Emergency Economic Stabilization Act of 2008

In October 2008, the Emergency Economic Stabilization Act of 2008 was signed. The bill provides authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, amends the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, extends certain expiring provisions, provides individual income tax relief and for other purposes.

The following information covers certain provisions of interest to individual taxpayers.
Energy Improvement: This law extends the tax credit for energy-efficient existing home improvements for 2009. Home improvements, including energy efficient windows, doors, HVAC, insulation, roofs, and water heaters, installed between January 1, 2009 and December 31, 2009 are eligible for the tax credit.

Caution: Improvements made in 2008 are not eligible for tax credits. Under the energy efficient tax credit law of 2005, all tax credits expired at the end of 2007. New 2008 law applies only to improvements in 2009.

The law further extended the 30% investment tax credit for solar energy systems and qualified fuel cell property until January 1, 2017.

Alternative Minimum Tax Relief: The law amends the Internal Revenue Code to extend through 2008 for individual taxpayers:the offset of nonrefundable personal tax credits against regular and alternative minimum tax (AMT) liability; the increased AMT exemption amounts.

Note: AMT Exemption Amounts For 2008

$46,200 for single and head of household fliers;
$69,500 for married people filing jointly and for qualifying widows or widowers, and
$34,975 for married people filing separately.

Extension Of Individual Tax Provision: The law extends through 2009 the following tax provisions:

The tax deduction for state and local sales taxes in lieu of state and local income taxes;
the tax deductions for qualified tuition and related expenses (up to $4,000);
the tax deduction up to $250 for certain expenses of elementary and secondary school teachers;
the additional standard tax deduction from gross income for real property taxes;
tax-free distributions from individual retirement plans for charitable purposes;
the exemption from withholding of tax of interest-related and short-term capital gain dividends received from a regulated investment company (RIC) and the special rule for RIC stock held in estate of a nonresident non-citizen; and
the inclusion of an RIC within the definition of "qualified investment entity" for income tax purposes.

FDIC Insurance Coverage This law increases from $100,000 to $250,000, until December 31, 2009, the amount of deposit and share insurance coverage offered under the Federal Deposit Insurance Act and the Federal Credit Union Act.

The Emergency Economic Stabilization Act of 2008 contains many provisions. This represents a quick overview of a few of the provisions impacting individual taxpayers.