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WORKER, HOMEOWNERSHIP AND BUSINESS ASSISTANCE ACT OF 2009
On November 6, 2009 President Obama signed into Law, the "Worker, Homeownership and Business Assistance Act of 2009. ("The Act") The Act is intended to build on the success of the American Recovery and Reinvestment Act of 2009 by creating jobs and reducing taxes.
INCENTIVES
HOMEOWNER TAX CREDIT: The Act extends the $8,000 first-time home buyer tax credit through April 30, 2010, and creates a new $6,500 tax credit for certain "long-time" homeowners who purchase a different home as their primary residence. For purchases after November 6, 2009, the credit is not available for homes with a purchase price in excess of $800,000. Taxpayers who enter into a binding contract on a home before May 1, 2010 are still eligible for the credit if they close on the home prior to July 1, 2010. Individuals earning up to $125,000 and couples earning up to $225,000 are eligible for the full credit.
Military personnel serving overseas for at least 90 days during the period beginning January 1, 2009 and ending April 30, 2010 will have an additional year under the bill to take the home buyer tax credit. A separate provision excludes from gross income payments to compensate military personnel forced to sell their homes at a loss due to permanent reassignment and certain other purposes.
NET OPERATING LOSS CARRYBACK: Generally all taxpayers can elect to increase the carryback period for a Net Operating Loss (NOL) generated in either 2008 or 2009 to either three, four or five years. Previously, only "small businesses" were able to elect the extended carryback provisions. NOLs carried back to the fifth taxable year will be limited to 50 percent of the taxable income for the year before the NOL deduction. In addition, the 90% limitation on the use of an Alternative Minimum Tax NOL is suspended for any NOL for which the extended carryback period is elected.
OFFSETS
WORLDWIDE INTEREST ALLOCATION DELAY: The extensions and expansions of both the home buyer credit and the NOL carryback are offset by a six-year delay of the implementation of a tax break on worldwide interest allocation slated for use by multinational firms, which will raise $20.1 billion.
ADDITIONAL OFFSETS: The Act increases the penalty to $195 per partner/shareholder, per month up to 12 months, for failure to file S corporation and partnership tax returns. In addition, businesses with assets of at least $1 billion are subject to accelerated estimated tax payments beginning in July, 2014.
EXTENDED FUTA SURTAX: The Act extends the 0.2 percent Federal Unemployment Tax Act (FUTA) surtax through June 30, 2011, to pay for the Act’s extension of unemployment insurance benefits. The FUTA surtax extension will pay for 14 more weeks of UI benefits in all 50 states, and up to 20 more weeks in states with a three-month average total unemployment rate of at least 8.5 percent.
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