McCaskill: Stimulus Tax Breaks Will Save Missourians Money When They File This Year

As the 2009 tax season comes to an end, U.S. Senator Claire McCaskill wants Missouri families and businesses to know about all the ways the American Reinvestment and Recovery Act will continue to put a little extra cash in their pockets over the coming months and during next year’s tax season. Approximately 40 percent of recovery spending was in the form of tax relief.

During these tough economic times, Missourians are eager to keep more money in their pocket. That’s why McCaskill wants Missourians to know how the stimulus bill can benefit them as they file their taxes this year, with new tax breaks available for everything from buying a new home or car to sending a child to college.

The recovery plan provides a number of tax breaks that Missourians can take advantage of on their 2009 taxes, including:

• First-Time Homebuyer Credit: People who purchased their first home after December 31, 2009 and before May 1, 2010 are eligible to receive an $8,000 tax credit. “Long-time” residents (those who have lived in the same property for five of the past eight years) may qualify for a credit of $6,500 for purchases of a new principal residence made after November 6, 2009 and before May 1, 2010. People who purchase a home between January 1, 2010 and April 30 of 2010 may claim the tax credit on their 2009 or 2010 tax returns.

• Sales Tax Deduction for New Vehicles: Taxpayers who purchased a new car, light truck, recreational vehicle or motorcycle in 2009 can deduct state and local sales and excise taxes paid on the new purchase.

• ‘American Opportunity Credit’: Taxpayers who paid tuition in 2009 are eligible to receive a tax credit of up to $2,500 for the cost of tuition and related expenses. This credit is also available in 2010.

• Suspension of taxes on the first $2,400 in unemployment benefits: Taxpayers who received unemployment benefits in 2009 will not be taxed on the first $2,400 of those benefits.

Increased tax credit for improving energy efficiency of homes: Homeowners who improved the energy efficiency of their homes in 2009 can receive up to $1,500 or 30 percent of expenditures from the improvements.

Protects 26 million taxpayers from being hit by the Alternative Minimum Tax: 308,000 Missourians were protected from a tax hike in 2009 through the Alternative Minimum Tax.

Missouri businesses are benefiting from the following tax credits:

Extended bonus depreciation: Companies that made capital investments during 2009 are able to write-off the value of those investments more quickly by permitting those companies to immediately write-off fifty percent of the cost of depreciable property.

Extended small business expensing: Small businesses can write-off capital investments of up to $250,000 made in 2009.

Net Operating Loss “carry back”: Under normal circumstances, companies that lose money are entitled to tax refunds on any profits made in the previous two years. Under the ARRA and subsequent legislation, businesses can elect to carry back losses in either 2008 or 2009 for five years, allowing them to receive a larger refund.

Capital gains tax breaks: To incentivize people to invest in small companies, individuals who invested in small businesses in 2009 are eligible for an increased capital gains tax break. The tax break is also available for investments made in 2010.

For more information on recovery tax credits click here.