Economic Stimulus Package, Personal Finances and Payday Loans

Help with payday loans

Will the economic stimulus package put more money in your wallet?

It’s possible the economic stimulus package will bring down the high number of payday loans that have been issued lately. Many of the measures in the economic stimulus package will benefit individuals in certain situations, just as payday loans can help people in special cases.

Here are some ways that the economic stimulus package will help individuals.

Lower income taxes

The “Make Work Pay” tax credit will mandate that employers withhold a lower amount of taxes from your paycheck. The total tax break will add up to $400 for individuals and $800 for couples, and it will be spread out over the rest of the year. This tax cut applies to anyone who makes less that $70,000 per year, or couples who make less than $140,000 per year.

Middle-income families will not have to pay the Alternative Minimum tax this year. Also, seniors who don’t work, disabled veterans and retired railroad workers will get a one-time payment of $300. That’s the average amount of payday loans in some areas, so perhaps this credit will help some people get ahead a little.

Perks with big purchases

If you buy a car in 2009, you might be able to deduct the interest you pay on your car loan and the sales tax from your taxes. However, this  deduction is only available if you earn less than $125,000.

Anyone who buys a house in 2009 could get a tax break, too. Home buyer credits are already available, but the bill doubles this credit to $15,000. It also removes the previous law that said home buyers eventually had to pay the credit back.

Help with higher education

The bill includes several measures that would help college students and their families. The American Opportunity Tax Credit gives $2,500 to anyone who pays college tuition and makes less than $80,000 per year. It also increases the amount that can be awarded as Pell Grants.

Help for the unemployed

With unemployment at a 26-year high, it makes sense to help out jobless workers. Unemployment benefits will be extended, so people who qualify could collect unemployment benefits for an additional 20 weeks. The bill will also assist with health care for unemployed workers by helping to pay for bills through Cobra and Medicaid.

Perhaps the most helpful provisions for unemployed workers will be the ones that create jobs. President Barack Obama has said that the economic stimulus package will create or save up to 4 million jobs. This would more than make up for the number of jobs that the economy shed in 2008.

More help for needy families

More needy families will benefit from the child tax credit after the bill passes because the income threshold to receive the credit will be lowered. It also increases the amount of food stamps families can receive.

For children with three or more children, the earned income tax credit will be increased. A fund called Temporary Assistance for Needy Families will be established. Some needy families may be able to get cash assistance through this fund instead of getting payday loans.