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How the 2009 Stimulus Plan will benefit me and my family

Granted the final Congressional votes are still being worked out, but the $789B Stimulus Plan seems to be well on its way to approval. The biggest question on everybody’s mind (including me) is, “when do I get my check?” quickly followed by, “how much am I getting?” It is clear to me that unlike the Bush Stimulus Plan that was enacted in the waning days of his presidency, the Obama plan is focusing on an array of tax credits for individuals and families, as well as a long list of state and federally programs and projects which are designed to create jobs and shore up state agencies that are trying to manage huge deficits.

The short answer to the first question, “will I be getting a check for this Stimulus Plan?” seems to be “not really,” the benefit to American citizens by-in-large seems to be coming in the form of increases to existing tax credits and new tax credit incentives rolled out over the next two years. Unemployed individuals will get a little more money, and Social Security recipients, poor, elderly and veterans receiving disability or pensions will receive one-time checks, although the amounts do not seem to be finalized (*current estimates provided below).

A bipartisan Congressional Budget Office did an analysis of one of the latest versions of the plan and of all the line items, they point out that of all the money earmarked as “direct payments to individuals” are funds being used in the following categories;

• Assistance to unemployed families
• Health insurance
• Health information technology
• Medicaid
• And a large general heading of Tax Provisions (simply described as Tax Credit Payments)

Digging further the Tax Credit Payments have been itemized this way;

Proposed Tax Credit to Individuals: The bill provides a $500 credit per worker and a $1,000 credit per dual-earner couple. The full credit would be paid to people making $70,000 or less ($140,000 per dual-earner couple). It would also be refundable, which means that even very low-income families who don’t make enough to owe income tax would be able to claim it. [*estimated cost: $139.4 billion]

One-time Direct Payment: For seniors who don’t work, disabled veterans and retired railroad workers, the bill provides a one-time $300 payment. [*estimated cost: $17 billion]

Proposed Tax Break for Higher Income Families: A proposed one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax.  [*estimated cost: $70 billion]

Temporary Deduction for Car Buyers: Those who buy a car in 2009 will be able to deduct the interest they pay on their car loan as well as the sales tax charged in the purchase. Ironically, if you notice the ads on TV and in print, most dealerships are offering O% APR. The full deduction would be available to those earning less than $125,000 ($250,000 for joint filers). [*estimated cost: $11 billion]

Temporary Credit for Home Buyers: The bill doubles the size of an existing temporary home buyer credit to $15,000. It also would allow all home buyers to claim it. And it removes the requirement under current law that the credit be paid back. [*estimated cost: $39 billion]

New College Credit: The bill introduces the American Opportunity Tax Credit, a $2,500 credit for higher education expenses. The full credit would be available to those making less than $80,000 ($160,000 for joint filers). [*estimated cost: $10.3 billion]

Pell Grants: The bill increases the maximum Pell Grant by $281 in the 2009-10 academic year and by $400 in the 2010-11 academic year. [*estimated cost: $14 billion]

Unemployment benefits: The bill provides jobless workers with an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what’s deemed a high unemployment state, of which there are about 30 currently. [*estimated cost: $27 billion]

In addition, the weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive. I assume this increase is per check but my sources don’t elaborate. [*estimated cost: $8.8 billion]

Plus, the first $2,400 of benefits in 2009 would be exempt from federal income taxes. [*estimated cost: $4.7 billion]

Also included in the bill is an incentive for states to provide unemployment insurance coverage for part-time workers and for workers who quit their jobs for compelling family reasons. [*estimated cost: up to $2.6 billion]

Food stamp payments: The bill includes a provision would increase food stamp payments by 12%, so a family of four would see an additional $71 on top of the $588 per month they receive currently. [*estimated cost: $16.5 billion]

Help for needy families: The bill provides $2.3 billion to states to create a contingency fund through 2010 for the welfare program called Temporary Assistance for Needy Families, which provides cash assistance to the needy. [*estimated cost: $2.3 billion]

Aside from the tax credits to individuals, state and federal will bolster is state and federal programs and infrastructure with the hopes of saving what has been deemed vital services (ex. education sector, health and commerce and justice sectors of the government (ie. police and fire departments), as well as new projects to create a new efficient energy/renewable-energy systems. What this means for us is more jobs, more government contracts and tax credits for individuals and families in the near future.

Sited and Related Links:
Associated Press | A comparison of economic stimulus plans
Washington Post | Taking Apart the $819 billion Stimulus Package
IRS | Supplemental Security Income Payments
CNN Money | How stimulus can help your wallet

meta-DAD | What the new Stimulus Plan will mean for American families
meta-DAD | California state delays income tax refunds
meta-DAD | Stimulus Check Disbursement Schedule