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Credits where credits are due Looking forward to having more cash in your pocket thanks to the new economic program? These are some of the incentives you can count on to make life a little more affordable this year.

Looking to install a new energy-efficient furnace?

Uncle Sam could help pay for it, thanks to the federal government's new economic stimulus program.

Buying a new car?

You'll be able to claim a federal income tax deduction on the sales taxes you pay on all but the most expensive vehicles.

In the market for a house?

The stimulus package offers a tax credit of up to $8,000 on home purchases through the end of November.

"It's an added bonus," said Christopher Sucharski, a first-time home buyer who earlier this month closed on a house in Newfane.

While Sucharski already was looking to buy a house before the stimulus package was approved, he said the tax credit will make it easier to afford the inevitable costs of furnishing and sprucing up his new home.

The $787 billion economic stimulus program adopted earlier this month includes a wide range of tax breaks and incentives, many aimed at encouraging consumers to spend money while also easing the tax burden on most families.

The tax cuts included in the stimulus plan will reduce the tax burden on 97 percent of American families, according to estimates from the Tax Policy Center, a Washington, D.C., think tank.

The effect of those tax cuts will boost the average family's after-tax income by 2 percent, or an average of $1,179, the center estimates. The biggest tax savings will go to people in the bottom fifth of the income spectrum. Those taxpayers will see their after-tax incomes rise by an average of 4.7 percent.

Almost half of the $280 billion in tax cuts included in the stimulus plan will go toward the "Making Work Pay" tax credit -- worth up to $400 for individuals and $800 for couples -- that will be distributed by reducing the amount of taxes withheld from pay checks by April 1.

"The idea seems to be that, if people get the credit through their paychecks, the money is more likely to get into circulation, rather than stuck into a savings account or used to pay down debt," said Mark Luscombe, a tax analyst at CCH Inc.

Many other aspects of the stimulus program that are aimed at individuals, however, will take a year or so to have an effect. That's because a significant portion of the stimulus package relies on tax breaks that taxpayers won't be able to cash in until they file their federal income tax returns next year.

Here's a look at other portions of the stimulus program that could affect you:

>Unemployed workers

*Workers receiving unemployment benefits won't have to pay income taxes on the first $2,400 in benefits received this year. Those benefits previously had been completely taxable.

*Unemployment benefits will rise temporarily by $25 a week.

*Unemployment benefits will also include a 33-week expansion, extending the period laid-off workers in New York can get the benefits to 59 weeks.

*The federal government will pay 65 percent of the health insurance premiums unemployed workers pay under the COBRA program, which lets former employees keep the same health coverage they had at their old jobs.

The subsidies apply to workers who were laid off between Sept. 1, 2008, and the end of 2009 and will last for up to nine months.

Workers who lost their jobs between Sept. 1, 2008, and Feb. 17 and didn't sign up for health coverage under COBRA will get an extra 60 days to reconsider under the new terms. The subsidy is limited to workers whose incomes are less than $125,000 for individuals and $250,000 for couples filing jointly.

The COBRA provisions are important because the cost of health insurance can eat up most of a laid-off worker's unemployment benefits. In New York, the typical monthly cost of COBRA family coverage amounts to about 85 percent of a worker's average monthly unemployment benefits, according to the Families USA Foundation.

>First-time home buyers

*First-time home buyers who purchase a home between Jan. 1 and Nov. 30 can qualify for a tax credit of up to $8,000, or 10 percent of the purchase price. The one catch is that those home buyers will have to pay the credit back if they sell the home within three years or it stops being their principal residence during that time.

The stimulus program's home buyer tax credit was enough of an incentive to convince Karen Freeburg to buy a house a year earlier than she had planned.

"It's definitely a nice incentive," said Freeburg, who has agreed to buy a Cape Cod in the Town of Tonawanda.

With up to $8,000 coming her way through next year's tax return, Freeburg said the extra money will help her fix up her new home the way she wants.

"I figure it will help pay for a new fence," she said. The home buyer tax credit is lucrative, but it also can be complex, said David Schlein, a partner at Lumsden & McCormick, a Buffalo accounting firm.

The credit starts to phase out for buyers with incomes above $75,000 for individuals and $150,000 for couples.

Still, the credit included in the stimulus plan is more lucrative than a similar benefit that was in effect last year. That credit included a provision that required the $7,500 tax break be repaid over a 15-year period, effectively turning it into an interest-free loan.

