New plan will put money in pockets
As residents of Pike County buckle down for tax season, the federal government has a plan that will put money back into citizen’s pockets, but not until next year.
President Obama’s new stimulus plan includes several individual tax cuts and credits to help stimulate the economy and put confidence back into the hearts of American consumers.
Jack Rainey, a tax specialist at H&R Block, outlined some specific cuts and credits that he said would affect the citizens of Pike County.
“One of the credits will be a ‘making work pay credit.’ This will be a refundable credit of up to $400 for single people and up to $800 for married couples,” Rainey said. “Basically, we are going to be getting more money back from our taxes. Either an employer can change your withholdings, giving you a little bit back in each check, or the government will give you a tax cut, meaning you don’t have to pay as much in next year’s taxes.”
Rainey said that the economic recovery payment provision and the unemployment compensation provision will help Pike County residents.
“The economic recovery payment will be a $250 one-time payment for individuals who receive Social Security, Tier 1 railroad retirement benefits, SSI, or VA pension of disability benefits,” Rainey said. “The unemployment compensation will add an additional $25 a week to unemployment payments and it will allow an exclusion from tax on the first $2,400 or unemployment benefits.”
Larger families will be able to claim three of their children for an increased tax credit next year, and Rainey said that the first-time homebuyer credit provision has a great deal of potential to help Pike County residents buy their first home.
“As long as you are a first time homebuyer, it doesn’t matter if you are buying a new house, an old house, a mobile home, or an apartment. The government will give you up to an $8000 refundable tax credit, meaning that you will get that money back in your hand when you get your refund,” Rainey said. “It’s basically a gift. The credit will come after you buy your house and 10 percent of the purchase price of the house, up to $8,000, will just be handed back to you.”
New homeowners would have to live in the house for three years in order to be sure to keep all of the money received from the refund.
Rainey said that the new stimulus plan should help stimulate the economy for a while, although he doesn’t know whether it should be considered a long term fix.
“Although I can’t say whether or not I think this is a long term solution, or even if it’s the best plan in the long run, these tax credits and cuts will help us put money back into the economy,” Rainey said. “Any money going into the economy will stimulate it, thus helping with housing, car sales, and helping on an individual level.”