Tax Tip: 2009 Making Work Pay Tax Credit
Most workers will bring home more of their pay thanks to the newly enacted American Recovery and Reinvestment Act of 2009. The Making Work Pay Tax Credit will show up automatically in employee’s paychecks because of new withholding tables. Employers are urged to implement the new withholding rates as soon as possible, but before April 1, 2009. Employees do not need to do anything to benefit from the change. You do not need to fill out a new W-4.
The maximum credit for 2009 and 2010 is $400 ($800 married filing joint - MFJ). As usual, it is phased out for higher income taxpayers. Phase out begins at $75,000 ($150,000 MFJ). Taxpayers will not get a separate check like the Economic Stimulus Payment of 2008, but they will need to know the amount of the Making Work Pay Tax Credit for their 2009 and 2010 tax returns.
Source: www.irs.gov; IR-2009-13
