First 100 days of Obama: Stimulus plan includes tax breaks for many people

Whether the multibillion-dollar economic stimulus plan will actually jump-start the nation's ailing economy is uncertain.

But one thing is for sure: The plan has real perks for many American families -- some worth hundreds of dollars, some worth thousands. Of course, some families will benefit little, if at all.

For more information on the incentives, go to www.irs.gov and click on "Update on Recovery Tax Provisions for Individuals and Businesses."

Break for home buyers » Buy a home before Dec. 1 and you could get as much as $8,000.

The money is a tax credit that does not have to be repaid if the home remains your primary residence for at least three years. Although it is touted as an incentive for first-time buyers, those who have owned homes in the past may qualify, as well.

The IRS defines a first-time buyer as someone who has not owned a home in the three years prior to the date he or she closes on a home this year.

The free money is available only to those who have purchased after Jan. 1. Buyers who purchased between April 8 and Dec. 31, 2008, are eligible for an incentive worth as much as $7,500, but that must be repaid.

The credit is reduced or eliminated for higher-income taxpayers. It begins to be phased out for single filers with modified adjusted gross incomes of more than $75,000. Those earning more than $95,000 don't qualify.

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For married couples filing jointly, the credit begins to be phased out at incomes of more than $150,000; those earning more than $170,000 don't qualify.

Incentive for car buyers » Purchase a new car, light truck, motor home or motorcycle and you may be entitled to deduct the taxes you paid on next year's tax return.

Taxes on up to $49,500 of the purchase price may be deducted if you bought after Feb. 16 and before Jan. 1, 2010.

Unlike the homebuyer tax credit, which reduces your tax liability dollar for dollar, this deduction simply reduces your taxable income. So, its value depends on your tax bracket.

The amount of this deduction also is phased out for higher-income taxpayers. Don't itemize? That doesn't matter -- you can still take this deduction.

In addition to the $8,000 federal incentive, Utah is offering $6,000 grants to homebuyers. Unlike the federal money, the state incentive is available only for those who buy new homes, and it's limited to the first 1,600 home buyers. About 1,100 grants are still available. For information, go to www.utahhousingcorp.org.

More money in worker paychecks » Most taxpayers qualify for a tax credit of up to $400 this year and next -- $800 for married couples filing jointly.

But taxpayers won't have to wait until they file their returns before they get their money. This benefit is being coordinated with employers, who are delivering the incentive by withholding less money from paychecks -- to the tune of about $45 to $65 more per month for some people.

The credit, based on 6.2 percent of earned income, phases out for higher-income taxpayers.

To compensate for the reduced amount being withheld, employees will take a tax credit when filing 2009 and 2010 returns. So, even though less money is being taken out of paychecks, employees won't owe more in taxes or get less of a refund.

More benefits for the unemployed » Weekly unemployment benefits have been increased by $25 per week, and workers who exhaust 26 weeks of unemployment benefits may be eligible for 20 additional weeks.

Even better, the first $2,400 of unemployment benefits a person receives in 2009 is tax free. Additionally, many laid-off workers are eligible for a new 65 percent subsidy that helps cover much of the high cost of continuing health insurance coverage under the federal COBRA program.

The subsidy is available for up to nine months. You must have been laid off between Sept. 1, 2008, and Dec. 31 of this year to qualify. For information, call your former employer's human resources department or contact the Utah Department of Insurance at www.insurance.utah.gov or by calling (801) 538-3077.

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