American Recovery and Reinvestment Act of 2009

From TaxAlmanac

American Recovery and Reinvestment Act

Congress has passed the American Recovery and Reinvestment Act of 2009 (ARRA) and President Obama signed the bill into law on February 17, 2009.

United States Congress

The final recovery and reinvestment plan contained approximately $287 billion in tax cuts for families and businesses, with a particular focus on creating jobs in the green energy, highway, and school building sectors. The tax cuts included a $400‐per‐worker tax credit – known as Making Work Pay credit – to put cash in the hands of America’s working families in the next few months. Additional Finance Committee provisions included a $14.4 billion measure providing a one‐time, $250 payment to seniors, veterans, and retirees, and approximately $177 billion more in investments to create jobs in health information technology, to help out‐of‐work Americans keep their health care coverage and find new employment, and to give aid to struggling state economies. The legislation also included a major expansion of Trade Adjustment Assistance to help American firms avoid layoffs due to international competition, and to help workers negatively affected by trade stay on their financial feet and retrain for new, good‐paying jobs here at home.

Key Tax Provisions

TAX RELIEF FOR INDIVIDUALS AND FAMILIES

• "Making Work Pay” Tax Credit
• Economic Recovery Payment to Recipients of Social Security, SSI, Railroad Retirement and Veterans Disability Compensation Benefits
• Refundable Credit for Certain Federal and State Pensioners
• Increase in Earned Income Tax Credit
• Increase Eligibility for the Refundable Portion of Child Credit
• “American Opportunity” Education Tax Credit
• Computers as Qualified Education Expenses in 529 Education Plans
• Refundable First-time Home Buyer Credit
• Sales Tax Deduction for Vehicle Purchases
• Temporary Suspension of Taxation of Unemployment Benefits
• Extension of AMT Relief for 2009

TAX INCENTIVES FOR BUSINESSES

• Extension of Bonus Depreciation
• Election to Accelerate Recognition of Historic AMT/R&D Credits
• Extension of Enhanced Small Business Expensing
• 5-Year Carryback of Net Operating Losses for Small Businesses
• Delayed Recognition of Certain Cancellation of Debt Income
• Incentives to Hire Unemployed Veterans and Disconnected Youth
• Small Business Capital Gains
• Temporary Small Business Estimated Tax Payment Relief
• Temporary Reduction of S Corporation Built-In Gains Holding Period from 10 Years to 7 Years

REINVESTMENT IN RENEWABLE ENERGY

• Long-term Extension and Modification of Renewable Energy Production Tax Credit
• Temporary Election to Claim the Investment Tax Credit in Lieu of the Production Tax Credit
• Removal of Dollar Limitations on Certain Energy Credits
• Tax Credits for Energy-Efficient Improvements to Existing Homes
• Tax Credits for Alternative Refueling Property
• Plug-in Electric Drive Vehicle Credit
• Parity for Transit Benefits

Supporting Documents

• Summary
• JCT Technical Explanations (go to link for 2009 and select both jcx-10-09 and jcx-12-09 for autodownload)
• Legislative text
• IRS

Supporting Guidance

• Rev. Proc. 2009-19 - 5 yr C/B of NOL
• Rev. Proc. 2009-26 - 5 yr C/B of NOL
• Notice 2009-12 - allocation of first-time homebuyer credit between unmarried people.
• Notice 2009-27 - guidance relating to premium assistance for COBRA continuation coverage.
• Notice_2009-28 - provides statutory definition of new targeted groups (“unemployed veteran” and “disconnected youth”) under Sec 51, and now has been clarified by Notice 2009-69.
• Notice 2009-53 - interim guidance relating to the credit for nonbusiness energy property under § 25C.
• Notice 2009-54 - Qualified Plug-In Electric Vehicle Credit.
• Notice 2009-58 - Qualified Plug-In Electric Vehicle Credit Under Section 30.
• Notice 2009-89 - New Qualified Plug-in Electric Drive Motor Vehicle Credit.
• Notice 2010-11 - Extension of Temporary Suspension of AHYDO Rules
• Notice 2010-58 - Q&A on 5-yr NOL C/B under both ARRA and WHBA
• Notice 2010-81 - Build America Bonds - determination of issue date

• CCA 201307005 - Electronic Health Records Incentive Payments are generally taxable

Related Articles/Links

• REG-117501-09 - prop reg on estimated tax payments for small businesses
• First-time homebuyer credit recap (with many more links to forms, IRS FAQs, legislation, and discussions)
• Sec. 36 - informal recap of FTHB legislation, as twice amended
• First-Time Homebuyers Have Several Options to Maximize New Tax Credit
• Energy-Saving Steps This Year May Result in Tax Savings Next Year
• Tax Breaks Available for Taxpayers Who Purchase Qualified Plug-In Electric Vehicles
• Energy Provisions of the American Recovery and Reinvestment Act of 2009 (IRS)
• Discussion:N-2009-28 regarding notice containing definitions for the new work opportunity tax credit (WOTC) groups
• Special Tax Break on New Car Purchases Available in States With No Sales Tax - IR-2009-60, June 10, 2009
• Discussion:Verification Link for advance $250 / $500 Making Work Pay Tax Credit
• Discussion:EHR Incentive Program

Related discussions

• Discussion:Stimulus money for digitizing medical records - re electronic medical records, electronic records
• First-time homebuyer credit
• See KatieJ's 1/26/11 post here re shorter recognition period for BIG tax
• others that weren't listed here can be found by a search on ARRA or the general topic