IRS Issues Stimulus Act Update

by Glen Shapiro, LawAndTax-News.com, New York

19 February 2009

The US Internal Revenue Service has announced that it is working with Congress and the administration to implement tax-related provisions of the American Recovery and Reinvestment Act 2009 "as quickly as possible."

In an update on the forthcoming changes, issued following President Obama's signing of the bill on February 17, the IRS said that "the vast majority" of individuals preparing their 2008 tax returns due April 15 will not be impacted by the new legislation.

"These changes will largely impact 2009 tax returns filed next year, in 2010. Taxpayers should continue to prepare their 2008 tax returns as they normally would," the IRS advised.

However, there are a few limited areas in the legislation that could impact 2008 tax returns. For example, for some small businesses, changes in the net operating loss provisions could affect 2008 tax returns.

Unlike last year's smaller stimulus package, taxpayers will not receive a check through the mail, and the new 'Making Work Pay' tax credit will be automatically credited to taxpayers through withholding changes handled by employers. Some taxpayers will also be able to claim this credit when they file their 2009 tax return in 2010, the IRS stated.

The IRS expects that the Making Work Pay credit payments will begin to appear in taxpayers' paychecks in the spring.

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