Stimulus for the restofus

Wednesday, July 22, 2009

If you're keeping a wary eye on the odometer and another on the gas pump, perhaps now's the time to do something about it.

If the miles are building up on your older, less fuel-efficient car or truck, you can save from $3,500 to $4,500 on a newer car that gets better gas mileage.

Signed by President Obama on June 24, the cash for clunkers bill, now officially known as the Car Allowance Rebate System, is modeled after several European programs, and will be in effect only through Nov. 1, 2009.

The guidelines divide cars, trucks, SUVs and minivans into several categories, based on weight and wheelbase, and the sticker price of the replacement vehicle cannot exceed $45,000.

If your used car is worth more than $4,500, or if you have sentimental attachment to your old ride, perhaps the CARS program isn't for you. Vehicles that are traded in for a rebate must be sent to the crushers, not resold.

Besides the CARS program, the Internal Revenue Service points out several other tax breaks made available by the American Recovery and Reinvestment Act:

* First-time homebuyer credit. Taxpayers who didn't own a home during the past three years, and buy a house before Dec. 1 can receive a credit of up to $8,000 on either an original or amended 2008 return, and eligible taxpayers cannot claim the credit until after the closing date.

* Energy-efficient home improvements. The ARRA provides a 30 percent tax credit on the cost of all qualifying home improvements up to a maximum of $1,500 for qualifying additions such as insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

* Tax credit for the first four years of college. The new credit modifies and expands the existing Hope credit for tax years 2009-10, for an annual maximum credit of $2,500 per student.

* Certain computer technology purchases for 529 plans. Qualifying computer equipment and Internet access and related services can be paid for by a qualified tuition program.

* New vehicle purchase incentive. Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles.

For more information, go to IRS.gov or check with your accountant or tax preparer.

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