The Stimulus bill which will soon pass Congress is one of the largest spending bills ever. It’s pork, pure and simple, with a veneer of stimulus. But forget the veneer, it appears to me to just be spend, spend, spend.
That said, there are a few tax proposals buried in its 1400+ pages. Let’s look at them:
1. Joe Kristan noted that estimated payments for “small business owners” for 2009 only are reduced from 100%/110% of 2008 taxes (under the Safe Harbor method) to 90%/100%. To qualify under this provision an individuals Adjusted Gross Income (AGI) must be under $500,000. As Joe noted, it’s up to the IRS to define what a small business is. Perhaps the IRS will do this before it’s time to file 2009 tax returns.
2. The AMT patch is contained within the stimulus bill. This is a good thing as otherwise it would be debated sometime late this year. It would have been better to just eliminate the AMT but there’s always tomorrow’s stimulus bill.
3. There’s a Net Operating Loss carryback provision: NOLs can be carried back up to five years for 2008 if the business’ gross receipts are $15 million or less.
4. The first time homebuyer’s credit is increased to $8,000 for 2009 for eligible purchasers. And for 2009 purchasers (but not those who got this credit in 2008) the credit does not have to be paid back.
5. There’s a deduction for interest and sales tax on new car purchasers. There are weight restrictions (under 8500 pounds) and income restrictions (AGI under $125,000/$250,000 MFJ). The deduction applies to cars, light trucks, motorcycles, and recreational vehicles purchased in 2009.
6. The eligible income floor for the Child Credit has been lowered to $3000 from $8500 for both 2009 and 2010.
7. A new tax credit of up to $2500 for tuition and expenses paid during the tax year. The credit phases-out at an AGI of $80,000 ($160,000 MFJ) and 40% of the credit is refundable.
8. Bonus Depreciation is extended through 2009.
I’m sure there are more tax provisions…especially since no Congressman or Senator has read the bill they’re voting on.
Hat Tips: Roth Tax Updates, NAEA