Today, Rep. Grace Napolitano urged Californians to take advantage of the 25 different tax cuts in the Recovery Act, part of the more than $800 billion in tax cuts for working families and small businesses that Congress passed since last year. The Recovery Act included tax cuts for 95% percent of Americans, the largest individual piece of the act and one of the largest tax cuts in history. The act passed in February of 2009, but most of the cuts will only go into effect on tax day tomorrow.
"These are the right kind of tax cuts, where the money goes where it is needed most," Napolitano said. "With working families and small businesses able to take home more on tax day, there will be more money available to deal with hard times and encourage businesses to start hiring again."
Taxpayers in the 38th District and across the country can claim benefits on their 2009 tax returns, including:
* The Making Work Pay tax credit -- Ninety-five percent of working families are already receiving the Recovery Act's Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their 2009 paychecks -- and will continue to see these benefits in 2010. In California's 38th Congressional District, an estimated 230,000 families will benefit from the Making Work Pay tax credit, according to an analysis conducted by the Committee on Ways of Means.
* Tax credits for college expenses -- Families and students are eligible for up to $2,500 in tax savings under the American Opportunity Credit as well as enhanced benefits under 529 college savings plans, which helps families and students pay for college expenses.
* Expanded family tax credits -- Moderate income families with children may be eligible for an increase in the Earned Income Tax Credit and the additional Child Tax Credit.
* Tax-free unemployment benefits -- Thanks to the Recovery Act, individuals who received unemployment insurance in 2009 do not have to pay taxes on the first $2,400 of such earnings.
* The First Time Homebuyers tax credit -- First time homebuyers can get a credit of up to $8,000 for homes purchased by April 30, 2010 under the First Time Homebuyer tax credit. An estimated 199,092 households in California have already taken advantage of the First Time Homebuyers tax credit, according to the IRS.
* Tax credits for energy efficient renovations -- Taxpayers are eligible for up to $1,500 in tax credits for making energy-efficient improvements to their homes, such as adding insulation and installing energy efficient windows.
* The vehicle sales tax deduction -- 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.
Those filing their taxes can use an online tax calculator to see what tax cuts they qualify for by visiting www.whitehouse.gov/recovery/tax-saving-tool.
"The economy is still suffering, but the Recovery Act is working, if slower than hoped for," Napolitano said. "We have already seen an increase in funding for construction projects and local schools throughout the year. Now on tax day, millions of Californians will have more money in their pockets to pay their bills, help put their kids through college, and give a needed boost to our economy."