Making Work Pay Credit Provisions

March 12, 2009 // 0 Comments

By JERRY COON Spring is my personal favorite time of the year. Yes, I do like going deer hunting and that happens in the fall. I do like watching football and that happens in the fall. It can be excruciating when we have to watch the Lions, but there are other good teams to watch like our Rockford Rams and several good college teams. I like going to Knoxville, Iowa, in August to watch the World of Outlaws winged sprint cars put on their spectacular racing show. Salmon fishing in Lake Michigan gets going seriously in late summer. Going to Canada fishing in June is always a treat. We try to go camping somewhere in Michigan in the summer. Those are all good things and good times, but spring is still the best for me. Baseball is getting started. As of this moment, the Tigers have the best team on the planet. Their pitchers are healthy, their defense is the best in the league, and they are going to hit the stuffing out of the ball. This could be that World Championship year. I still play slow-pitch softball and my mind is ready to play. My mind says I can bat like Al Kaline this year, run as fast as the younger guys, play some shortstop, and maybe leg out an inside-the-park home run. The truth is my body isn’t there anymore, but it’s spring, so those things are still technically possible. I see a few guys in the river fishing already. As soon as we wrap up tax season, I will be one of those guys out there trying for that elusive Rogue River steelhead. I heard The Mines golf course was open last week and it’s a sign that golfing season is going to start pretty soon. I enjoy golfing and, who knows, this year might be the year I get a hole-in-one and break 40 for 9 holes or break 80 for 18. I might be satisfied, however, if I can just play regularly and maybe stay in the 40s and 80s. There is nothing better than going golfing for the first time in the spring, fishing for the first time in the spring, and stepping out on a ball diamond for […]

Credits, Deductions of the American Recovery & Reinvestment Act

March 5, 2009 // 0 Comments

by JERRY COON The picture is becoming clearer where it concerns some of the credits and deductions that were adjusted when President Obama recently signed the American Recovery & Reinvestment Act of 2009 (AR&R). There are so many provisions in this bill that were changed, thus affecting so many people, that it has guaranteed that tax professionals will spend many hours in the months ahead becoming familiar with those changes. Lower-income taxpayers, especially, will potentially get a tremendous amount of tax relief under this bill. First, those receiving Earned Income Tax Credit (EITC) will get the benefit of an increased EITC. In 2009 and 2010, taxpayers with three or more qualifying children can receive up to a maximum EITC of $5,656. That is an increase of $832 over the 2008 maximum credit of $4,824. It’s important to note that EITC is fully refundable, so the term “tax relief” isn’t technically totally accurate. Tax relief would imply there would be some tax to get some relief from. For reference purposes, under pre-American Recovery & Reinvestment Act law, two taxpayers filing a joint return with earnings of $29,000 and three children would already pay zero tax, would get a full refund of their withholding, and would get $2,669 in refundable EITC. That is how our current tax system works. The new EITC tables have not been released as yet, but it looks like these same taxpayers would get a refund of about $3,203 in 2009. The American Recovery & Reinvestment Act practically guarantees our tax system will continue to work in the same old way far into the future. The second provision affecting these same taxpayers allows more taxpayers to participate in the refundable portion of the Child Tax Credit (CTC). For each dependent under the age of 17, $1,000 of CTC is allowed. However, for 2008, basically only taxpayers with earnings in excess of $12,550 would qualify for a refundable CTC. The new law allows this refundable portion to start with earnings in excess of $3,000. The previously noted joint taxpayers with $29,000 and three children would receive an additional $3,000 of refundable CTC in addition to the $3,203 of refundable EITC for a total minimum refund of $6,203. I think it’s fair to say that […]

