Benefits of the Stimulus Package for Retirees

    Pennsylvania will, trust, and estate planning lawyer David Frees (with offices in Phoenixville, Paoli, and West Chester) has asked his staff to monitor news that might be useful to his clients and to retirees in Pennsylvania.  This is another in a continuing series of articles about new tax laws and how they affect you.

    President Obama signed the American Recovery and Reinvestment Act of 2009 on February 17. The giant stimulus package has hundreds of provisions but it also contains a section exclusively for Social Security recipients Here is an overview of those provisions that may affect Retiree’s.  Be sure to consult your tax adviser before purchasing a home, a car, or rv, or before contracting for energy efficient home improvements, or enrolling for college or educational credits to make sure that you qualify based on your particular facts and circumstances.


1.    Social Security Recipients: If you are receiving Social Security payments you will, under the new law, receive a $250 tax-free payment in 2009.  That payment will occur,  regardless of your income. The payments should start before June of 2009.

2.    Make Work Pay: This provision gives a tax credit of up to $400 individually, double for married couples filing jointly for tax years 2009 and 2010. It is designed for working people. But many retirees hold part time employment and may still qualify. However, if your income exceeds $75,000, ($100,000 if you are married) the credit phases out and disappears once you earn $100,000 or $200,000  if you are married. Also if you receive the Social Security $250 you must deduct if from what you qualify for under the Make Work Pay provision.  So, the actual amount that you’ll receive is really quite small.

3.    First-time homebuyer credits for retirees: As a retiree this sounds like it may not apply to you - but it just might. If you have not owned a primary residence in the U.S in the last three years you may still qualify as a first time home buyer.  You could have sold your house more than three years ago and with the low price of houses you might have decided to relocate or just to buy.   If you have decided to buy a home, and you qualify, you could receive a tax credit of up to $8,000.  This provision has restrictions. The house you are buying must be your primary residence. It has to be purchased between January 1 and November 30 2009. If your income is above $75,000 it phases out and disappears if you earn more than $95,000. Also if you sell the house or stop using the house as your primary residence within three years you have to repay the credit.

4.    Energy-conservation: You may be able to get a tax credit if you increase energy efficiency in your home. Energy efficient improvements include new windows, water heater, even central heating and air-conditioning. As long as the work is done on your home between 2009 and 210 you could receive $1,500, or more, in tax credits.  Check with your accountant on the particulars before contracting for these services.

5.    New- car sales tax reduction: If you are thinking about buying a new car you may receive a tax break. The bill allows you to deduct sales or excise taxes on the first $49,500 of the sales price of a car, truck, motorcycle, and even an RV bought between February 17 and the end of 2009. To get the full deduction, your income may not exceed $125,000, or double that amount for married couples.

6.    Education provision: If you are retired but taking a few college courses towards getting a degree you may receive up to $2,500 per year. Your income must be less than $80,000, and double for married couples. The credit is 40% refundable. At the very least, as a Retiree, you can count on $250 individually and possibly more.

David M. Frees III, Esquire
[email protected]
Unruh, Turner, Burke and Frees

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David M. Frees, III
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