What the proposed stimulus means for your pocketbook
Filed under: Tax
While the stimulus bill is still a work in progress, there are a number of provisions in both bills that you can count on passing. But the reality for the average Jane or Joe is that there's not much there you'll find in your pocket immediately.
The largest amount of direct cash people will see in their account that is still in both the Senate and House bills is a tax credit of up to $500 for each worker and up to $1,000 for two-worker families.
This won't come in your mailbox as a check, however. Instead you'll either see the reduction in less tax money taken out of your paycheck each week or a credit you can write off when you file your 2009 taxes. The tax credit will be 6.2% of your earnings to offset the withholding for Social Security taxes.
Two other provisions to get immediate cash into people's pocket are targeted to the poor. One extends eligibility for the refundable portion of the child credit. People with incomes as low as $12,550 will be eligible in 2009; the eligibility level will drop to $6,000 in 2010. Congress expects this cash infusion will be spent quickly to help stimulate the economy.
Low income families will also benefit from the eligibility changes to the earned income tax credit. For low income families with three or four children that qualify, this could mean an extra $629 in their pockets.
What else is in there for the average person?
If the provisions passed in the Senate survive the negotiations with the House, there could be a $15,000 tax credit for new home purchases. Since this provision is not targeted to first-time buyers, most of the people who take advantage of this will probably put a house up on the market and do little to reduce the inventory of homes already on the market to be sold.
Another provision in the Senate bill offers a deduction on sales taxes if you buy a new car, as well as the ability to write off any auto interest you pay. Sen. Barbara Mikulski, who is the author of this provision, hopes to stimulate car sales with these tax incentives.
The big bucks go to infrastructure, education, health care, and local and state governments with the hopes that these projects will improve the job market. How quickly new jobs related to these projects will trickle down to your neighborhood is anybody's best guess.
Lita Epstein has written more than 25 books including "Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together."
This won't come in your mailbox as a check, however. Instead you'll either see the reduction in less tax money taken out of your paycheck each week or a credit you can write off when you file your 2009 taxes. The tax credit will be 6.2% of your earnings to offset the withholding for Social Security taxes.
Two other provisions to get immediate cash into people's pocket are targeted to the poor. One extends eligibility for the refundable portion of the child credit. People with incomes as low as $12,550 will be eligible in 2009; the eligibility level will drop to $6,000 in 2010. Congress expects this cash infusion will be spent quickly to help stimulate the economy.
Low income families will also benefit from the eligibility changes to the earned income tax credit. For low income families with three or four children that qualify, this could mean an extra $629 in their pockets.
What else is in there for the average person?
If the provisions passed in the Senate survive the negotiations with the House, there could be a $15,000 tax credit for new home purchases. Since this provision is not targeted to first-time buyers, most of the people who take advantage of this will probably put a house up on the market and do little to reduce the inventory of homes already on the market to be sold.
Another provision in the Senate bill offers a deduction on sales taxes if you buy a new car, as well as the ability to write off any auto interest you pay. Sen. Barbara Mikulski, who is the author of this provision, hopes to stimulate car sales with these tax incentives.
The big bucks go to infrastructure, education, health care, and local and state governments with the hopes that these projects will improve the job market. How quickly new jobs related to these projects will trickle down to your neighborhood is anybody's best guess.
Lita Epstein has written more than 25 books including "Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together."
Reader Comments (Page 1 of 33)
2-10-2009 @ 5:45PM
VKS said...
Economics is a dismal science. Very unpredictable. Good and bad human sentiments govern the workings of economy. That includes innovative spirit and entrepreneurship, hard work and dedication but also greed, fraud, undertaking unaffordable loans, bizarre concepts of social engineering imposed from the top (rather than empowering the grassroo bottom). Dogma has no place. we should try different things. Reagan cut taxes and unleashed a boom, Clinton raised taxes and unleashed a boom too. Go figure. This shows that economy has its own rhythm of ups and downs. When evil sentiments like greed, poor regulation and irresponsible loans prevail, economy goes in dump. I am for frugal living, personal responsibility, less taxes but the current situation is so bad that the economy needs a jolt to jumpstart it. Spending creates jobs and jobs create demand which help business to hire. I agree with Obama on the stimulus bill. The old tired dogma of 'Cut taxes and we will grow out it' has not worked for past eight years. Republicans should rethink. Again, economics is a dismal science. Dogma has no place in it.
