Update: Avoid getting too much "Making Work Pay" credit
Wed, 01 Apr 2009 01:44:06 GMT —
UPDATE: April 2: Just as questions are finally being resolved over last year's stimulus checks, a new stimulus plan kicks in and it's leaving people confused.It TMs called the "making work pay" tax credit.Normally, a tax credit gives you a dollar-for-dollar reduction in your taxes when you file, which means people wouldn't get the money until 2010.But the Obama administration wants to get the money out faster and has asked employers to withhold less tax from paychecks.Beginning this month, most low-income and middle-income workers will see extra money in every paycheck.For singles, you could get an extra 10 to 15 bucks a weekly to a maximum credit of $400 for the year. If you're married, filing jointly, it's an extra 15 to 20 dollars a weekly to a maximum $800.Not everyone is eligible, the credit phases out at higher income levels and people on social security won't qualify. And if someone claims you as a dependent, you won't get the credit.KRCG TMs FactFinder team has a warning about the "making work pay" tax credit.You could get more money than you are entitled to, which will have to be paid back or will reduce any refund you are owed when you file your tax return next year.How might this happen?First, people who have more than one employer might get a full credit from each boss.Also, joint filers who both work could get double what they should.And if you make money from investments or rental property, it could push your income above the limit.You should check with your employer to verify they are giving you the correct amount.You can use the IRS TMs calculator to determine how much credit you should receive in each paycheck.If it looks like a problem, you can always file a new w-4 to adjust the withholding. Original Story: April 1:
Springtime means you'll start seeing more green outside.
But starting Wednesday you're likely to see some more green in your wallet as well.
It's part of a new federal economic recovery tax credit passed in February called "Making Work Pay."
Here's what our Fact Finder team found out:
- The credit is available for 2009 and 2010.
- Singles will get up to $400, married couples up to $800 per year.
- Instead of a lump sum, most will get it little by little in each paycheck through reductions in federal tax withholdings.
- To get the full credit you have to make less than $75,000 or $150,000 for joint filers.
If you don't have any federal tax withheld you won't see a difference in your paycheck but you will get the full credit when you file your taxes next year.