Individual Tax Credits

• Most benefits associated ARRA revolve around tax credits. Many Americans remember the rush to buy homes when a tax credit of $8,000 was announced as part of the recovery effort package. Other tax credits included an increased amount of Earned Income Tax Credit, more families qualifying for the additional-child-tax credit and incentives aimed at installing energy-efficient appliances as well as the installation of products that make use of renewable sources of energy.
  
  

Other Individual Incentives

• Although one initiative included in the ARRA is labeled the Making Work Pay Tax Credit, it is actually a system of reducing the amount of federal taxes deducted from a wage earner's paycheck, thus resulting in more take-home cash to funnel into the struggling economy. Workers laid off between Sept. 1, 2008, and May 31, 2010, were in most cases eligible for reduced COBRA health insurance premiums thanks to language incorporated in the ARRA. Also, a $250 economic-recovery payment was paid to Social Security recipients along with veterans and railroad retirees, as a result of the ARRA's passage.
  
  

Business Incentives

• ARRA expanded upon the already successful Work Opportunity Tax Credit by adding returning veterans and "disconnected youths" to the list of individuals eligible for consideration of the credit. Businesses may qualify for the WOTC by requesting certification from their state's workforce agency through Internal Revenue Form 8850. WOTC applies to 12 targeted groups, including the two added by ARRA. The act also continues the COBRA health insurance subsidy available to eligible employers, providing guidance through the IRS and implementation of an updated Form 941, the employer's quarterly federal tax return. Businesses may also qualify for tax rewards through energy-efficiency and renewable-energy incentives dictated by ARRA.
  
  

Considerations

• When applying for incentives or claiming tax credits associated with the ARRA, contact the IRS or the appropriate governmental agency charged with administering the specific program. Some federal grants associated with renewable-energy property are available for businesses that elect to forgo the energy-investment-tax credit or the renewable-energy-production-tax credit. Because many ARRA incentives involve federal income tax credits, taxpayers should be sure of the credit's criterion and the associated reduction of tax liability before submitting an income tax return to the IRS.