PRESS RELEASE

February 16, 2009

Stimulus Bill Includes Tax Credit for Many Marianas Taxpayers

US will provide cash to Commonwealth to cover costs

WASHINGTON, DC – Taxpayers in the Commonwealth will receive a tax credit of up to $400 for individuals and $800 for couples as a result of the American Recovery and Reinvestment Act. Congress passed the bill last Friday and President Obama is expected to sign it into law on Tuesday.

The U.S. Treasury will pay the Commonwealth Government an amount equal to the total cost of the credits claimed in the Marianas.

“This new ‘Making Work Pay’ tax credit is important for two reasons,” reports Northern Mariana Islands Delegate Gregorio Kilili Camacho Sablan. “First, it puts money in people’s pockets, because it will lower taxes in both 2009 and 2010. And, second, it put new money into our economy, because the US will cover the cover the cost of the credit.”

The credit is refundable. So taxpayers who owe less tax than the amount of the credit will still receive the credit.

“Refundability means that if you owe $300 in taxes and are eligible for a $400 credit,” Kilili says, “you will not have to pay the $300 in taxes, plus you will get a check for the extra $100.”

Instead of waiting to claim the credit when they file their 2009 tax returns, taxpayers may instead adjust the amount of money being withheld from their paychecks. That way they begin to receive the benefit of the tax cut immediately, rather than next year.

The tax credit phases out for single taxpayers with incomes over $75,000 and for couples whose combined incomes are greater than $150,000. Non-resident aliens will not qualify for the credit.

The new law also provides a one-time cash payment of $250 to adults receiving Social Security benefits or veteran’s compensation or pension benefits, and to disabled persons receiving Supplemental Security Income. These Economic Recovery Payments are expected to arrive by mid-June.