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Bill H3548 – 13 Weeks Unemployment Benefit Extension For High Unemployment States

The past year has been a bad one for the American worker.  Because of the 2008 financial crisis and ensuing recession – millions of Americans have lost their jobs.  The current national unemployment rate is 9.7% as of Sept 4.  While many workers will find new jobs within the time period of existing employment benefits – many more will run out of benefits before finding a new job.

On September 22, the House passed legislation called Bill H3548 which will allow any states with a total unemployment rate (TUR) of 8.5% or higher to be eligible for federal funding which will allow 13 more weeks of extended unemployment benefits for those people who have exhausted all the current benefits.

This move was made as part of the ongoing 2009 stimulus package which is designed to help the economy recover as quickly as possible and for long term unemployed people to be able to keep paying the bills while they look for work.

Which states are eligible for these benefits?

The eligible states are:

ALABAMA, ARIZONA, CALIFORNIA, FLORIDA, GEORGIA, IDAHO, ILLINOIS, INDIANA, KENTUCKY, MAINE, MASSACHUSETTS, MICHIGAN, MISSISSIPPI, MISSOURI, NEVADA, NEW JERSEY, NORTH CAROLINA, NEW YORK, OHIO, OREGON, PENNSYLVANIA, RHODE ISLAND, SOUTH CAROLINA, TENNESSEE, WASHINGTON, AND WEST VIRGINIA. PLUS THE DISTRICT OF COLUMBIA AND PUERTO RICO.

When can I get these extra benefits?

At the moment this bill has not become law (as of Sept 24).  The senate still has to approve the bill and it is unclear how long it will take.  It is anticipated that the bill will pass Senate but it might take a while.

Keep in mind that the previous extension (Extended Benefits) required state law changes since EB is a joint federal and state program. EB required a change in federal law and then required state laws to be amended.  The legislation that recently passed the House (H3548) is an extension of Emergency Unemployment Compensation (EUC). This does not require state law changes so it won’t require the state legislature to change state law.  This means that it should take less time to get this extension than the previous one.

How much unemployment benefits are available now?

Most states have a basic amount of 26 weeks (6 months) of employment benefits plus any extra weeks available because of various unemployment rate triggers.  These are funded by the states and/or the federal government.

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Money

Ohio Unemployment Benefits Extension – 13 More Weeks?

The Ohio unemployment rate has reached a level of 10.8% as of August, 2009.  Legislation recently passed by the house (Sept 22) called Bill H3548 will allow any states with a total unemployment rate (TUR) of 8.5% or higher to be eligible for federal funding which will allow 13 more weeks of extended unemployment benefits for those people who have exhausted all the current benefits.

This move was made as part of the stimulus package for 2009 effort which is designed to help the economy recover as quickly as possible and for unemployed people to be able to keep paying the bills while they look for work.

Is this extension law yet?

Not as of Sept 23.  The senate still has to approve the bill and it is unclear how long it will take.  It is anticipated that the bill will pass Senate but it’s possible that changes will be made first.

Keep in mind that the previous extension (Extended Benefits) required state law changes since EB is a joint federal and state program. EB required a change in federal law and then required state laws to be amended.  The legislation that recently passed the House (H3548) is an extension of Emergency Unemployment Compensation (EUC). This does not require state law changes so it won’t require the state legislature to change state law.  This means that it should take less time to get this extension than the previous one.

How much unemployment benefits are available now?

Currently somone in Ohio might be eligible for the following:

  • 26 weeks of normal employment benefits
  • 20 weeks of Tier 1 EB
  • 13 weeks of Tier 2 EB
  • 13 weeks because of Bill H3548 (not finalized yet).

How much are the unemployment benefits?

In Ohio the maximum benefits are $503 per week and the minimum is $105 per week.  There is also an additional $25 per week available because of the 2009 stimulus package.

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Money

$8,000 Credit For First-Time Homebuyers Extended 6 Months – Not Increased To $15k

Earlier this year an $8,000 credit for first time home buyers was instituted as part of the 2009 Stimulus package.  The idea behind this credit was to help out first-time home buyers and encourage them to purchase a house.  Sinking house prices and a stalled house building sector were the main motivations for this credit.

[edit July 8, 2010 – closing deadline extended for first time home buyers tax credit to Sept 30, 2010]

The original plan called for December 1, 2009 to be the deadline for the $8,000 credit.  To get the credit your house purchase close date would have to be before Dec 1.  A senate bill has just been introduced on Sept 17 which would extend the first time home buyers credit by 6 months to June 1, 2010.

