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On February 17, President Obama signed into law the “American Recovery and Reinvestment Act of 2009” (the 2009 Economic Stimulus Act). This new legislation was passed to aid our ailing economy and includes a wide variety of tax provisions, many of which will affect both individuals and small businesses. Included below are highlights of the more prominent provisions. Please call our office for details on how the new changes may affect you. INDIVIDUAL PROVISIONS Plug-In Electric Vehicle Credit - For vehicles bought after February 17, 2009 and before January 1, 2012, the Recovery Act creates a new 10% nonrefundable personal credit for low-speed vehicles, motorcycles, and three-wheeled vehicles that meet the criteria of a qualified plug-in electric drive motor vehicle. The maximum credit for these vehicles is $2,500. If the vehicle is also used in business, the business portion of the credit is treated as a general business credit. Four-wheel vehicles purchased after January 1, 2009 also qualify for this credit based on a law passed in 2008. There are additional qualifications, so please call for further details. Unemployment – Partially Tax-Free – Although some states don’t tax unemployment compensation, it is taxable income for Federal purposes. Under the new law and for 2009 only, there is no federal income tax on the first $2,400 of unemployment benefits. However, the balance is taxable. The benefit of this provision depends upon your tax bracket. For example, if you are in the 15% tax bracket, this will save you up to $360 in taxes. AMT Patched Again – For yet another year, Congress has applied a patch to the alternative minimum tax (AMT) to prevent middle-income taxpayers from getting hit by a punitive tax that was originally enacted to counter tax shelters of the wealthy. • AMT Exemption Amount Increased - The AMT exemptions have been increased for 2009 to: $70,950 for married individuals filing jointly, $46,700 for unmarried individuals, and $35,475 for married individuals filing separately. The AMT phase-out rules remain unchanged. • AMT Relief for Nonrefundable Personal Credits - Nonrefundable personal credits will offset the AMT for 2009. Those credits include the dependent care credit, elderly and disabled credit, education credits, adoption credit, child tax credit, mortgage credit, saver’s credit, certain residential, home energy credits, first-time homebuyer credit, and plug-in electric vehicle credit. One-Time Payment to Retirees - Retirees, disabled individuals and Social Security beneficiaries and SSI recipients receiving benefits from the Social Security Administration or Railroad Retirement Board , and disabled veterans receiving benefits from the U.S. Department of Veterans' Affairs will receive a one-time payment of $250 in 2009. The one-time payment will reduce any allowable Making Work Pay credit. Thus, taxpayers receiving any of the benefits mentioned above who are working will be required to reduce any otherwise allowable Making Work Pay credit by the $250 one-time payment. At press time, no date was specified for release of the payments, although the new law specifies payments be made within 120 days of enactment.

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