Stimulus Tax Relief
The six-month-old plan includes $288 billion of tax relief, and Treasury has made $62.5 billion of that available so far in the form of credits, payments and incentives to individuals and businesses. President Obama signed The American Recovery and Reinvestment Act of 2009 on Feb. 17, 2009. The act is the tax portion of the $789 billion stimulus package that has been so hotly debated in Congress and the news in recent weeks. Previously, Treasury has only provided a monthly total but the detailed figures show that most of the spending is on track. The vast majority of tax relief is going to individuals, with the biggest chunk steadily appearing in workers’ paychecks. But economists are divided about just how stimulating the tax relief has been.
What It Means to You
The Stimulus Package will initially raise the deficit, which is an increased bill to taxpayers. Eventually, the tax credit will stimulate the economy. This will result in higher tax revenues. In a few years this will reduce the deficit. If the government did not spend now to stimulate the economy, the recession would cause government tax revenues to fall much further than $400 billion. Essentially, the government is doing the right thing to avoid a global depression.
In order to be successful, the stimulus bill should extend the 2001 and 2003 tax cuts and should reduce taxes for individuals, corporations, and small businesses. Doing so would increase employment and family income, shorten the recession, and speed economic recovery. All families and businesses would benefit from these policy changes, seeing an immediate but modest increase in income in 2009. As a result of these policies, however, families could expect their incomes to increase by an average of more than $4,500 and their taxes to decrease by three percentage points in 2013.
Unlike last year’s stimulus program that produced separate payments, the majority of eligible taxpayers will see the new Making Work Pay credit show up incrementally in their paychecks. As the name indicates, the credit is a version of an Obama campaign plank that seeks to help workers recover some of the payroll taxes drawn from their wages.
The 2009 stimulus package is dependent on many things, especially if you received a stimulus check in 2008. If you did, you must know the exact amount that you received and make sure that you received all that you were entitled to. Have your life circumstances changed in any way? (For example, have you added a new baby to your family?) And, you must remember that your filing status determines the amount you will be allowed. Other conditions that affect your chances of getting stimulus tax relief for 2009 are: Were you claimed on someone else’s tax return last year and are planning to claim yourself in 2009? Did you obtain a valid social security number in 2009? If you are qualified, then your chances are excellent of receiving some type of tax relief as a direct result of the President’s stimulus package.