What Does the Economic Stimulus Plan Mean For You?

President Obama is expected to sign the economic stimulus plan today, immediately creating some important changes in our taxes, our health insurance and our day-to-day lives. The actual plan weighs in at over one thousand pages, though, making it difficult for everyone to read up on exactly what it means for them. It’s honestly not worth reading the whole plan: not all of it is relevant information for the individual taxpayer. There are some specifics, however, that you should be aware of:

1. Many workers will receive a $400 tax credit in the form of an extra $13 in their weekly paychecks. The credit would go into affect in June.
2. The $1,000 child tax credit would be extended to many families who don’t earn enough to pay income taxes (which means they’ll actually be getting money back).
3. Low-income families with three or more children will receive an expanded Earned Income Tax Credit.
4. Middle and upper-income taxpayers will be shielded from the Alternative Minimum Tax.
5. If you are a first-time homebuyer purchasing a home before Dec. 1, you can receive an $8,000 tax credit — which you don’t have to pay back.
6. If you buy a new car before the end of the year, you can write off the sales tax.
7. Homeowners making their homes more energy efficient are eligible for a tax credit to cover up to 30 percent of the costs, for a total of $1,500.
8. College students can receive a tax credit of up to $2,500 to help pay tuition and other education expenses. Parents helping their children with such costs can also be eligible.
9. If you receive unemployment benefits in 2009, you won’t have to pay federal income taxes on the first $2,400 you receive. 
10. The government will cover up to 65 percent of your COBRA premiums during the first 9 months of COBRA coverage to make sure you can still receive health insurance even if you lose your job.
11. Pell Grants, which help low-income students with college expenses will increase to $5,350 (they’re currently set at $4,731).
12. The tuition tax credit will be 40 percent refundable, which means that families who don’t pay enough income tax to take the full credit will receive extra money back.
13. Computer expenses can now be claimed as allowable expenses for 529 college savings plans.
14. Individuals receiving food stamps will get a bump in their aid, as well those drawing unemployment checks.
15. Anyone receiving Supllemental Security Income will receive a one-time payment of $250.

In addition to these direct benefits to taxpayers, the federal government is handing a lot of money to state governments. The goal is to reduce budget cuts and job losses on the state level in such areas as education and Medicaid. The federal government will also be sending a lot of money to building infrastructure (repaving roads, updating buildings and so forth) and to research in an effort to create jobs.

Most of the benefits above involve your taxes. You may need to consult a tax professional to see how the package actually affects you, and learn how to actually claim benefits.