From Housing Wire:

A senate bill introduced late Thursday would extend the $8,000 first-time homebuyer tax credit for six months after its current November 30 expiration date.

Maryland Democrat Sen. Benjamin Cardin introduced S.B. 1678, and it is co-sponsored by senators John Ensign (R-Nev.), Johnny Isakson (R-Ga.), Senate majority leader Harry Reid (D-Nev.) and Debbie Stabenow (D-Migh.).

Who is eligible?

If you buy a home between January 1, 2009 and June 1, 2009 and meets the following conditions:

  • You must not have owned a house in the past 3 years.  This is the “first time” homeowner condition.
  • Your income must be less than $75,000 for singles or $150,000 for married couples.  Keep in mind that singles who make up to $95k and couples who make up to $170k can get a partial credit.

Is this credit a loan?

No, this credit does not have to be paid back.

Are there any strings attached?

You have to stay in the house for 3 years.  If you don’t then the money has to be paid back.

What is a “first time home buyer”?

A first time home buyer is someone who hasn’t owned a house in the past 3 years or has never owned a house.  For couples – this applies to both spouses.  It is important that if you sold your last house in 2006 that you don’t close on the new house within 3 years of the previous selling date or you won’t get the credit.  For example if you sold your last house on June 1, 2006 then don’t close on a new house before June 1, 2009.

Is the tax credit $8,000 for everyone?

No, the actual credit is $8,000 or 10% of the house value – whichever is less.  For example if your house is worth $200,000 then you would get $8,000.  If the house is only worth $70,000 then you would only get 10% of $70k which is $7,000.

This is a refundable tax credit

The $8,000 credit means that anyone who is eligible for this credit can subtract $8,000 from the amount of tax owed to the IRS.  If you don’t owe $8,000 in taxes then you will get a refund for the difference.

For example if Bob owes $30,000 in taxes and is eligible for the $8,000 credit then he will deduct $8,000 from $30,000 and will owe only $22,000 in taxes.  Steven only owes $5,000 in taxes so if he qualifies for the credit then he will not pay any taxes and will get a refund of $3,000.

Carnival of Financial Planning.

Carnival of Road to Financial Independence

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Money

Contribute Unused Vacation And Sick Leave Pay To My 401(k) Or Other Retirement Accounts

Employers already have the ability to let workers contribute the value of their unused vacation time to their 401(k) plans but it is pretty rare for en employer to do so.  A recent proposal by President Obama will make it easier for employers to convert unused vacation and sick leave pay into a retirement account such as a 401(k) plan.  The purpose of the plan is to try to encourage Americans to save more – while the American saving rate has increased from the dismal 0% rate in the last year or so – the low amount of savings that middle-aged Americans have is going to be a big problem when they try to retire.

What kind of retirement accounts will it apply for?

This program will apply to any qualified retirement plan.  401(k) plans, Roth IRA, tradition Roth etc.  It hasn’t been announced if you will have the option of splitting up your unused vacation time into different accounts or have to designate one account to be the receiver of any contributions resulting from unused sick days or vacation time.

Will these contributions be on top of existing contribution limits?

No, the contribution limits won’t be changing for any retirement accounts.  If you have already reached the contribution limit for your Roth IRA for example then you won’t be able to use that account for this purpose.

What if my current vacation/sick leave is “use it or lose it”?  Can I still contribute?

Probably not.  These changes are voluntary for employers and employees and there are no actual rules changes.  If you lose your unused holiday at the end of the year then it would be up to the employer to “volunteer” to allow these unused days to be contributed to a retirement account.  I wouldn’t hold your breath waiting for this to happen.

Will these changes encourage workers to save more?

I doubt it – workers who can already “bank” their vacation days and unused sick leave pay will just continue to do so.  Workers who don’t have the ability to carry over these days are very unlikely to have an employer who suddenly decides to allow employees to keep their vacation days.

Where there any other changes announced?

Yes.

Ability to buy US government savings bonds with your IRS tax refund.

Starting in 2010 you will be able to select “buy savings bonds” selection when filing your taxes.  Your tax refund will be used to buy US government bonds which will be mailed to you.  I’m not sure how useful this is since these bonds don’t pay very much interest and are probably a more appropriate investment in a tax-sheltered account such as the Roth IRA.

