US Tax Refunds Rise

by Mike Godfrey, Tax-News.com, Washington

24 March 2010

The Obama administration has announced that average income tax refunds from 2009 tax returns are up nearly 10% to just over USD3,000 because of the various tax benefits provided in last year's Recovery Act.

According to Internal Revenue Service data, the average refund is up more than USD260, a 9.6% increase over last year.

"The more that individuals and families take advantage of these benefits, the more money is pushed back into the economy, helping all Americans as we grow our way out of this crisis," said Treasury Secretary Tim Geithner. "Only by getting these benefits to the American people can we help ensure that the recovery is firmly established. And only by firmly establishing the recovery can we encourage the creation of new jobs and lay a foundation for sustained economic growth."

Vice President Joe Biden noted: "The big guys know all the credits and deductions to claim during tax season, but we want middle class families to know just how much is out there for them this year thanks to the Recovery Act – and how to take advantage of it. From help with college expenses to credits for cost-saving, energy-efficiency home improvements, these Recovery Act tax credits not only provide some needed relief for working Americans, but also help them invest in their families’ futures."

Some key tax benefits available as a result of the Recovery Act include:

• Making Work Pay: according to the White House 95% of working families are receiving the Work Pay tax credit of USD400 for an individual or USD800 for married couples filing jointly in their paychecks in 2009.
• College Expenses: Families and students are eligible for up to USD2,500 in tax savings under the American Opportunity Credit.
• Purchase of First Home: Homebuyers can get a credit of up to USD8,000 for first homes purchased by April 30, 2010 under the First Time homebuyer tax credit.
• Energy Efficiency and Renewable Energy Incentives: Taxpayers are eligible for up to USD1,500 in tax credits for making some energy-efficiency improvements to their homes.
• New Vehicle Purchases: Taxpayers can deduct state and local sales taxes or fees for vehicle purchases under the vehicle sales tax deduction.
• Expanded Family Credits: Moderate income families with children may be eligible for an increase under the Earned Income Tax Credit and the additional Child Tax Credit.
• Unemployment Benefits Tax Free in 2009: the Recovery Act made the first USD2,400 of unemployment benefits received in 2009 tax free.

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