What to expect this year, next year


The $787 billion stimulus package, signed by President Barack Obama, includes tax benefits and spending increases that will directly benefit many Americans.

Reduction in income tax: The IRS is updating withholding tables to incorporate the Making Work Pay tax credit of $400 for singles and $800 for couples. When employers receive the new tables, the changes will be made.

First time homebuyer tax credit: Singles with income of up to $75,000 and couples earning up to $150,000 who buy their first home (or who haven't owned a home in the last three years) can claim a tax credit of up to $8,000, or $4,000 for singles, which does not have to be paid back. The home must be bought between January 1 and December 1 (not December 31) of 2009.

This is an "above the line" tax credit, which means you don't have to itemize taxes to get it.

New car tax credit in 2009: Individual taxpayers who earn up to $125,000 in 2009 ($250,000 for couples) will be able to deduct state taxes, local sales taxes and excise taxes paid for the purchase of any new car, light truck, recreational vehicle or motorcycle priced at up to $49,500. This is also an "above the line" tax credit.

New car tax credit in 2010 and 2011:Taxpayers can claim a tax credit of up to $2,500 for the purchase of a plug-in hybrid until manufacturers sell more than 200,000 of them. The credit starts at $417.

One-time check for Social Security, Supplemental Security Income, railroad retirement benefits and veterans disability compensation: $250 checks are scheduled to be mailed in June 2009.

For the unemployed

Unemployment benefits: Beginning on March 2, unemployment benefits increased by $25. For 2009, the stimulus plan exempts the first $2,400 of unemployment benefits from federal income taxes.

Job training funds: The stimulus increases money states get for job training. To find a local job training program, visit www.servicelocator.org.

COBRA assistance: Those who lost jobs between September 1, 2008 and February 17, 2009 will have government assistance to pay for 65 percent of COBRA healthcare coverage.

Food stamps: Beginning in April, qualified recipients will get an additional $20 to $24 in stamps each month.


Pell Grants: The recovery bill increases the maximum Pell Grant, funds for low-income undergraduates and certain post-graduate college students, by $500 for two years starting July 1. Maximum grant for 2009 will be $5,350. It will be $5,500 in 2010.

Higher education tax credit. The new $2,500 annual tax credit can be claimed on tax returns filed in 2010 and 2011.

529 plans and computer expense: Money withdrawn from a 529 college savings plan is taxable if not used for a qualifying expense. Under the stimulus plan, computer-related expenses are allowable.


World's most favored Investment: U.S. Treasuries

Treasuries are still the world's go-to investment. In most recent months, the inflow of foreign capital has been more than the U.S. trade deficit. In November, it was more than $15 billion more.

While some foreign investors are selling long-term Treasuries, the February Treasuries sale was remarkably successful. It drew such foreign investors as the director of the China Banking Regulatory Commission. Japan is the No. 2 holder of U.S. Treasuries.

For American individuals and organizations, U.S. Treasuries are a highly favored investment.

Looking for roommates

With the tight economy, some homeowners and renters are looking for ways to split the bills.

Housing experts for ad agency Ogilvy & Mather say they saw similar housing arrangements during the recession of the early 1990s. This time, people owe more on their mortgages, so it's happening more often. In California, a master bedroom and bath can cost a roommate $650 a month.

Some people put an ad for a roommate on Craigslist, where roommate postings nationally increased 70 percent, to 476,045 in January 2009.

Builder offering low-low mortgage interest rate

Builder Toll Brothers is offering a 3.99 percent fixed rate mortgage for 30 years, one of the lowest ever.

Based in Horsham, Pa., the company says the deal is for loans of $417,000 or less and carries no points for the buyer.

Interest rates for qualified buyers have plunged in recent weeks. For the week ended January 15, the 30-year fixed rate mortgage fell to an average of 4.96 percent with an average 0.7 point charge, according to Freddie Mac. The rate is the lowest since Freddie Mac began its survey in 1971.


If insuring your home is taking a bigger bite out of your wallet each year, here are some ways to ease the pain.

  • Increase the deductible from $500 to $1,000 for a 20 percent premium deduction.

  • Combining auto and home policies could save you up to $300 a year.

According to Money magazine, if your premium is $2,000 a year, you could save:

  • Up to $400 by installing a central station burglar and fire alarm.

  • $300 by updating the plumbing, electrical and heating systems.

  • $200 by installing hurricane shutters or roof tie-downs.

  • $200 for deadbolt locks.

Owning a new home can result in a discount of up to $400. The discount decreases with age.



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