Auto-enrollment for retirement plans

Another feature of the latest proposals is to make it easier for small and medium sized employers to automatically enroll employers into their company retirement plans.  Currently there is a fair bit of bureaucratic paperwork to set this up and this process will be streamlined.

More Information

Roth IRA Contribution Limits For 2010

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Money

Cash For Appliances Program – Upgrade Your Clunker of a Fridge, Washing Machine, Dishwasher

Fresh off the huge success of the Cash for Clunker old car trade-in program, the government is now planning a similar rebate plan for your old appliances.  Simply put – there will be cash rebates ($50 to $200) available which can be applied if you buy new appliances with an Energy Star seal.  The main difference with this program is that unlike the Cash for Clunker program you don’t have to trade in your old appliance to get the rebate.  So if you want to move your grandfather’s old 1950’s fridge out to the garage then this program won’t interfere with those plans.

The program is part of Obamas economic stimulus package for 2009 which provided money for various parts of the economy and is now going to stimulate the appliance industry.  $300 million dollars has been allocated so far.  Considering how quickly the original Cash for Clunkers funding was increased from $1 billion dollars to $3 billion dollars after it’s quick success, I don’t think it’s much of a stretch to imagine that the Cash for Appliances program could get increased funding if demand is high enough.

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Dec 9 – Cash for Remodeling]

When does the Cash for Appliances program start?

The program is very much still in the planning stages.  It will be run by each individual state so make sure whatever information you get is applicable to your state or the state where you are going to buy the appliances in.  The government’s Energy department has set a deadline of Oct. 15 for states to file formal applications.   These formal applications will outline the exact details of how much the rebates are, who will be eligible and how the plans will be administered.  The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November.  This is just a guess – it’s very possible that it could get used up much quicker or much slower than anticipated.  I would assume that the programs will start either on October 15 or by November 1 by the latest.

The amount budgeted for this program should cover approximately 2 million appliances.  This may sound like a lot but if you consider that the Cash for Clunker program applied to 750,000 cars and was done in 2 weeks, it’s very possible that the cash for appliances funding could easily be used up in a week.  Since the original amount ($300 million) is relatively small ( it’s less than a third of the original amount allocated to the Cash for Clunkers program ) so the Cash for Appliances program could get extended several times if necessary.

What kind of appliances are eligible for the Cash for Appliances rebates?

The Cash for Appliances rebates will be awarded for the purchase of appliances which have the Energy Star seal.

Here is a list of the eligible appliances:

  • Refrigerators
  • Air conditioners
  • Washing machines
  • Freezers
  • Central and window air conditioners
  • Dishwashers
  • Furnaces
  • Water heaters
  • Heat pumps

How much will the Cash for Appliances rebates be?

This information has not been determined yet.  So far the plan is that the rebates will be at least $50 and not more than $200 per appliance.  I would assume that the larger rebates will be given for appliances that are more efficient.  For example all the refrigerators that have an Energy Star seal will have different efficiencies – it’s likely that the fridges that are more efficient within that group will get the largest rebates.

Energy savings by the consumer is also a great reason to use this program.  If you can save $100 per year on a new fridge then that’s a good deal even without the rebates.

Old refrigerators and freezers are some of the biggest energy users in homes, and getting old ones out for energy-efficient models will save customers anywhere from $50 to $150 a year on electricity bills, says Steven Rosenstock, manager for energy solutions at the Edison Electric Institute, which represents 70% of the investor-owned utilities in the United States.

Will existing state rebates still apply?

Yes, any existing rebates for energy-efficient appliances will still apply so you can “piggy back” the different rebates to get a fairly cheap appliance.  It’s important to do your research on this topic since there are different existing rebates in various states and the Cash for Appliance program will unfortunately have different rules and rebates for each state.

Why is the government doing this?

The government is funding the program in the hope that the appliance industry will get some stimulus money.  The home appliance industry has been in a big slump with sales in 2009 down about 15% from last year.

“These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy,” Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

What should I with my old refrigerator (or other appliance)?

If your old appliance is an old clunker that can’t be sold then try to find out if your local utility will pick it up for free.  Some utilities will not only pick up the old appliance but will also pay you some money for it.

Meanwhile, utilities in many states offer to pick up and recycle old refrigerators and freezers and give the customer a rebate ranging from $25 to $50. Such programs began on the West Coast in the last decade but more recently have been moving east.

