Commerce Secretary Locke, Mayor Rybak Raise Awareness of New Recovery Act Tax Benefits in Minneapolis

With Tax Day approaching, Locke highlighted an online tool to help families determine their eligibility for new tax benefits

Remarks
Fact Sheet

U.S. Commerce Secretary Gary Locke participated in a roundtable discussion in Minneapolis today to raise awareness of the new tax credits available to American families as a result of the American Recovery and Reinvestment Act. Locke was joined in the discussion by Minneapolis Mayor R.T. Rybak and several Minnesotans who have taken advantage of many of the new tax credits.

“Already tax refunds are up an average of nearly $300 this year—due in large part to Recovery Act benefits,” Locke said. “With tax time almost upon us, it is critically important for everyone to know that these tax incentives can be claimed for purchases made in 2009, and will continue throughout 2010.”

Yesterday, the IRS reported that the average tax refund has increased nearly 10 percent for 2009, but families are often not fully aware of all tax code changes and miss out on taking advantage of them. With more than a dozen new tax benefits available to taxpayers and businesses, it is important that all American families know about them in order to achieve as much personal tax savings as possible.

“As a city with a large and stable middle class, Minneapolis knows well the need to continuously invest in our families and businesses to grow our economy,” said Rybak. “At a time when we needed it most, the Obama administration stepped in and stepped up to rebuild our economy by delivering tax breaks directly to middle class families. In the process, in cities like Minneapolis, we helped families buy their first homes, we helped homeowners improve the energy efficiency of their homes, and we created thousands of jobs for the new clean energy economy.”

A helpful tool is available on the White House Web site to guide American taxpayers through the new tax benefits and help determine if they are eligible for savings. The Tax Savings Tool can be found here: www.WhiteHouse.gov/Recovery.

Taxpayers can collect more than a dozen 2009 Recovery Act tax benefits when they file their 2009 tax returns, including:

• Making Work Pay - Ninety-five percent of working families are receiving the Recovery Act’s Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their paychecks in 2009 – and will continue to in 2010. Taxpayers whose withholding in 2009 did not provide the full amount of the credit they are due will get the additional amount when they file their 2009 tax return. Even though most taxpayers received the benefit of this credit in their paychecks from adjusted tax withholding by their employers, they still need to claim this credit on their tax returns (i.e., Form 1040 or 1040A).
• Up to $2,500 in College Expenses – Families and students are eligible for up to $2,500 in tax savings under the American Opportunity Credit as well as enhanced benefits under 529 college savings plans, which help families and students pay for college expenses.
• American Opportunity Credit – More parents and students are eligible for a tax credit of up to $2,500 to pay for college expenses and can claim the credit annually for four years instead of two.
• 529 College Savings Plans – Students can now use a 529 plan to pay for computer technology, adding this to the list of traditional college expenses (tuition, books, etc.) that can be paid for by a 529 plan.
• Up to $8,000 for Purchase of First Home – Homebuyers can get a credit of up to $8,000 for first homes purchased by April 30, 2010 under the First Time Homebuyer tax credit. Long-time residents who don’t qualify as first-time homebuyers and those with incomes of up to $145,000 for an individual and $245,000 for joint filers are also eligible for a reduced credit.
• Up to $1,500 in Energy Efficiency and Renewable Energy Incentives – Taxpayers are eligible for up to $1,500 in tax credits for making some energy-efficiency improvements to their homes such as adding insulation and installing energy efficient windows.
• Money Back for New Vehicle Purchases – Taxpayers can deduct the state and local sales taxes they paid for new vehicles purchased from Feb. 17, 2009 through Dec. 31, 2009 under the vehicle sales tax deduction. In states that don't have a sales tax, some other taxes or fees paid may be deducted.
• Expanded Family Tax Credits - Moderate income families with children may be eligible for an increase in the Earned Income Tax Credit and the additional Child Tax Credit.
• Earned Income Tax Credit – The Recovery Act increased the credit for families with three or more children, bringing the maximum amount to $5,657.
• Child Tax Credit – More families will be able to take advantage of the child tax credit under the Recovery Act, which reduced the minimum amount of earned income used to calculate the additional child tax credit to $3,000 from $12,550.
• Up to $2,400 in Unemployment Benefits Tax Free in 2009 – Unemployment benefits are normally taxable, but the Recovery Act made the first $2,400 of unemployment benefits received in 2009 tax free.

Participants in Commerce Secretary Gary Locke's roundtable discussion this morning included:

Minneapolis Mayor R.T. Rybak

Pastor Patrick Hansel and Pastor Luisa Cabello Hansel—local homeowners who hosted the discussion and took advantage of the first-time homebuyers tax credit

Shannon Guernsey—local homeowner who took advantage of energy efficiency tax credits to make home upgrades

Tina Maynard—Service Coordinator at Centraire Heating & Air Conditioning in Eden Prairie, Minnesota.