Are you wondering what is going to happen to you at tax time this year? Most Americans are. This is the information our tax experts at free1040.com have received from the IRS. The American Recovery and Reinvestment Act provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes only apply to 2009 and 2010 tax years.

Tax year 2010 maximum credit is:

$5,666 with three or more qualifying children

$5,036 with two qualifying children

$3,050 with one qualifying child

$457 with no qualifying children

Child tax credit has been reduced from $1,000 to $500 per child, at this time unless congress passes the Bush Tax Cuts, when they return to session after the elections or a similar bill that will increase this credit back to its former amount.

Under the American Recovery and Reinvestment Act (ARRA), more families will be eligible for the additional child tax credit because of a change to the way the credit is figured.

Taxpayers who cannot take full advantage of the child tax credit because the credit is more than the taxes they owe may receive a payment for some or all of the credit not used to offset their taxes. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax.

ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income was set to rise to $12,550. Reducing the amount to $3,000 permits more taxpayers to use the additional child tax credit and increases the amount of the payments they may receive. This change applies to tax years beginning in 2009 and 2010.

Information for Individuals

Many of the Recovery Act provisions are geared toward individuals:

Homebuyer Credit. Homebuyers who purchase by April 30, 2010, and settle by Sept. 30, 2010, may be eligible for a credit of up to $8,000. Documentation requirements apply.

COBRA. Workers who lose their jobs between Sept. 1, 2008, and May 31, 2010, may qualify for reduced COBRA health insurance premiums for up to 15 months.

Education benefits. The American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.

Home energy efficiency and renewable energy incentives.

Earned Income Tax Credit. The EITC is bigger in 2009 and 2010.

Additional child tax credit. More families will qualify for the ACTC in 2009 and 2010.

Making Work Pay Tax Credit. This credit means more take-home pay for many americans in 2009 and 2010.

$250 for Social Security Recipients, Veterans and Railroad Retirees. The economic Recovery payment was paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board in 2009. To verify whether you received it, call 1-866-234-2942 and select Option 1.

Money Back for New Vehicles. Taxpayers who bought new cars and certain other new vehicles in 2009 can deduct the state and local sales taxes they paid as well as other taxes and fees they paid in states with no sales tax.

Increased Transportation Subsidy. Employer-provided benefits for transit and parking rose in 2009.

Up to $2,400 in Unemployed Benefits Tax Free in 2009. Individuals should check their tax withholding.

Health Coverage Tax Credit. This credit increased from 65 percent of qualified health insurance premiums, and more people are eligible.

Information for Businesses

The following Recovery Act provisions effect businesses:

Making Work Pay Tax Credit. The 2010 withholding rates, contained in Notice 1036, reflect

Work Opportunity Tax Credit. This expanded credit adds returning veterans and "disconnected youth" to the list of new hires that businesses may claim.

COBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941.

Energy Efficiency and Renewable Energy Incentives.

Net Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. The Worker, Homeownership and Business Assistance Act of 2009 (WHBAA) expanded the five-year NOL carryback to most businesses.

Municipal Bond Programs. New ways to finance school construction, energy and other public projects.

For more tax updates visit us at free1040.com.