In five years, NV Energy in Nevada has picked up 50,000 refrigerators, giving $30 to customers in Nevada and California who have turned in their working, but old appliances. The company hopes to boost the program to 20,000 appliances a year and help the utility reach its goal of producing a state-ordered 25% of its electricity through renewable or energy-efficiency sources by 2025, Hargrove says.

In Michigan, where 2008 energy legislation required utilities to cut electricity production by 5% a year, the program is exceeding expectations.

DTE Energy, parent company of Detroit Edison which serves 2.2 million electric customers in Detroit and its suburbs, collected more than 3,300 appliances since starting the recycling program at the end of June. It offers $50 per refrigerator or freezer and $20 for old window air-conditioner units.

More information on the Cash for Appliances program

Cash for Clunker Appliances coming soon

Cash for Appliances – Government will give money for old appliances

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Cash For Clunkers – Tax Rules

The popular Cash for Clunker car trade-in program has just ended after handing out $3 billion dollars of cash for consumers to upgrade their older cars and get a brand spankin’ new ride which hopefully gets better gas mileage than the old one.

This program – officially knows as the Car Allowance Rebate System (CARS) was created earlier in the year as part of President Obama’s stimulus package for 2009.  This program was primarily designed to help stimulate the big car companies which have been enduring poor sales.  The other intention is to help the environment by burning less gasoline in more fuel-efficient cars.

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Dec 9 – Cash for Caulkers

One very common question which has come up recently has been the taxation of any Cash for Clunker voucher money received by a person using the program. Some websites have been reporting that the entire amount of the credit is taxable income and will be added to your taxable income for the year.   This is not true – the government Cash for Clunker website specifically addresses this issue and says:

Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.

Tax treatment of Cash for Clunker payments

If you are concerned about having any tax issues as a result of trading in your old clunker and getting a voucher or credit for a new car then put your mind at ease.  The discount you received off the new car purchase price is not considered taxable income so no taxes will have to be paid on it.

The taxation of this plan is the same as if you had just traded in your car or even if you had sold the old car separately.  The cash for clunker voucher amount or the sale proceeds from a used car sales are generally not taxable since they are probably less than the amount paid for the car originally.  You can’t claim the loss on your car since government law doesn’t allow capital gain losses to be claimed on depreciating assets.

The voucher or credit amount for your clunker is not “income” or any kind of bonus money.  It’s simply a payment for your old car which is not taxable.  In effect you are basically selling your old junker to the government for either $3500 or $4500.

How the Cash for Clunker program works

The main concept behind the Cash for Clunkers program is that you can trade in your old gas guzzler car for a new car which has better mileage.  The government will pay you either $3500 or $4500 for your trade in.  Obviously this is only worth doing if your current older car is worth less than the potential rebate amount.  If your car is worth more than the voucher amount then you are better off just doing a normal trade-in or selling it privately.

Rules of the 2009 Cash For Clunkers program

  • Car must be less than 25 years old (built in 1984 or later).  This applies to the date of trade-in relative to the manufactured date of the car.  See section below for more info.
  • Can only be used for trade-in on a new 2008,2009 or 2010 car.  Outright purchase or lease.  Used car purchases are not eligible.
  • Trade-in car must get 18 mpg or less (city/highway combined).  See this website to find out the mileage for your car or this site to find your car.
  • This program has ended so no more trade-ins.   Trade-in must occur on July 1, 2009 or later.
  • The new car must have a purchase price of $45,000 or less.
  • Credit will be either $3500 or $4500.  If the new car gas mileage is between 4 and 10 mpg more than the old car then the credit is $3500.  If the difference is at least 10 mpg then the credit is $4500.
  • Applies to new cars of any country – domestic and foreign cars are all eligible.
  • The new car must have a combined fuel economy of at least 22 mpg.  See this website to find out the mileage for your car or this site to find your car.
  • The credit will be applied to the purchase of the new car.
  • The car buyer doesn’t have to file anything – the car dealer will handle the documentation.
  • The credit will not be considered as income for the car purchaser.
  • All the normal credits and rebates for the new car will still apply in addition to the ‘cash for clunker’ credit.
  • The trade-in car must have been owned by you and insured for the past year (ie 365 days).  You must provide documentation for this.
  • Car must be driveable!!

More articles on this issue

[edit Aug 30 – Cash for Appliances program announced – Get rebates for new fridge or other appliances.

Cash for Clunkers – Tax Rules

Is there a Cash for Clunkers tax?

Cash for Clunkers taxable income?

Cash for Clunkers taxable?

