A major part of the economic stimulus package signed last week is the Making Work Pay Tax Credit. In 2009 and 2010, that credit will provide a refundable tax credit of up to $400 for a working individuals and $800 for married workers. But you won’t be getting that money in a lump sum: it isn’t a stimulus check and it isn’t intended to be part of your income tax return. Instead, you’ll be receiving that money spread out over all of your paychecks.
In order to make sure you get that money, the IRS has released new tables to show taxpayers just how much of their paychecks will be withheld when that tax credit goes into affect. Your withholding should amount to only a few dollars less per week — remember that the credit is spread out over a full year — but you shouldn’t need to do anything to receive it. Employers should be receiving the new withholding tables and put them into affect by April 1, 2009. Depending on how on-the-ball your employer is, you could start getting a little extra in your paycheck immediately.
The actual amount you can expect varies. It’s the equivalent of 6.2 percent of your earned income for the year, up to a total of $400 per person. You can qualify for up $800 if you’re married — even if only you (or only your spouse) is employed. Your annual income can also affect the credit — taxpayers passing a certain income do not receive it. If you are single, the credit phases out between $75,000 and $95,000. If you are married, it phases out between $150,000 and $190,000.
The credit is also available to self-employed individuals: they can claim it by reducing their estimated quarterly tax payments or claiming it when they file their 2009 tax returns. You can also get the credit even if you don’t earn enough to owe federal income tax: you will have to wait for it, if withholding isn’t taken out of your pay check though. Instead, you’ll be able to get the credit when you file your 2009 tax return. However, you do need to have a job in order to get the credit — and you cannot be claimed as a dependent on someone else’s taxes. That means that if you’re a student working part time, you’ll probably miss out on this particular tax credit.
It’s worth making sure that you do qualify for the tax credit: employers will just automatically start using the new withholding tables. If your spouse’s salary makes it impossible for you to claim the Making Work Pay Tax Credit, for instance, it’s up to you to make sure your paperwork reflects that fact. If you don’t qualify for the tax credit, but your withholding still decreases, you’ll owe the IRS money come April 2009. It may be significantly easier just to fill out a new W-4 and increase your withholding on line 6.
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March 6th, 2009 at 11:24 am
I think this stimulus plan is a bit more complex for taxpayers than last year’s lump sum stimulus check. Although, it’s nice that we will receive more money overall than last year. The Making Work Pay Credit is at least an effort to show the average taxpayer that the government recognizes they need help as well as big businesses.
March 19th, 2009 at 1:19 pm
so- my check is 8.00 more this week. If there are only 38 more weeks to the year then I will not be getting the full 400.00. Will I see the remaining 96.00 in my income taxes in 2010?
March 19th, 2009 at 8:08 pm
@Megan, You may need to double check how much you qualify. Because of the way the credit is written, not everyone will receive the full $400.
March 20th, 2009 at 5:52 pm
Do you know how this will affect filing taxes at the end of the year? Will those of us receiving the stimulus end up having to pay more at the end of the year? Also, I read somewhere that a person making $30,000 should expect to pay 15% to Federal taxes, is this correct? Is there somewhere I can go to find out how much should be deducted from paychecks to ensure that I don’t have to pay at the end of the year?
March 21st, 2009 at 9:25 pm
At the max of $400.00 for the year, that works out to about $7.69. No I don’t know whay world of glory and rainbows you live in but $7.69 won’t stimulate me to take a dump. The Making Work Pay Credit should be retitles as The Joke of the Week Credit.
March 27th, 2009 at 12:19 pm
I am asking the same question as Farrah. Will this affect our filing at the end of the year? I am so scared we will end up owing. I need to find out soon so I can change my w4 if need be.
April 1st, 2009 at 5:54 pm
HELL YEAH NIGGA MY CHECK WAS 20.00 more this week. I goin to KFC
April 10th, 2009 at 9:41 am
Wow, I just want to send out a big thanks to those who worked so hard to create this new stimulus bill and found it in your heart to reach deep down in the pockets of America and share the wealth. I just cant beleive I received an entire 5 extra dollars a week and even with a W4 set at 2! Can you imagine by the end of year just how much that will have come to? My family will be able to enjoy it immensely. I couldn’t even imagine what we’d have done without all of it. Anyways, thanks for fighting so hard to help all of us hard working taxpaying citizens. I see the rest of you have done even better don’t you just feel blessed by our government that has brought so much change..ha
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July 6th, 2009 at 8:06 am
What a joke… how about politicians next pay raise is $5 a week? Oh, yeah… they vote it for themselves. Ridiculous!