Despite all the talk about the benefits of the new administration’s economic initiatives, you may be left wondering, “But what’s in for me?” The answer: probably some needed cash. Here are specifics on new incentives that will put more money in your pocket.

BUY A HOME SAVE UP TO $8,000

First time home buyers can take advantage of a stimulus tax credit available through November worth 10% of a home’s price, up to $8,000. To qualify, you can’t have owned a home in the past three years, and must make under $170,000 as a married couple; $95,000 if you’re single. You can take the credit even if you owe no tax. Get the cash faster by filling an amended 2008 tax return claiming the credit.

KEEP ON WORKING SAVE $400

The daily grind just got a little less taxing for workers. During 2009 and 2010, the stimulus Making Work Pay Credit is $400 per worker or $800 for a married couple. So this means slightly higher take-home pay. You’ll get smaller credit is you make more than $75,000; you won’t make any credit if you make more than $95,000.

REFINANCE A MORTGAGE SAVE ABOUT $200 A MONTH

Eight Million home owners owe more on their mortgages than their homes currently worth. These left the owners paying inflated mortgage rates on houses with declining values - clearly a painful situation. But the new foreclosure prevention plan allows those mortgaged for as mush as 105% of their homes’ values to refinance and lower their payments. If someone who owes a $225,000 on a home now worth $221,000 could save $200 a month or more. You should call your lender and talk to customer service.

BUY A NEW CAR SAVE $200+

The stimulus plan allows a sales tax deduction when you nab a new auto, as long as it costs $49,500 or less and was purchased on or after February 17, 2009. Claim it even if you don’t itemize, as long as your income is under $135,000 if you’re single; $260,000 for couples.

HELP YOUR HOUSE GO GREEN SAVE $1,500

Installing energy-efficient windows in 2009-2010 will pay off in ways beyond lower energy bills. The stimulus offers a credit for 30% of the purchase price for some improvements, up to $1,500 per tax return, regardless of your income. Visit energy star.gov to see which projects and products qualify for the credit.

PAY FOR COLLEGE SAVE $2,500

Parents and students writing tuition checks also get extra help thanks to the stimulus package, which replaces the up-to $1,800 Hope Scholarship Credit with the beefier American Opportunity Credit. Claim it in your taxes next year, and you’ll get back 100% of the first $2,000 paid for tuition, fees, books, and other materials for college. Learn more at ed.gov.

MODIFY A MORTGAGE SAVE ABOUT $400 A MONTH, PLUS $5,000

Families struggling with mortgage payments may qualify for loan modifications if their payments (including taxes and homeowners’ insurance) top 31% of their monthly pretax incomes. The government is dangling up to $4,500 in incentives to loan they modify, so check and see if you’re eligible. Visit makinghomeaffordable.gov.

Source: Goodhousekeeping June 2009 by Kelli B. Grant

Tags:  money savings tax credit