Tax Bullet Points from the American Reinvestment and Recovery Tax Act (2009 Act)

Bonus depreciation: The 2009 Act extends 50% additional first-year depreciation through 2009 (2010 for certain longer-lived property and transportation property). Also, the election to accelerate AMT credits and research credits instead of taking additional first-year depreciation is extended through 2009.

Small business expensing limitation nearly doubles. Extending the $250,000 small business expensing amount in 2008 through 2009. This 179 change allows your business to expense a certain amount of tangible personal property rather than depreciating it over its life.

Carryback period for net operating losses lengthens. Eligible small businesses, those with gross receipts not exceeding $15,000,000, may elect a three, four, or five-year carryback of 2008 net operating losses instead of the usual two-year period.

Alternative motor vehicle credit added. Effective for property placed in service in 2009 and 2010, the 2009 Act adds a 10% credit up to $4,000 for the cost of converting a motor vehicle to a plug-in electric drive vehicle.

New, qualified advanced energy property credits offered. Beginning after February 17, 2009, qualified energy projects that equip, expand, or establish manufacturing facilities that produce certain renewable and alternative energy property can receive a new 30% credit for the cost of investments in the projects, up to a $2.3 billion national limit.

COBRA premium subsidy -

Employees involuntarily terminated between September 1, 2008, and December 31, 2009, may receive the subsidy.

Terminated employees pay only 35% of their health insurance premium to your company as the plan sponsor. The federal government will reimburse your company for the remainder of the premium by applying a credit against your company's payroll taxes.

Individuals whose annual income exceeds $125,000 (or $250,000, if married and filing jointly) may have to repay all or part of the premium reduction through an increase in their income tax liability for the year.

If an employee declined to take COBRA at the time of termination, or elected COBRA and later discontinued it, you must notify that employee of the subsidy and provide him/her with another opportunity to elect COBRA coverage and pay a reduced premium.

Premium reductions apply only to coverage periods beginning on or after February 17, 2009. Reimbursements cannot be made for coverage initiated before then.

Opportunities to earn credits -

For 2009 and 2010, 6.2% or $400 for taxpayers ($800 for married taxpayers filing jointly) with adjusted gross incomes below $75,000 ($150,000 for joint filers); also for 2009 and 2010, 15% of earned income in excess of $3,000 for determining the refundable portion of the child tax credit; and offsetting nonrefundable credits for 2009 alternative minimum tax expenses.

One-time-only credit for first-time homebuyers offers a credit equal to 10% of the purchase price (limited to $8,000 for joint filers, $4,000 for married couples filing separately) and, unlike the previous version of the credit, no repayment provision. Act now, you must purchase a home before December 1, 2009.

Deduction for state and local sales and excise taxes imposed on the purchase (up to $49,500) of passenger cars, light trucks, motorcycles, and motor homes bought after February 17, 2009, and before January 1, 2010.

Breaks in education expenses. Under the American Opportunity Tax Credit, you can receive a credit of up to $2,500 for every eligible student in your household per year. The credit covers qualified tuition expenses and textbook expenses, is applicable for 2009 and 2010, is partially refundable, and applies against alternative minimum tax. In addition, you can use your 529 plans to pay for computer expenses in 2009 and 2010.

Credit increases for the cost of certain energy improvements to your home and to your vehicles....