Taxpayer asks:
I heard that I can get more money back from my taxes this year because I am disabled. Is this true? I am on fixed income and it would help me.
Taxgirl says:
I think what you’re referring to is the one time payment for retirees and disabled persons as part of Obama’s stimulus package for 2009, called the American Recovery and Reinvestment Act of 2009. It’s also referred to as the Economic Recovery Payment (ERP).
If you were eligible, you should have received a check for $250 sometime in 2009 directly from the Social Security Administration, Veterans Administration or the Railroad Retirement Board. Payments would have been made to:
- Retirees, disabled individuals and Supplemental Security Income (SSI) recipients receiving benefits from the Social Security Administration;
- Disabled veterans receiving benefits from the U.S. Department of Veterans Affairs; or
- Railroad Retirement beneficiaries.
The check would not have been issued by the IRS.
If you can’t remember whether you received a check, you’ll need to contact the respective agency:
Social Security Administration: Toll free number is 800-722-1213.
Veterans Administration: Toll free number is 800-827-1000.
Railroad Retirement Board
This is not an IRS issue. It only affects your taxes with respect to the Making Work Pay Credit. In the event that you are also eligible for both, the Making Work Pay Credit would have to be reduced by the amount of your Economy Recovery Payment. If you report that you did not receive a check and you did, your tax return will be bounced. I’ve already heard of a few that have been returned for this mistake, so be careful.
Otherwise, there are no new credits or payments available from IRS for the disabled for 2009. I do have a post coming up about existing credits – so keep reading!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook at http://www.facebook.com/taxgirl
If there’s one thing that both parties in Congress can agree on, it’s that any hope for economic recovery is going to hinge on getting unemployment under control. At the end of 2009, one out of every ten Americans able to work wasn’t working.
Fortunately, there’s some good news. Last month, the national unemployment rate dropped to 9.7%, the lowest since August. In addition, the manufacturing sector added jobs for the first time in three years.
It’s certainly encouraging but likely not enough to signify a recovery. That’s why Democrats and Republicans are working together to get a jobs bill passed this week. The bill will provide a tax break for companies who hire unemployed workers; the measure would exempt companies from paying the employer’s share of Social Security payroll taxes for new workers so long as those new employees had previously been unemployed at least 60 days. That’s equivalent to a 6.2% reduction in overhead costs for a small business. If it passes, it would be a substitute for Obama’s proposed $5,000 tax credit for small businesses who commit to new hires. The Senate plan is cheaper and considered less likely to be abused than Obama’s version.
While it looks likely that the Senate will pass some version of the bill, it’s not so certain in the House. Reportedly, a number of Representatives doubt the efficacy of a bill which creates jobs if there are no consumers willing to buy goods and services. I have one question for them: what do you suggest instead? It’s awfully easy to sit back and try nothing. After all, our good friends in Congress are employed – to the tune of $174,000 per year. Speaker of the House Nancy Pelosi (D-CA) takes home $223,500. Majority Leader Steny H. Hoyer (D-MD) and Minority Leader John Boehner (R-OH) each take home $193,400. Oh, and did I mention the benefits?
So, it’s of course it’s easy for members of the House to sit back with a “it’s not going to work” attitude without even giving it a go. They have no clue.
I’m not in Congress but I do own a business. And here’s the thing: our economy is very interdependent. I don’t buy the idea that giving the top more money will help everyone down the line any more than I buy the idea that the failure to buy goods or services at the bottom creates a standstill to the top. It’s not a straight line and it’s not a simple equation. It’s complicated. Financial incentives matter. If I could expand my business capacity with limited overhead, I would. And I think most small businesses would.
Why makes the House think they know better? And what do they have to lose by saying yes? It won’t cost them anything upfront and it would only apply if businesses actually made a new hire (which would, in turn, reduce unemployment payments). So, no hire, no cost. And it’s not a refundable credit, so nobody’s getting anything that they didn’t pay in. It’s a tax cut but for taxes associated with costs and not directly tied to profits. So it’s not a blanket tax cut – it’s a tax cut specific to businesses who create jobs. That feels like a good thing.
