What a year this has been and it’s only the 9^th of March! We had a huge national party on Inauguration Day, a day that filled many hearts with hope. Since then we have watched the economy and the stock market continue to founder. We all know someone who has been laid off, have seen houses in our neighborhoods under foreclosure, and watched our investments shrink. In my accounting practice, I help business owners and individuals on a daily basis as they struggle with these difficult economic forces. On the positive side, we have also seen people reach out to help others, even taking pay cuts so that co-workers won’t be laid off. A large majority of the country remains united behind the new administration, hopeful that their proposed strategies will be successful.

One of the strategies to stimulate the economy is the American Recovery and Reinvestment Act of 2009. This Bill provides aid to distressed states and individuals, funds to improve the nation’s infrastructure, and $300 billion in tax breaks for individuals and businesses, some of which I am listing here:

• A refundable tax credit of $400 ($800 for married couples) phased out at higher income levels. Instead of stimulus checks, payroll withholding will be adjusted to boost paychecks and get money into the economy more quickly.
• $250 economic recovery payment for adults eligible for social security and veterans benefits. Checks will be mailed to these individuals.
• Sales tax deduction on new vehicles purchased by 12/31/09. Higher Education credit of up to $2500, phased out at $90,000 of income for singles and $180,000 for married couples.
• Up to an $8000 tax credit for first time homebuyers buying a house by 11/30/09.
• Tax free treatment of $2400 of unemployment benefits and a Cobra insurance subsidy for eligible individuals.

It has been said that every problem offers opportunities. Now is the time for us to face our fears, make the hard decisions, and grasp those opportunities. In the long history of our country, there have been many difficult periods and we have always emerged stronger and more united. As President Obama said, “This is our time.” Let’s make the most of it.

Jean M. Diamond CPA, Ltd.