"Cash-for-Clunkers" and Other Benefits of the Recovery Act
We've all seen the government assistance going to big companies in the banking, insurance, and automotive industries. It's natural to ask what kind of help is available for the average person. This article outlines just some of the consumer benefits available through the American Recovery and Reinvestment Act (ARRA) and the Car Allowance Rebate System (CARS). The IRS has recently posted a Reminder of Taxpayer Benefits and also has a Recovery Act Information Center. Clicking on the headings below will take you to more specific information about each program.
Cash-for-Clunkers
The Car Allowance Rebate System (CARS) or "cash for clunkers," has just been made available. You should visit www.cars.gov or call the CARS hotline at (866) CAR-7891 to learn the details of this program, but here are the basics. When you purchase or lease a fuel-efficient new car or truck between July 1 and November 1, 2009, the dealer can apply a government credit of either $3500 or $4500 for your qualifying trade-in. This credit will reduce the amont you pay for your new car or truck. You must have a clear title to the trade-in and have proof of insurance for the last 12 months. News & World Report* had a good article explaining the program. Beware -- there is only one official website, www.cars.gov, and you do not have to register for the program. Other websites may provide helpful information, but do not give them your personal information.
First-Time Homebuyer Credit
Taxpayers who purchase their first home this year before Dec. 1 can receive a credit of up to $8,000. This credit phases out at higher income levels, and different rules apply to home purchases made in 2008. IRS provides some answers to questions about the credit.
New Vehicle Purchase Incentive
Qualifying taxpayers can deduct the state and local sales tax paid on new vehicles purchased between Feb. 17 and Dec. 31, 2009. These vehicles can be cars, light trucks, motor homes or motorcycles. One additional advantage is that this deduction is available even if you don't itemize your deductions. Here's more information from Accounting Today*.
Energy-Efficient Home Improvements
The tax credit is increased for homeowners who make qualified energy-efficient improvements to existing homes. The rate is increased to 30 percent of the cost of all improvements up to a total of $1,500. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems. The Energy Star site provides a list of products that qualify for the credit. Renewable energy improvements* also earn credits.
Tax Credit for First Four Years of College
The American Opportunity Credit modifies the existing Hope credit to make it available to a broader range of taxpayers, including those who owe no tax, and the credit is available for four years of college rather than just the first two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
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