How the Economic Stimulus May Affect Your Wallet

The final decision to be made on the stimulus package is drawing closer. Members of the Senate and the House are meeting this week to draw up a final version of  the bill based on the Senate’s revised version submitted last week. Because the bill has evolved greatly since it was first introduced in the House a few weeks ago, I thought it would be beneficial to review the parts of the most current version of the stimulus that will most greatly affect the average American citizen.

You, Me and the Economic Stimulus

Work Pay Credit- a $500 credit per worker and $1,000 credit for each dual-earner couple. Eligible workers are those making less than $70,00o/year (or $140,000 for a dual-earner couple).

Non-worker Payments- a one time $300 payment for retired seniors as well as disabled veterans who don’t work.

High-income family credit-  a one year reprieve from paying the Alternative Minimum Tax (AMT) for middle to upper-middle income families. (The AMT was intended originally for high-income tax payers but is now threatening middle-income  taxpayers)

Car Buying Credit-A temporary credit where new car buyers in 2009 may be able to deduct the interest they pay on their car loan as well as the sales tax from the original purchase. Eligible car owners will be those that earn less than $125,000/year.

Home Buyers Credit- A temporary home buyers credit worth up to $15,000 for homeowners who purchase a new home in 2009. Unlike the current home-buyers credit this one does not need to be paid back.

College Credit- the bill introduces the American opportunity Tax Credit, a $2500 credit for higher education expenses to those making less than $80,000.

Amping up Pell Grants- an increase in the maximum Pell Grant amount awarded by $281 in the 2009-2010 academic year.

Child Care- the bill increases who is eligible for the child care tax credit by lowering the income threshold that must be met to $8,100 so that more lower income families can claim the credit.

Earned income tax credit- the existing credit will be temporarily  increased from 40% to 45% of qualifying earning for low-income families with three or more children.

Direct Lifeline Benefits

Health Insurance for the Jobless- the bill provides help for jobless Americans who need health insurance. When a worker is laid off, Cobra health insurance allows newly laid off workers to keep their health insurance  for a period of time if the accept full payment of premiums. This bill may provide up to 50% of premiums for a year for unemployed Americans.

Unemployment Benefits- an additional 20 weeks of unemployment benefits and 13 weeks on top of that if the unemployed worker lives in a state of high unemployment.  Weekly unemployment benefits will also increase by $25/week. Also, the first $2,400 benefits would be exempt from federal income taxes.

Food Stamps- Food stamp payments would be increased by 12 percent- a possible additional $71 on top of the $588/month that families may currently receive.