Today, U.S. Congressman John Salazar encouraged Colorado residents to take advantage of a new tax tool designed to help Americans receive funds available through the American Recovery and Reinvestment Act stimulus bill. When the Recovery Act was signed into law on February 17, 2009 it immediately cut taxes for 95 percent of all Americans. In addition, the Recovery Act offers tax credits and deductions to help Americans keep more of their tax dollars. Initial figures from The Internal Revenue Service report that due to the significant new tax benefits available under the Recovery Act tax refunds are up nearly 10 percent this year. To help taxpayers see for themselves exactly how they can benefit from Recovery Act tax credits and collect every dollar owed when they file this tax season, the federal government has launched a new interactive Tax Savings Tool available at www.whitehouse.gov/Recovery (click on the "Recovery Act Tax Saving Tool" link).
"Congressman Salazar offered the following statement on this new tax saving tool:
"In addition to being the largest tax cut in our nation's history, the Recovery Act is now using this tax season to increase individual returns so folks will have more money in their pocket. During these tough economic times, Recovery Act tax cuts are helping hard-hit middle class families. This year's tax refund puts more money in hands of families across the country, and gives them incentives to make energy-saving home improvements, purchase a new vehicle or buy a home. I encourage everyone to visit this site to make sure that they are taking advantage of the tax cuts, deductions and credits that came with the stimulus bill."
According to early tax season data from the IRS, the average income tax refund is up more than $260 - a 9.6 percent increase over last year - which is due in large part to the Recovery Act. The average refund through March 12, 2010, is $3,036, which is an increase of $266 compared to the same time a year ago. This is a sign that people are taking advantage of the Recovery Act tax savings this year. However, data shows that less than half of the overall expected returns have been filed. Congressman Salazar wants to make sure that taxpayers are aware of the new Recovery Act benefits they are eligible for this year.
Taxpayers can collect several Recovery Act tax benefits when they file their 2009 tax returns, including:
* Up to $2,500 in College Expenses - Families and students are
eligible for up to $2,500 in tax savings under the American Opportunity Credit <http://www.irs.gov/newsroom/article/0,,id=205674,00.html> as well as enhanced benefits under 529 college savings plans <http://www.irs.gov/newsroom/article/0,,id=213034,00.html> , which help families and students pay for college expenses.
* American Opportunity Credit - More parents and students are eligible for a tax credit of up to $2,500 to pay for college expenses and can claim the credit annually for four years instead of two.
* 529 College Savings Plans - Students can now use a 529 plan to pay for computer technology, adding this to the list of traditional college expenses (tuition, books, etc.) that can be paid for by a 529 plan.
* Up to $8,000 for Purchase of First Home - Homebuyers can get a credit of up to $8,000 for first homes purchased by April 30, 2010 under the First Time Homebuyer tax credit http://www.irs.gov/newsroom/article/0,,id=204671,00.html. Long-time residents who don't qualify as first-time homebuyers and those with incomes of up to $145,000 for an individual and $245,000 for joint filers are also eligible for a reduced credit.
* Up to $1,500 in Energy Efficiency and Renewable Energy Incentives - Taxpayers are eligible for up to $1,500 in tax credits for making some energy-efficiency improvements http://www.irs.gov/newsroom/article/0,,id=206875,00.html to their homes such as adding insulation and installing energy efficient windows.
* Money Back for New Vehicle Purchases - Taxpayers can deduct the state and local sales taxes they paid for new vehicles purchased from Feb. 17, 2009 through Dec. 31, 2009 under the vehicle sales tax deduction http://www.irs.gov/newsroom/article/0,,id=204519,00.html . In states that don't have a sales tax, some other taxes or fees paid <http://www.irs.gov/newsroom/article/0,,id=209624,00.html may be deducted.
* Expanded Family Tax Credits - Moderate income families with children may be eligible for an increase in the Earned Income Tax Credit <http://www.irs.gov/newsroom/article/0,,id=205666,00.html> and the additional Child Tax Credit <http://www.irs.gov/newsroom/article/0,,id=205670,00.html> .
* Earned Income Tax Credit - The Recovery Act increased the credit for families with three or more children, bringing the maximum amount to $5,657.
* Child Tax Credit - More families will be able to take advantage of the child tax credit under the Recovery Act, which reduced the minimum amount of earned income used to calculate the additional child tax credit to $3,000 from $12,550.
* Up to $2,400 in Unemployment Benefits Tax Free in 2009. Unemployment benefits are normally taxable, but the Recovery Act made the first $2,400 of unemployment benefits received in 2009 tax free.
* Making Work Pay - Ninety-five percent of working families are
receiving the Recovery Act's Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their paychecks in 2009 - and will continue to in 2010. Taxpayers whose withholding in2009 did not provide the full amount of the credit they are due will get the additional amount when they file their 2009 tax return. Even though most taxpayers received the benefit of this credit in their paychecks from adjusted tax withholding by their employers, they still need to claim this credit on their tax returns (i.e., Form 1040 or 1040A).