Two Provisions on the Newly Signed Bill

February 26, 2009 // 0 Comments

by JERRY COON Information is slowly trickling out, detailing how the American Recovery and Reinvestment Act of 2009 will affect us here in Rockford. All 1,107 pages of this historic bill were signed into law by President Obama on February 17. An additional 285-page report has been issued by a joint Congressional committee that explains just the tax provisions of the bill. Needless to say, we are in the heart of the tax season and even skimming through 285 pages would be a difficult task, let alone trying to look over the full bill. For that reason, tax professionals like me belong to tax organizations such as the National Association of Tax Professionals. They have the staff to research these bills and the accompanying committee reports and give us a 20- or 30-page synopsis of what it all means to you and me. I can deal with 20 to 30 pages. I would like to pass on what we are being told about two provisions of the bill: the One-Time Emergency Payments provision and the Making Work Pay Credit. Both of these credits will put a tremendous amount of money back into people’s hands with the hope they will spend that money and thus stimulate the economy. The One-Time Emergency Payment consists of the Department of Treasury issuing a $250 check to the following taxpayers: those receiving Social Security benefits; railroad retirement benefits; veteran’s benefits; and certain taxpayers receiving supplemental security income benefits. There is quite a group of taxpayers, however, who will not qualify for the $250 payment, including those currently in prison, those currently on probation or who have violated parole, those who have committed fraud, and those currently receiving SSI while receiving Medicaid benefits. The Social Security Administration (SSA), the Veterans Administration (VA), and the Railroad Retirement Board (RRB) are all required to submit lists of eligible taxpayers to the Department of Treasury. The checks are required to be issued no later than 120 days after February 17. That means those $250 checks or direct deposits should show up no later than about June 17. That also means that taxpayers will not be required to file a tax return to get the benefit. We all thought that was hokey last year when […]

Tannery Closure/Rate Implications Addressed

February 19, 2009 // 0 Comments

by MICHAEL YOUNG, Rockford City Manager Since Wolverine World Wide’s (WWW) recent announcement that it is closing its downtown tannery facility, the City of Rockford has been working to identify all of the issues related to this decision and its ultimate impact on our residents and ratepayers. As you can imagine, the issues are numerous and complex and include analyzing financial implications on the sewer fund, an analysis of lost tax revenue, engineering issues related to the decommissioning of the treatment plant, and planning and zoning issues related to the eventual redevelopment of the tannery property. We have stayed in very close communication with WWW and are working to identify a time frame to address all of these issues. As I have interacted with residents and ratepayers, I have been comforted but not surprised by the community’s response to this announcement. Rockford has always been an example of a community that pulls together during tough times to work toward a positive solution. Thank you to those who have taken the time to provide your support and input. I have also received a handful of questions regarding the impact of the tannery’s closing on sewer rates and the new PARCC Side Wastewater Treatment Plant and since others may have similar questions, I would like to answer them publicly. The short answer to this question is simple. The City’s share of financing and operting the new treatment plant today is $90,000 less per year than the cost of signing the new City of Grand Rapids Wastewater Treatment Plant contract. In addition, the City has saved $2.4 million over the last ten (10) years by not signing the proposed new Grand Rapids contract when it was presented in the winter of 1998. This savings over the last ten (10) years has allowed us to keep our sewer rates stable. That said, as I wrote in an earlier article, the tannery closing will impact rates likely resulting in an increase of approximately $10 per month for the average residential customer. While we understand that this is a difficult time for a rate increase, the tannery closing would have increased rates even higher if Rockford had signed the Grand Rapids contract ten (10) years ago and not built the PARCC […]

What is the Economic Recovery Bill?

February 19, 2009 // 0 Comments

by JERRY COON All 1,071 pages of the Economic Recovery Bill were signed by President Obama on Tuesday. This bill has some items that will benefit most of us, although you can bet there isn’t anything in it for the presidents of GM, Chrysler or Ford. The total bill is worth $787 billion in federal spending. Since the deficit was expected to be about $813 billion anyway, that will bring the federal deficit for this year up to $1.6 trillion. That is a staggering amount of money. We have become somewhat acclimated to the big number game, so the figures don’t seem to mean as much. This “big number game” appears in our day-to-day life in many ways. For example, in major league baseball, Ryan Howard of the Philadelphia Phillies recently signed a three-year contract for $54 million. Wow – $54 million to hit a baseball. The New York Yankees signed three players, CC Sabathia, AJ Burnet, and Mark Teixeira, to free-agent contracts that totaled $441 million. Wow – $441 million to pitch a baseball and, in Teixeira’s case, to play first base. It seems that every day we see another story of a Wall Street executive that received a multi-million-dollar bonus or remodeled his office for a few hundred thousand dollars. Those numbers don’t just jibe with the reality of living out here in Rockford and in all of the Rockford-like cities of the United States. It looks like the politicians that we have elected have lost touch with us, and that’s a scary proposition. I am not saying that some stimulating should not take place. Our economy needs some help, and some type of stimulus bill is good. I am saying the men and women in Washington are so used to playing the big number game, that billions and trillions do not have a relation to reality anymore. A one-year deficit of $1.6 trillion? That’s an outrageous figure. But outrageous as it may be, it is what it is, and the Economic Recovery Bill is what it is and there is something in it for most people. For starters, all 4.8 million people drawing unemployment will receive a $25-per-week benefit increase. In addition, the first $2,400 of benefits received in 2009 will be […]

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