Circular 230 disclosure: The items contained in this text are provided as general information and are not intended to be tax preparation or tax planning advice and should not be used for the purposes of avoidance of penalties. For proper guidance with your specific concern, you should contact a tax professional in good standing.

Making Work Pay Credit 
For tax years beginning in 2009 and 2010, a credit amount of the lesses of 6.2% or $400 ($800 if married filing jointly) will be allowed to eligible individuals, either as a payroll income tax withholding deduction or as a refundable credit on the tax return. This amount corresponds to the Social Security tax withheld for wages up to $6,451.61 ($12,903.22 if married filing jointly). It is phased out through earned income amounts of $75,000 and $95,000 ($150,000 and $190,000 if married filing jointly). Eligibility and income requirements and, offsets due to other payments of the law exist.

Premium Assistance for COBRA Benefits
For those who were terminated (a qualifying event) from September 1, 2008 through December 31, 2009, Government will subsidize Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums at the rate of 65%, through the employer/payer, for up to nine months provided that the beneficiary contributes the other 35%. Many other qualification criteria, and beneficiary’s income limitations apply. Department of Labor and the IRS guidance is not available at this time. Interested and qualified beneficiaries (such as the persons laid-off or terminated) should immediately contact the applicable employer/payer related to the continuation of their COBRA related health insurance premiums.

Economic Recovery Payment to Recipients of Social Security, SSI, Railroad Retirement and Veterans Disability Compensation Benefits 
One-time payment of $250 will be made to retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration, Railroad Retirement beneficiaries, and disabled veterans receiving benefits from the U.S. Department of Veterans Affairs. Other eligibility requirements exist. The amount received may reduce the amount of the “Making Work Pay Credit”. The state and Federal government retirees will also qualify for this payment.

Increase in Earned Income Tax Credit
A new category is established for for families with three or more children. The Recovery Act increases the EITC credit percentage for families with three or more qualifying children to 45% (from the present two or more children and 40%) for 2009 and 2010. This is a new category which did not exist before. The yearly indexing will not be effected.

Refundable Child Credit Eased 
The earned income formula for the determination of the refundable child credit to apply to 15% of earned income in excess of $3,000 for tax years beginning in 2009 and 2010. This will make greater number of taxpayers to qualify for this credit, all or part of which can be refundable.

New American Opportunity Tax Credit (HOPE Credit)
The Hope credit for tax years beginning in 2009 or 2010, which will be referred to as the “New American Opportunity Credit” increased to $2,500 maximum. There is also a refundable portion of the credit not to exceed 40%. Qualification criteria and income limitations apply.

Home Energy Efficient Purchases
The percentage rate for the energy efficient components such as furnaces, water heaters,windows, etc. has been increased to 30% with an aggregate credit cap of $1,500 for those components purchased in 2009 and 2010.

Home Energy System Credit Cap Removed
Beginning in 2009, the dollar cap on home energy systems such as qualified solar water heating property, qualified wind energy property and qualified geothermal heat pumps.

First-Time Home-Buyer Credit
The first time home-buyer credit is increased to $8,000 ($4,000 if married separately) for home purchases between January 1 through December 31, 2009. Further, the credit is a grant and does not have to repaid as it was for the 2008 tax year, unless the home ceases to become the taxpayer’s principal residence within 36 months of purchase. Other conditions and income limits apply apply.

Plug-In Electric Vehicle Credit
For low-speed vehicles, motorcycles, and three-wheeled vehicles that meet the criteria of a qualified plug-in electric drive motor vehicle, purchased after February 17, 2009 and before January 2012, there is a new 10% credit, limited to $2,500. This does not negate the credit allowed for four wheel vehicles purchased after January 1, 2009 based on 2008 law. Other conditions apply.

AMT Yearly Patch
Middle income taxpayers will be helped again for the 2009 tax year with new, slightly higher Alternative Minimum Tax (AMT) exemption amounts. These amounts are:
$46,700 for Unmarried taxpayers
$70,950 for Married taxpayers filing jointly, and
$35,475 for Married taxpayers filing separately.

Further, the following personal credits will offset the AMT for 2009 tax year:
Child and dependent care credit
Credit for elderly or the disabled,
Education credits,
Child tax credit, and
Others such as: adoption credit, mortgage credit, residential energy credits, saver’s credit, first-time home-buyer credit, and plug-in electric vehicle credit.

Computers and Section 529 Education Plans
For tax years 2009 and 2010, “Qualified Education Expenses” will include purchases of computer and and relevant software in addition to the legacy items such as the expenses for tuition, room & board, mandatory fees and books. Certain limitations apply.

Reduced Tax on Unemployed Compensation
For 2009 tax year only, there will be no tax on the for the first $2,400 of unemployment compensation received.

Special Sales Tax Deduction for New Car Purchases
A new above the line deduction is established for the sales tax on qualified new car purchases for those who will not itemize this or other sales tax amount as a deduction. The cost of the vehicle is limited to $49,500 ($24,750 if married filing separately. Other conditions and income limitations apply.

Small Business Stock Capital Gains
75% of the gains are excluded from tax on sale of small business stock (section 1202) issued after the date of enactment (February 17, 2009) and before January 1, 2011, and held for more than five years. There may be other conditions and taxes. The current exclusion percentage is 50%.