March, 2009
Maco & Associates, LLC
Tax News and Updates
In This Issue
2009 Stimulus Payments/Withholding
Unemployment Benefits
College Tuition Credits and Grants
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Greetings!
You don't live "off the grid," so you know that President Obama has  signed the "American Recovery and Reinvestment Act."  We've provided a few highlights below which may impact you.
New Withholding Tables May Produce Some Unwanted Results

unclesam  Tax Cuts for 95% of America's Working Families may produce some unwelcome results, particularly for those filing as married, filing jointly.

For 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns.

This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.

For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes in early spring. These changes may result in an increase in take-home pay. The amount of the credit must be reported on the employee's 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return.

A Calculator is available that shows you the difference between the old federal withholding rates and the new Federal Withholding Rates. For those who receive small refunds or no refunds, this may cause you to want to file a revised W-4 with your employer to change your dependencies to negate the impact of this change. Feel free to contact our office for assistance.


First $2,400 of Unemployment Benefits Tax Free for 2009

In 2009, the first $2,400 of unemployment benefits will be tax-free, under relief provided by the American Recovery and Reinvestment Act. Every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits when they file their tax return next year. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.

The new law doesn't affect the return taxpayers are filling out now. Unemployment benefits received in 2008 and prior years remain fully taxable.

Unemployed workers who expect to receive more than $2,400 in benefits in 2009 should consider having tax withheld from their benefit payments in excess of that amount.




First Time Homebuyers Credit    
 
Support for Students Struggling to Afford College

The American Opportunity Tax Credit helps families offset college tuition costs with the $2500 American Opportunity Tax Credit. (For accountants and tax geeks: That $2,500 includes a full credit on the first $2,000 of expenses, and then 25 percent of expenses up to $4,000, for a total potential credit of $2,500.)
Many families will see a $500 increase in their maximum Pell Grant to cover college tuition payments. This calculator helps you determine eligibility.

For more information on this important legislation go to the IRS Website

IRA investments
You have until April 15, 2009 to make any contributions to your IRA for 2008. Remember you control the where to invest, so you choose risk free CD's or even money market funds. Call or email and we can help you determine how much this can save you in taxes.


Just in Time for Tax Season
We have a few new offerings:

Free E-filing: Beat the mail and get your return filed more quickly than ever before.

Audit Shield: Our "Better Safe than Sorry" protection plan which will pay up to $2500 in penalties, etc. imposed by the IRS due to an error on your part on forgetting to give us a critical piece of your income information). The plan is $24.95 and is added to your invoice, should you choose to use it

We Look Forward to Working With You Throughout
the Year and Wish You a Prosperous 2009!

 


Please welcome our new Intern, Hannah Schoff who will be joining us in May! You will be hearing from Hannah throughout the year! She will be replacing Laura Beck who has risen through the ranks from Intern to Accountant and has accepted a position at the US Treasury upon graduation in May. We will miss Laura, but, welcome Hannah, another bright, talented young accounting professional.

From All of Us at
Maco & Associates, LLC
Telephone: (610)489-7215  
Email:info@macoassociates.com
4183 Ironbridge Drive
Collegeville, PA 19426
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