On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009. The following is a summary of the Act’s major tax provisions affecting individuals and business.
Tax Changes for Individuals
- Homeowner Tax Credit. The Act extends the $8,000 first-time home buyer tax credit, originally established in
the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”), through April 30, 2010. The Act also
creates a new $6,500 tax credit for existing homeowners who want to purchase a different home as their primary
residence. Individuals earning up to $125,000 and couples earning up to $225,000 are eligible for the credit. The
credit is unavailable if the purchase price of the home exceeds $800,000.
Tax Changes for Businesses
- NOL Carryback. The Act expands the Recovery Act’s NOL carryback provision for small businesses, allowing any business (not just small businesses) with a loss in either 2008 or 2009 to claim refunds of taxes paid within the previous five years. There is no limit on carrybacks for the first four years of the carryback period, but for year five the carryback is limited to 50 percent of a company’s taxable income in that year.
- Extended FUTA Surtax. The Act extends the 0.2 percent Federal Unemployment Tax Act (“FUTA”) surtax through June 30, 2011, to pay for the Act’s extension of unemployment insurance benefits. The FUTA surtax extension will pay for 14 more weeks of unemployment insurance benefits in all 50 states, and up to 20 more weeks in states with a three-month average total unemployment rate of at least 8.5 percent.
- Increase in Penalty for Failure to File Partnership or S Corporation Returns. The Act will raise $1.2 billion in revenue by increasing the penalty, from $106 to $195, for failing to file S corporation and partnership tax returns.
- Increase in Estimated Tax Payments for Large Corporations for 2014. Businesses with assets of at least $1 billion will see their corporate estimated tax payments due July-September 2014 increase by 33 percent. This adjustment is expected to raise $18.3 billion. The adjustment merely pulls payments ahead into 2014 meaning that the tax receipts will fall by the same amount in 2015.
- Electronic Filing by Return Preparers. The Act requires all tax return preparers who expect to file 10 or more returns to use electronic filing on the individual income tax returns they prepare. If an individual’s return is handled by a preparer and filed electronically under this requirement, the individual will not be required to pay any tax deficiency via electronic payment.
IRS Circular 230 Notice
To the extent this client alert within it concern tax matters, the information is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law or in promoting, marketing, or recommending to another party any transaction or matter addressed. |
