if Adjusted Gross Income (AGI) is less than $75,000
Couples: $800/year if Adjusted Gross Income is less than $150,000
On average this amounts to about $13 additional in your paycheck each week.

Retiree Benefits

Do you collect...

Social Security?
Supplemental Security Income?
Veterans Disability?
Retirement Benefits?

You may qualify to receive an extra $250 check this summer.
Go to -http://www.socialsecurity.gov/payment


AMT Tax (Alternative Minimum Tax)

What exactly is the AMT? Click here for a detailed explanation http://www.fairmark.com/amt/amt101.htm

$500 increase in AMT exemptions for individuals with income less than $46,700 and $1,000 increase in AMT exemptions for couples with income less than $70,950.

With this change 26 million Americans won’t have to pay an AMT Tax this year!

New Vehicle Purchases

Car
Light Truck
Motor Cycle
Motor Home

Spend up to $49,500 and you can deduct State and Local Sales Taxes which in most states is 6% of the purchase price.

Who qualifies?
- Individuals who earn less than $125,000
- Couples who earn less than $250,000

You will qualify for the deduction whether you itemize or not.

(Okay, I’ve posted this for information’s sake, but the best way to buy a car for personal or business use is to buy used and pay cash)

Home Buyers

$8,000 credit for first time home buyers who purchase a home between January 1, 2009 and November 30, 2009.

Stipulations:
- The home must be your primary residence
- You must stay in the home 3 years
- If you fail to meet these requirements you will have to repay the money.

Did you buy a home between April 8, 2008 and December 31, 2008?

You may be able to qualify for 2008 earlier version of this credit. The 2008 credit maxes out at $7,500, however, and you have to repay the credit over 15 years - even if you stay in the home three or more years.
Check out this link for more info: http://www.federalhousingtaxcredit.com/home.html

Energy Efficient Home Improvements

Are you buying new windows this year or home insulation? The credit for energy efficient home improvements has been raised from $500 to $1,500.

The improvements include everything from new windows or water heater to a new central air-conditioning system for your home.

College Tuition

The Hope Credit: Increased to $2,500 (was $1,800)
Income Restrictions:
- Single: $80,000
- Couples: $160,000

The 529 College Savings Plan: The money in these accounts can now be used to purchase PCs/Laptops or Internet Access for students.

Unemployed?

If you were laid off between September 1, 2008 and December 31, 2009 and remain on your previous employer’s health insurance (COBRA benefits) – you will receive a 65% discount
on the premium for up to 9 months.

You also don’t have to pay taxes on the first $2,400 of unemployment benefits

Information on the 2008 Stimulus Payment:
If you didn’t file for the Economic Stimulus Payment for 2008 it may not be too late!

http://www.irs.gov/newsroom/article/0,,id=177937,00.html

Contact Dorethia:

www.connercoaching.com

800.962.2491

Homeownership...The American Dream? Not so fast...

A few weeks ago someone sent me an email advertising a mortgage for low income people available through the funds from the new stimulus package. The email stated that you only had to have an annual income of around $24,000 to qualify to buy your very own home!


Yes, only to wish you hadn't!! Why are we pushing low income people to buy a home? Even people with high incomes who also have high amounts of debt and poor spending habits should steer clear of home ownership.


It seems as if we haven't learned anything from the mortgage and economic meltdown. Because if we had we would be saying 'Hey, there's more to home ownership than simply paying the monthly note'.


Things like maintenance, repairs, taxes, and insurance. Not to mention your housing costs, whether it is rent/or mortgage, should not exceed 28 - 35% of your 'take home' pay. Some calculate gross pay, that's not realistic and 35% is on the high side, you still need to be able to save for life's incidentals...


I say rent, I don't care if it's you and 6 kids, cram into an apartment you can afford until your income goes up and you can buy a home on solid footing. Being uncomfortable is a lot better than being MISERABLE because you've bought a home you are struggling to pay the monthly expenses for! Ask the folks on either end of the income spectrum. We've all seen that regardless of how much money you make, if you over-extend yourself, you're still BROKE at the end of the day.


So don't let the ad campaigns get you again people. Do the math and make sure that home ownership fits in your budget - with room still left for saving. Make sure you can devote the TIME to caring for a house and don't be so caught up on 'owning a home'. As we can all see, the 'American Dream' has been uprooted....Create your own dream... hopefully it will include educating yourself and your family on effective money management as well as debt free living! - Dorethia

Use your tax return to invest in yourself!
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