1) First-Time Homebuyer Credit – the new law increases the existing credit to a maximum of $8,000, but best of all it no longer needs to be paid back as long as you stay in the home for 36 months. You have to purchase a primary residence between Jan. 1st – Dec 1st, 2009, and you must not have owned a residence in the past three years prior to the purchase. The phase-outs on the credit is $75k single and $150k married filing joint.
Although this is a great deal – the flaw with the credit is that first-time home buyers need the funds to close on the house and not after they file a tax return. Also, this may jump start the housing market for entry level homes, but it will most likely not affect the rest of the market.
2) Making Work Pay Credit – Stimulus check #2 is not as exciting this time around and many will not even really notice it. If you make $6,451 or more in earned income ($12,903 married filing joint), but do not have adjusted gross income of $75k or more ($150k married filing joint), then you receive $400 or $800 married filing joint. However, this will not be one payment – it will be a reduction of employee social security tax withholdings. This will translate to roughly $15 extra per paycheck, with any remaining credit being refunded with the 2009 tax return. Nothing really to get excited about unless you are ADP, Paychex, or another payroll processor that will be able to charge more because of all the complexities this will cause for payroll processing.
Other than that, the additional incentives are not that “stimulating”. Sorry, but it is not very exciting thinking about the spending of our future wealth and the wealth of our children.