Be sure to contact us for updated information and specific advice on any transaction
you are considering.

The American Recovery and Reinvestment Tax Act of 2009 (ARRA), was signed into
law on February 17, 2009. It  provides a measure of federal tax relief to most
individuals. Highlights of the new law include:

Making Work Pay Credit
Maximum $800 credit for MFJ ($400 for single). Credit is refundable which means
the unused amount can still be received even if the tax liability is not enough to cover
the full amount. Most taxpayers have already seen this credit in slightly higher
paychecks since the Act was signed so there will be no additional credit on the 2009
tax return.

First Time Home Buyers
Purchases of a primary residence prior to December 31, 2009 for a "first-time"
home buyer will qualify for a 10% tax credit on the first $80,000 of purchase price.
The taxpayer must not have owned a US residence in the last three years. The credit
phases out at AGI's of $150,000-$170,000 for Married Filing Jointly and
$75,000-$95,000 for Single filers. Unlike 2008 purchases, the credit does not have
to be repaid as long as the home is owned for three years after purchase.

Sales Tax Deduction for New Vehicles
Purchases of new cars between February 16, 2009 and January 1, 2010 qualify for a
deduction of the sales tax paid on the vehicle even if the taxpayer doesn't itemize.   
Itemizers who deduct the state income tax in lieu of the state sales tax also get a
separate deduction for auto sales tax. The maximum deduction is sales tax on the
first $49,500 of vehicle cost.

Tax Credit for College Tuition
The previous Hope credit has been modified for 2009 and 2010 and renamed the
American Opportunity Tax Credit. The credit is increased to a maximum $2,500 and
phases out for modified AGI's between $80,000 and $90,000 ($160,000 and
$180,000 for MFJ) It is now available for the first four years of secondary education
as opposed to the first two years, as previously. 40% of the credit is now refundable
There are also special rules for students attending a secondary institution in a
Midwestern disaster area.

Energy Tax Credits
For 2009 and 2010 taxpayers can again take a credit for energy efficient
improvements to existing property. The credit has increased to 30% of the product
cost (not installation) of qualifying products purchased between January 1, 2009 and
December 31, 2010. The maximum credit is $1,500 during 2009 and 2010.
Qualified products include windows, doors and skylights.
American Recovery & Reinvestment Act of 2009
Naperville, IL 60565 - phone: 630-305-9130
email: -
Hilton & Chapman, Ltd.
Certified Public Accountants

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