Last year, Idaho paid out more than $500 million in federal unemployment benefits. Georgia paid out $1.6 billion. We’re already bleeding money to pay for those who are unemployed. Why not try something new and try to kick start the economy by something other than simply throwing money at it with our eyes closed? Your thoughts?
Over the weekend, I had the opportunity to chat with Marjorie Kornhauser, a professor at the Sandra Day O’Connor School of Law at Arizona State University about her Tax Literacy Project. It’s an ambitious project, for sure. Her plan is to make tax law more accessible (!) to the general public through a series of interactive sites, games and more. I share her enthusiasm for the notion that everyone should understand what they’re paying and the mechanisms behind our tax law and policy.
The Tax Literacy Project focuses on federal income tax but much of the content will also apply to other federal, state, and local taxes. Although the idea is to appeal to the the general public, the Project will specifically focus on young adults, those potential taxpayers between the ages of 16 and 30, who are about to enter (or have just entered) the workforce.
The Project’s web page is scheduled to launch early this year. I’ve already chatted with Professor Kornhauser about establishing a presence on twitter and she’s in the process of setting something on Facebook. They’re also setting up an advisory board to drive the Project forward and it’s my understanding that there are some pretty high profile folks signed on already.
I’ll keep you informed as more information becomes available, including the launch. In the interim, if you’re interested in helping out, the Project is seeking some funding. Every little bit counts, so if you have a few dollars to spare, I know that it would be appreciated. To make a contribution to the Tax Literacy Fund, you can make a secured donation directly to the university at https://secure.asufoundation.org/giving/online-gift.asp?fid=418 (no appeal code necessary) or make a check payable to the ASU Foundation and mail to :
Sandra Day O’Connor College of Law
Arizona State University
PO Box 877906
Tempe, AZ 85287-7906
Be sure and write Tax Literacy Fund (30004788) in the memo line of your check so that it’s directed to the Project.
I’ll be sure and let you know when the web site launches: keep an eye out.
Taxpayer asks:
Just before Christmas, I bought a 2007 VW Jetta. It was a great deal since it had very low miles on it. When I bought it, the dealer said that I could deduct the sales tax from my taxes but I read on your site that the car has to be new, not just new to you. Was this just a slimy, used car salesman trick?
Taxgirl says:
The post you’re referring to is this one and was specifically about whether the purchase of a new car qualified for the new sales tax deduction – the one that got all of the press that increased your standard deduction. The deduction is available to taxpayers who bought new vehicles from February 17, 2009, through December 31, 2009. In those states that don’t have a sales tax (Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon), taxpayers can take a deduction for other taxes or fees paid. The deduction is limited to state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle and phase outs for taxpayers whose modified AGI begin at $125,000 for individual filers and $250,000 for married taxpayers filing jointly.
What your dealer is likely referring to is the option at Schedule A to deduct your state and local sales taxes or your state and local income taxes. This was part of the American Jobs Creation Act of 2004 and has been extended for a few years at a time since – it still applies for 2009. So, for 2009, you can elect to deduct state and local general sales taxes instead of state and local income taxes as a deduction on Schedule A. You cannot deduct both.
If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and use that amount to figure your deduction. If you didn’t save your receipts, you can use the optional general sales tax tables in the instructions for Schedule A or use the IRS’ Sales Tax Deduction Calculator! I played around with it this morning – it’s pretty cool.
If you go the actual expenses route, you can deduct the actual sales taxes that you paid if the tax rate was the same as the general sales tax rate for your locality. On the plus side, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. But, and this may apply to you, if you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle.
So, if you itemize your taxes, you might still be able to claim sales taxes paid as a deduction on your Schedule A – which would make your dealer right. Run the numbers and see how they come out. Depending on the income tax rate in your state, this could make sense for you.
Oh, and one more caveat: the sales tax deduction is available to individual taxpayers for items of personal use. Do not include sales taxes paid on items used in your trade or business.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl! – Now on Facebook at http://www.facebook.com/taxgirl