*Homeowners who make energy-efficient improvements to their property can qualify for tax credits of up to 30 percent, or a maximum of $1,500.

The tax credit covers high-efficiency furnaces or tankless water heaters installed this year or in 2010 and can dovetail with rebates currently available for National Fuel utility customers.

"It's a nice complement to what we have available with our conservation incentive program," said Julie Coppola Cox, a National Fuel spokeswoman. "It makes energy efficiency that much more affordable."

The federal tax credits also cover energy-efficiency improvements that aren't part of the National Fuel program, including qualified windows, insulation, central air conditioning systems and metal or asphalt roofing.

A detailed list of qualified improvements is available at www.energystar.gov.

>Car buyers

This deduction on the purchase of a new car could be lucrative to Buffalo Niagara residents because of the region's high sales taxes.

The provision allows new car buyers to deduct the sales and excise taxes they pay on vehicles purchased after Feb. 16 through the end of this year.

The deduction is limited to the first $49,500 of the vehicle's purchase price and is phased out for buyers whose incomes exceed $125,000 for individuals and $250,000 for couples filing jointly.

Because the deduction helps reduce your taxable income, even taxpayers who claim the standard deduction can claim this tax break. But the tax savings will depend on a taxpayer's tax bracket.

A taxpayer who buys a $25,000 car in Erie County will pay $2,188 in sales tax on that vehicle. If that taxpayer is in the 25 percent tax bracket, the tax break would be worth a quarter of those sales taxes, which would cut almost $547 off their federal income tax bill for 2009.

>Students

*The stimulus plan replaces the Hope Scholarship credit, which was worth a maximum of $1,800, with a new credit that is worth up to $2,500 both this year and in 2010. The credit covers the first $2,000 in eligible expenses, such as tuition, fees and books, and then 25 percent of the next $2,000 in eligible expenses, said Joe Hurley, who runs the Savingforcollege.com Web site.

The new credit also is 40 percent refundable, which means it is paid to taxpayers even if they have little or no tax liability.

The new credit is available to more families than the old Hope credit was, and can be used for the third and fourth years of college, as well as the first two years, Hurley said. The income limits for the new credit also are higher, phasing out for incomes above $80,000 for individuals and $160,000 for couples filing jointly, up from $50,000 and $100,000 under the Hope program.

*The stimulus program also allows funds from Section 529 college savings plans this year and in 2010 to be used to purchase computers and other computer equipment, as well as to pay for Internet access, Hurley said.

*The maximum Pell Grant for low-income students will rise by $500 to $5,350 for the 2009-10 academic year and to $5,500 the next.

>Low-income workers

*More taxpayers will be eligible to claim the child tax credit. The stimulus package also makes it easier for taxpayers who don't owe any income tax to claim the credit.

Under last year's rules, taxpayers with dependent children under age 17 needed at least $8,500 in income to benefit from the credit. The stimulus plan lowers that income threshold to $3,000.

The earned income tax credit also is expanding for the next two years. The maximum credit for a qualifying family with three or more children will rise by $629 to $5,657.

*Food stamp benefits will increase by 13.6 percent, hiking the maximum monthly benefit for a family of four by $80 to $668 from $588, according to the U.S. Department of Agriculture.

*Individuals who receive Social Security benefits; railroad retirees; disabled veterans; and government retirees who aren't eligible for Social Security will receive a one-time payment of $250.

e-mail: drobinson@buffnews.com

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What's in the stimulus for me?

There's something for almost everyone in the economic revitalization plan

Students

*Annual tuition tax credit rises to $2,500.

*Section 529 funds can pay for computers.

*Pell Grants rise by $500.

*

Homeowners

*First-time buyers get tax credit of up to $8,000 for homes bought from Jan. 1 to Nov. 30.

*Tax credits of up to $1,500 for energyefficient upgrades.

*

New car buyers

*Sales and excise taxes deductible on new vehicles costing up to $49,500.

*

The unemployed

*Weekly unemployment checks rise $25.

*First $2,400 in jobless benefits not taxed.

*Benefits extended by 33 weeks.

*65 percent subsidy for COBRA health insurance coverage.

*

Workers

*$400 tax cut for individuals and $800 for couples.

*Food stamp benefits rise 14 percent.

*Earned income tax credit increased for families with three or more children.

*Child tax credit available to taxpayers earning $3,000 or more.

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