Reply
2-10-2009 @ 2:21PM
J said...
We are giving away enough money that everyone in the US could get about 31,000.00 ea. This is 13 times what we have spent on the War.I say give our money back to us!!! God help us all!!
2-10-2009 @ 4:39PM
David said...
We were out of balance because of goverment and other's .nobody made any one buy anything .They lived beyond there mean's .no tree's grow's to the sky !!!
We have to come bacK to balance( Reality )We are
going back to the private sector .Which is the real .
Goverment Is not going to fix this long term .We are the
one's responsible.We have to fix it and live with in or means.
2-11-2009 @ 8:49AM
VIOLET said...
I'M A MINORITY I'M SURE AS A DISABLED SINGLE MOTHER OF A DISABLED CHILD. BUT IT SEEMS I DON'T EXIST IN THE STIMULUS PACKAGE. I CANNOT WORK AND AM STRUGGLING JUST TO PAY RENT, BUY FOOD, MEDICINE, AND PAY FOR HEATING. THE BUSH ADMINISTRATION AT LEAST ACKNOWLEDGED I EXISTED WITH THE $600. STIMULUS CHECK. I WAS VERY DISAPPOINTED THAT OBAMA OVERLOOKED THE DISABLED IN THE STIMULUS PACKAGE. I SEEM TO REMEMBER HIM PONDERING $1000.00 STIMULUS CHECKS WHEN HE WAS CAMPAIGNING FOR PRESIDENCY, WHAT HAPPENED TO THAT IDEA? AND WHY WERE WE CUT OUT OF THE NEW STIMULUS BILL?
2-10-2009 @ 12:45PM
Rose Anzalone said...
After reading the above stimulus program I noticed there is no reference to Senior Citizens. Do we get a part of this stimulus or not. If so, how? Most of us have lost over 50% of our retirement plans and drowing in debt also. Is the President going to address us? Please acknowledge.
Thank you
Rose Anzalone
Reply
2-11-2009 @ 11:19AM
Don said...
Dear Rose;
As seniors we get NOTHING. Also, I am paying Federal taxes on my Social Security that I have already paid Taxes on!!!!
2-11-2009 @ 3:34PM
judi said...
Of course there will be nothing for seniors. We were the ones who worked all those years to contribute to the country's productivity and we are now being repaid by being completely left out. The only "workers" who will benefit are the ones who are in their active reproductive cycle and they are being rewarded by reaping more financial gain for each child they bring into the world. Why would low income families have been irresponsible enough to have 4 children anyhow?? My family has always stopped having children when they could no longer afford them. And should the government reward people for buying a new car when thousands are losing their jobs of 20 or 25 years everyday?? And as for a tax credit at the end of the year-I don't know about you but we end up in so low a bracket that it won't do us any good anyhow. The next step will be to euthanize people when they reach a certain age so the assets they worked all their life for can be dividided amongst the people who are still considered valuable.
2-14-2009 @ 8:04AM
Jaime said...
Dear Rose, I'm not sure if this will be any help for you, but ... My mother is on Social Security Disability. With last years stimulus package, even though she did not earn enough to have to file her taxes, she filed them anyways. And since she filed, she did receive a $300 stimulus. I'm not entirely sure how this new stimulus will work, but if it's the same as last year, as long as you file, you should receive something. I HOPE!!!
2-14-2009 @ 8:57AM
Louise said...
there will be a one time payment 250 sent to all seniors on SS
2-14-2009 @ 9:22AM
Britt said...
