from the inbox:
With Tax Day approaching, the White House has put together a Tax Cut Calculator and a Tax Cut Checklist that will help taxpayers understand how they are benefitting from some of the more than 40 tax cuts signed into law by President Obama.
This Tax Cut Calculator looks at the bipartisan tax cut compromise that President Obama signed into law at the end of 2010, and shows individuals and families how they are benefitting from these tax cuts in 2011. The Calculator shows the benefits of the Payroll Tax Cut, which is providing a larger paycheck for millions of workers across the country right now. It also illustrates how families can benefit from three Recovery Act tax cuts that the President fought to extend – the American Opportunity Tax Credit (AOTC) and the expanded Earned Income Tax Credit (EITC) and Child Tax Credit. This Calculator can be found on WhiteHouse.gov and can also be used for broadcast and embedded on websites. Instructions for embedding are included below.
The AOTC, EITC and Child Tax Credit are also benefits that families and businesses should keep in mind when filing this year’s tax returns.
Below is some background information on the tax cuts included in the Calculator. In addition, as families complete their taxes for 2010, a checklist is included that shows the Recovery Act tax cuts Americans may be eligible to claim on their tax returns.
· 6.7 million people in Pennsylvania Benefit from the Payroll Tax Credit
· 372,000 Pennsylvania Families Benefit from the American Opportunity Tax Credit
· 353,989 people in Pennsylvania had their Unemployment Benefits Extended
Last December, thanks to a historic bipartisan agreement signed into law by President Obama, millions of people in Pennsylvania are benefitting and will continue to benefit from several tax credits. The Payroll Tax Credit is currently benefitting 6.7 million people in Pennsylvania who will see $4.8 billion in tax relief this year. Families will continue to be eligible to claim key Recovery Act tax cuts in 2011 and 2012 that they are now claiming for 2010. These tax cuts include the American Opportunity Tax Credit, which will help 372,000 families in Pennsylvania afford college, as well as expansions of the Child Tax Credit and the Earned Income Tax Credit that will provide larger tax cuts to 15.7 million families with about 29.1 million children.
· The Payroll Tax Cut: The law signed by the President creates a new Payroll Tax Cut that is boosting paychecks for 6.7 million people in Pennsylvania throughout 2011 by reducing the payroll taxes they pay on their wages from 6.2 percent to 4.2 percent. Nationwide, this provision will benefit 159 million workers, and provides a typical family earning $50,000 with a $1,000 tax cut this year.
· The American Opportunity Tax Credit (AOTC): Families in Pennsylvania will receive $856 million from the AOTC – an average of $2,300 per family – to help pay for college. President Obama created the American Opportunity Tax Credit as part of the Recovery Act, and extended it through the end of 2012 as part of the bipartisan tax compromise. For more information on the AOTC, click here LINK.
· Child Tax Credit: The bill that the President signed not only extended the $1,000 child tax credit, but it also continued Recovery Act provisions that made it available to more families. In total, extending the Recovery Act expansions of the Child Tax Credit that the President fought for will increase tax credits for 11.8 million families, with families with one child receiving up to $1,000 more and some families with two or more children receiving nearly $1,500 more.
· Earned Income Tax Credit: The bill extended expansions of the Earned Income Tax Credit for married couples and families with three or more children. In total, the Recovery Act provisions the President fought for in the bill he signed will benefit 5.8 million working families with 12.5 million children.
Don’t Forget: The new Tax Cut Calculator focuses on the tax compromise the President signed into law to provide tax cuts for workers and families in 2011. But when completing their tax returns for 2010 this April, taxpayers should not forget about the following Recovery Act tax cuts they may be able to claim:
þ American Opportunity Tax Credit: The Recovery Act created a new college tax credit that provides up to $2,500 for each of four years of college to help cover the cost of tuition and other educational expenses. Learn more about the American Opportunity Tax Credit.
þ Child Tax Credit: The Recovery Act made more families eligible for the Child Tax Credit, and increased the value of the credit for certain families. Learn more about the Child Tax Credit.
þ Earned Income Tax Credit: The Recovery Act expanded the amount that filers with three or more children could receive as a result of the Earned Income Tax Credit and increased the level at which it begins to phase out for married couples. Learn more about the Earned Income Tax Credit.
þ Residential Energy Credits: Under the Recovery Act, Americans who made some types of energy-efficient upgrades to their homes last year can get 30 percent of what was spent back - up to $1,500 - this tax season. Learn more about the Residential Energy Credits here.
þ First-Time Homebuyer’s Tax Credit: First-time homebuyers who purchased by April 30, 2010 and settled by September 30, 2010 may be eligible to collect a credit of up to $8,000 with no payback requirement. Learn more about the First-Time Homebuyer Credit.
þ Making Work Pay Credit: Over 110 million working Americans qualified for the Recovery Act’s Making Work Pay Tax Credit, which saved individuals up to $400 per year and married couples up to $800 per year in 2009 and 2010. Even though you probably received the benefit of this credit in your paychecks from adjusted tax withholding by your employer, you must still claim the credit on your tax return. Learn more about the Making Work Pay credit.
For families across the country, these tax benefits mean more money in their pockets and give them incentives to make energy saving home improvements, purchase a new vehicle or buy a home. That isn’t just good for working families – it’s also good for the economy overall. Those purchases are helping drive economic growth and provide more clean energy, manufacturing and construction jobs for working families right here in the U.S.