For laws affecting homeowners for 2009, see
American Housing Rescue and Foreclosure Prevention Act of 2008.

For the latest extension of that law, see the updates with
AARA and the Worker, Homeownership, and Business Assistance Act of 2009.

This new credit for 2009 and 2010 is $400 ($800 MFJ). It will be calculated on the tax return, but instead of having to wait to enjoy its benefit, employers are required to adjust taxpayers' withholding to account for the amount. You should have started seeing a bit more in your paycheck in April 2009. So upon filing your tax return, for example, $400 less withholding for the year is offset with the credit, so your final tax result (refund/balance due) would be the same under identical circumstances.

Recepients of social security, SSI, RR, VA disability, will receive a separate $250 (for 2009 only), which will reduce the credit when filing the tax return. Certain government retirees receiving pensions will need to file a return to get the $250 credit.

The problem that may occur will be for these retirees who are still working or those who have more than one job; they will have realized too much in lower withholding, and therefore a larger discrepancy between total withholding and their tax liability.

If you are self-employed, let's say making the same income and same estimated payments, you could simply decrease your payments by the credit amount, all else being the same.

The Making Work Pay Credit is based on earned income and is reduced by 2% of modified adjusted gross income exceeding $75,000 ($150,000 MFJ), and is not available to dependents, nonresident aliens, estates and trusts.

Now the additional child tax credit (the refundable portion) will be 15% of earned income in excess of $3,000 rather than $8,500.

What it means: More lower-income eligible taxpayers will receive the refundable portion.

The income phaseouts have temporarily increased and EIC will be based on up to three qualifying children.

For 2009 and 2010 the Hope Credit will cover all four years of higher education rather than the first two, and the credit based on 100% of the first $2,000 of expenses and 25% of the next $2,000 expenses, good for up to $2,500 (an increase of $700).

Books are now qualified expenses with the tuition and fees. And now, 40% of the unused credit due to no tax liability can be refundable. AGI phaseout will be between $80,000-$90,000 ($160,000-$180,000), a welcomed increase from the lower phaseout in previous years.

For 2009, the first $2,400 of benefits are not taxable.

Taxpayers can deduct sales tax assessed on the purchase price (up to $49,500) of a new vehicle between February 17 through the end of the year. AGI phaseout for this deduction, which can be made without having to itemize, is $125,000-$135,000 ($250,000-$260,000 MFJ).

Computers and internet accesss are now qualified expenses for the purpose of excluding distributions from tax.

Yes, the credit for getting insulated windows, doors, insulation, had expired for 2008, but is renewed for 2009 and 2010. The $500 lifetime limit and specific limits for property types have been replaced by an aggregate $1,500 maximum, and the credit percentage has increased from 10% to 30%. This is the 'Nonbusiness Energy Property Credit'.

The Residential Energy Efficient Property Credit (who named these!!!) pertaining to a 30% credit on solar property no longer has a $2,000 credit limit.