The realitity of the stimulus is not to help the average hard working individuals/families, instead it is to help people that keep on having kids even though they can't afford to so they can keep on getting more and more of the hard working American workers tax dollars with welfare! If you are the 'average' American if will see about $12-$15 more on each of your paychecks based on a 26 week pay, big deal. However, if you collect food stamps, you will get $80 more a month!! Way to go, lets encourage having 10 kids with no jobs and punish people that get out there and work 40/50/60 or more hours every week just to make ends meet! So if you are lazy, you get more money and if you care about your family and doing all you can for them, you get less. That is obvisously what Obama is about.
2-14-2009 @ 9:35AM
Doug said...
Thank you for your comment. I work with seniors and think its unfair that there are no deductions for that age group. Keep writing to the appropriate officials and hopefull since chage will come as well.
2-14-2009 @ 10:13AM
Holly said...
Dear Rose,
I just want to say not to worry about the economy, if you have Jesus in your life He will take care of you. You can't count on the government, but you can ALWAYS count on him. I'm a young single mom of 2 and I just have to say I would not be here if it weren't for Him. God Bless you...
2-14-2009 @ 11:23AM
Bill B said...
Rose; Don't you realize, old is out, we no longer contribute to the economy, so our new president and his henchman have decided that we are no longer needed, but put a drain on the entitlement systems, even though for over 50 years we contributed to it. The first step is controlling health care, next will be housing, and then the complete loss of whatever income you have. Those people that elected this Chicago political missfit that has been secretive about his history should be proud of yourselves. He is recycleing Clinton missfits, a third Clinton term. Congradulations America.
2-14-2009 @ 11:16AM
Marian R Hill said...
I agree with Rose's question. What about senior citizens who live on less than $12,500 a year?
2-14-2009 @ 11:44AM
K. Freeman said...
Do not fear Rose. Obama is your savior. He will pay all your bills and the money you receive from SS and retirement is extra $$ and free gratis. You will be able to buy anything you need. If you can't afford it, Obama will provide it for you. I'm sure glad I voted for Obama. I can retire at age 45, set at home and never have to worry about working again. I fail to see why retired people are worried about their portfolio's dropping by 50% and having to pay taxes on SS. Why is everyone worried about unemployment....duh.
People just don't realize how lucky we are...
Thank you Mr. President!!!
2-14-2009 @ 11:59AM
Frances said...
Rose,
I am 53 years old and I work full time my whole life. My Mom and Dad are in their 80s and both receive social security checks and my father's pension check. My father got a cost of living increase on his pension and social security. I do not get cost of living increases every year and my merit raise was the usual 3% that every other working person I know has gotten the past few years. The richest people in my family are my parents right now.
I may not see any social security when I am of age or it will be greatly reduced........probably much less than you're getting.
I have social security and medicare deductions as well as my own health insurance to pay for from my paycheck. If you are retired you probably didn't have a medicare deduction from your check. The baby boomers pay for a lot more than any other generation. In 2008, I got a $600 stimulus check and my parents got $1200. Granted they are two people but my Mom worked for only 2 years before becoming a full time mother and never returning to work. That could never be the case now as one needs to work at least 10 years and accrue 30 points to even receive a social security check. My father never paid for health insurance, it was just given to everyone as a benefit in those days as I'm sure you remember.
2-14-2009 @ 11:57AM
CB said...
That's a good question. I'm a care giver for seniors and disabled folks. I got my little stim. check last year but, yet I hear there are others who still haven't gotten theirs. There are alot of seniors out there that are barely making ends right now. They worked their whole life for a little check and nothing else to show for it. We need to take care of our elderly! Why aren't they getting some of that stim. plan?
2-14-2009 @ 12:06PM
George kenyon said...
Well ehat eles is new we are always let out of all the money . and who put money there in frist place gllk
2-14-2009 @ 12:27PM
Ed said...
mabe I will get 400.00 back in increments if 16.00 a week till I get 400.00 . but I now know why demorats love to raise taxes! THEY DON'T PAY TAXES!!!!!!!!!! check out obummas choice for sec treasure! he's a FELON!!
2-14-2009 @ 12:29PM
lucie said...
thank you ,i was thinkong the same thing what happens to us.house taxes going up ,i do not get enough money to cover sometimes.