Key Terms

The American Recovery and Reinvestment Act

The American Recovery and Reinvestment Act of 2009 (ARRA) provides several benefits and tax credits for individuals and families when they file their tax return.

Additional information on available federal tax credits and benefits from the ARRA, included below:

Making Work Pay Tax Credit

“Making Work Pay” is a refundable tax credit, which means you may receive a refund even when you do not owe any tax, of up to $400 or up to $800 if you’re filing a joint return. The tax credit is automatically added to your paycheck each pay period simply because less tax is withheld. Most people didn’t need to do anything to receive this credit and the money was automatically included in their paychecks starting April 2009. If you do not have taxes withheld by an employer, you can get the credit on your 2009 tax return. For people filing a joint return, the credit will phase out if your annual household income is more than $75,000 or $150,000.

The IRS Withholding Calculator can help ensure you’re withholding the appropriate amount of taxes from each paycheck. Sometimes taxpayers withhold too little if they have more than one job, receive a pension, are married and both people work, or if someone claims them as a dependent. It’s important to adjust your withholding to the correct amount for your situation.

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Temporary Increase in Earned Income Tax Credit (EITC)

Through December 2012, ARRA temporarily increases the income limits and earned income tax credit percentage allowed for working families with three or more qualifying children. For more information, see the EITC and Family Credits page on this toolkit. Additional information is also available in Publication 596, Earned Income Credit (EIC), and Schedule EIC, Earned Income Credit (Qualifying Child Information).

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Temporary Increase in Refundable Portion of Child Tax Credit

The Child Tax Credit is a valuable credit that can significantly reduce the taxes you owe. You can claim this credit if you have a qualifying child, and can claim it in addition to the credit for child and dependent care expenses. The minimum earned income amount used to calculate the additional child tax credit is reduced to $3,000 through December 2012. Reducing the amount to $3,000 allows more taxpayers to claim the additional child tax credit and increases the amount of the payments they may receive. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax. 

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More Tax Credits

  • Residential Energy Credits – ARRA provides numerous tax incentives for individuals to invest in energy-efficient products. For more information, see Publication 553, Highlights of Tax Changes, and Form 5695, Residential Energy Credits.
  • Education Credits and Benefits – ARRA made temporary changes to education benefits. See the Tax Benefits for Education page of this toolkit for additional information.
  • Homebuyer Credit – ARRA extended the First-Time Homebuyer Credit to include homes purchased before December 1, 2009. The credit has now been further extended and the eligibility requirements have been expanded. For more information, see the First Time Homebuyer Credit page of this toolkit for additional information.


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