The New York Times published an article on Monday Feb 16 about what exactly is in the stimulus package. You know, that bill President Obama is signing into law today worth a bezillion dollars, is 1000+ pages and is supposed to pull us out of this economic slump? I’m convinced no one knows what exactly will fix things – not even professional economists. There are 3 jobs that one can have, always be wrong and still get paid: economist, weather forecaster and fortune teller.

Dropping my sarcasm, I will now get to some details of the stimulus package (you’ll have to read it yourself to fully understand it). We did not list all of the points here, by the way.

• Income tax. $400 tax credit for individuals, $800 for married couples.
• Unemployment benefits. You won’t have to pay taxes on the first $2400 you receive. Also, if you were fired or laid off, the government will cover 65% of your COBRA health insurance. If you declined the coverage (it can cost $1000/month), you’ll have two more months to reconsider.
• Social Security. If you receive Social Security, you’ll receive a one-time check for $250, which is classified as a refundable tax credit.
• New Car Purchase. If you buy a new car, light truck, RV or motorcycle, you will be able to deduct state and local taxes, if even you file a 1040 EZ tax return (meaning you don’t itemize deductions).
• Education. Pell Grants will be bumped up $500. Additionally, if you spend $4000 in a single year on higher education, you can deduct $2500.
• Home Buyers. First time home buyers can deduct up to $8000.
• Alternative Minimum Tax. This sword has been hanging over the American tax payer for years, waiting for some kind of fix from Congress. The way the tax is calculated (it’s a dinosaur in IRS tax regulations) AMT would impose pretty steep taxes on people making as little as $30,000. The bill sets this tax aside for another year.
• Child Tax Credit. The $1,000 child tax credit would be extended to more low-income families that don’t make enough money to pay income taxes

Cross your fingers, say a prayer, put good thoughts out in the universe – who knows? Maybe the economy will turn around.

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