Everyone is wondering what effect the American Recovery and Reinvestment Act of 2009 – otherwise known as the stimulus package – will have on their own lives.
We’ve heard that some folks on social security and/or disability will receive checks for $250 each – but haven’t heard when that will happen, or exactly who will be eligible.
We also heard that “everyone” will get a $400 tax credit – whether they owe any tax or not. Now we’ve found a few more details. “Everyone” only refers to those taxpayers earning under $75,000 per year – or couples earning under $150,000. Those earning more may get a small credit.
Most expected that this would show up as a tax credit at year end, but now the plan is to put it into paychecks throughout the year. New tax tables will be mailed to millions of employers in mid-March, resulting in about $13 per week more in eligible workers’ take-home pay.
Self-employed individuals who pay quarterly estimates are reminded to take the credit into consideration when depositing their taxes.
Other breaks apply to those citizens who have good credit and some money in the bank.
For instance, $2.3 billion is earmarked for encouraging you to buy a new car. If you buy a new domestic or foreign car by December 31, and pay $49,500 or less for that car, you can deduct the sales tax you paid at the time of purchase.
That is, you can if your earnings are $125,000 or less ($250,000 for couples.)
This deduction will be “above the line,” which means you can take it even if you don’t itemize deductions. If you purchased a $40,000 vehicle and paid 6% sales tax, your deduction would be $2,400. But remember, this is a deduction, not a credit. It reduces your taxable income, so the actual savings will be dependent upon your tax bracket.
U.S. car sales were down 37% in January compared to January 2007, and lawmakers are hoping this extra incentive will push consumers to new car lots.
This deduction might not be enough to convince you to buy a new car in this troubled economy, but car manufacturers are doing their part to convince you as well. As long as your credit is good, you can get extremely low interest – especially if you choose one of their less popular models.
If this does get you dreaming of a new car, be sure to check your credit scores before you go out to shop. If they’re a bit low, work on improving them before you buy. (You do have until the end of the year, remember.) Your credit scores can and will make the difference between paying a lot and paying a little when it comes to interest.
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
Yea if you have bad credit, interest rate will eat you up when you buy a new car.