As part of the American Recovery and Reinvestment Act, our government has instituted a Making Work Pay tax provision, but what does this mean? It means you are likely to see a little extra money on each paycheck after April 1, 2009 through December 2010.
The amount of extra money you can expect depends on your income and filing status, as well as on how many exemptions you take. The average range is expected to be between $10 and $15 per paycheck.
- The tax credit is 6.2% of a person’s earned income – up to $400 annually for individuals or up to $800 for married taxpayers who file joint tax returns.
- The credit is phased out at 2% of income for those who make over $75,000 individually or $150,000 for married couples who file together, and the credit is eliminated for anyone who makes more than $95,000 as a single person or $190,000 as a couple.
- The credit is reduced to an emergency payment of $250 for those who are eligible for Social Security benefits, veteran’s or pension benefits or Railroad Retirement, but the individual must have become eligible for the benefits by January 2009.
- Individuals who are non-resident aliens or those claimed as dependents are not eligible, even if they are employed.
This tax credit program is designed to help stimulate the economy by giving each worker a little extra spending money, which will help our economy in its recovery.