Cash for Clunkers Tax Rules

Who benefited from the Cash for Clunkers program?

Does Cash for Clunkers affect your taxes?

Cash for Clunkers tax rules

Cash for Clunkers tax rules – the Truth!

Tax rules and consequences of the Cash for Clunkers program

Cash for Clunkers Taxable Income Issue Resolved

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Money

Cash for Clunkers Trade-In Program Has Been Reinstated

It’s been announced that the extremely popular Cash for Clunkers trade-in program will be continued after more funding was obtained to pay for the credits.  The Cash for Clunkers program was suspended on July 31 because of a concern that the funding limit ($950 million) might have already been reached.  The original program was intended to run until the money was used up or November 1, 2009 – whichever came first.

[edit Aug 30 – Cash for Appliances program announced – Get rebates for new fridge or other appliances.]

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Dec 9 – Cash for Remodeling]

From Fox news:

The House passed emergency legislation Friday approving an additional $2 billion for the “cash for clunkers” program, whose immediate popularity this week threatened to sink the fledgling program.

Skipping over regular procedure to obtain an immediate floor vote, House Democrats’ presented a bill that would shuffle around funds from the Recovery and Reinvestment Act, an emergency stimulus for the original $1 billion budget for rebates on new cars that lawmakers worried had been exhausted in only a week. The bill passed 316-109.

The idea behind the Cash for Clunkers program is that someone buying a new car can get a large credit ($3500 or $4500) if they trade in their old car and it meets the Cash for Clunkers qualification guidelines.  Basically the old car has to get less than 18 mpg and the new car has to get at least 22 mpg.

Is the Cash for Clunkers payment taxable income?

From Fox News

It was unclear how many cars had been sold under the program. Sen. Debbie Stabenow, D-Mich., said about 40,000 vehicle sales had been completed through the program but dealers estimated they were trying to complete transactions on another 200,000 vehicles, putting the amount of remaining funding in doubt.

This program was very popular for a rather obvious reason – the government was giving a good chunk of money away if you were buying a new car and had an eligible old car to trade in.  Like any stimulus effort, it’s very difficult to determine how effective this new car credit will be.  It’s fairly certain however that the auto industry will be a major beneficiary of the stimulus especially with the new funding.  Recent years saw a domestic car market of about 16 million cars per year.  This year was projected to be only about 10 million cars so if this stimulus can get another million cars sold then that will help the car companies…who conveniently enough are owned by the government.

More articles

Is the Cash for Clunkers program over?

Cash for Clunkers program suspended – here’s why

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Cash For Clunkers Ended Because Funding Has Been Used Up

The brand new Cash for Clunkers government program which was designed to help stimulate the car industry as well as the general economy has come to a quick end. The plan was funded with $1 billion for the trade-in credit. The program was to run to November 1, 2009 or until the funding was depleted.

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Aug 30 – Cash for Appliances program announced – Get rebates for new fridge or other appliances.

[edit Dec 9 – Cash for Caulkers

Is the Cash for Clunkers payment considered taxable income?

The way the Cash for Clunkers plan worked was that a person could trade in a car on a new car purchase and as long as they met certain requirements, they would be eligible for $3500 or $4500 which would be applied to the new car purchase. The main criteria was that the difference in mileage between the two cars had to be large enough to qualify for the credit.

It’s been reported that the program has been stopped since the government is worried the claims on trade-in credits might have reached the $950 million limit. I had thought the program would run a lot longer than a few days. If the average credit is $4,000 then you need to have 237,000 eligible trade-ins to use up the money. Some dealers must have been pretty busy! I wouldn’t be surprised if it turns out that fraud and poor accounting also helped to bring the program to a halt prematurely. It’s very likely that a portion of the deals waiting for approval could be rejected.

From Fox News:

Transportation Department officials called lawmakers’ offices earlier Thursday to alert them of plans to suspend the program as early as Friday. But a White House official said later the program had not been suspended and officials there were assessing their options.

There is a possibility that the program could get extended:

A source told FOX News that senior Congressional leaders, the Obama administration and other lawmakers involved with the program are exploring potential options to either undertake administrative or possibly even Congressional action to infuse the program with cash.

There is a lot of uncertainty regarding how many consumers have made use of the Cash for Clunker program:

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

More articles

Is the Cash for Clunkers program over?

Cash for Clunkers program suspended – here`s why

Is the Cash for Clunkers program dead?

What’s happening to the Cash for Clunkers program?