What You Should Know About the Making Work Pay Tax Credit
First of all, you won't be getting a check in the mail or through direct deposit.
The Making Work Pay Tax Credit is appropriated through reduced withholding from your paycheck.
The withholding change is automatic, so you should not have to do anything to get it.
It's duration runs from April 1, 2009 and results in a monthly savings of about $45 for single taxpayers and $65 for those who are married.
Most taxpayers will not have to pay back the increased take home pay.
Some people have worried that a lower withholding might mean a smaller tax refund.
Reduced withholding, for most taxpayers, reflects that they will owe less tax for 2009.
In fact, the estimate is that the Making Work Pay Tax Credit will reduce tax bills around 6.
25%, with a maximum of $400 for single filers and $800 for married couples filing jointly.
It is true, however, that refunds might be affected in some cases.
In the case of a single taxpayer who gets just $380 in lowered withholding, they will see their remaining $20 as part of a larger refund, while a married couple with two wage earners might actually see their refund reduced.
The new withholding tables are designed to give a married worker a reduction of $600 in his or her withholding.
So, a working couple will get $1200 in reduced withholding, but only an $800 tax credit.
This could, effectively, take a $400 chunk out of their refund.
Since retirees don't have paychecks to plump up through withholding, they should look in the mailbox.
Retires who received Social Security, Railroad Retirement, or Veterans Administration Retirement benefits are entitled to a $250 payment.
Eligible recipients will receive their payment in the same way they receive their benefits.
Therefore, if your retirement benefits are direct deposited into a checking account, your $250 will be, as well.
If your benefits are generally mailed to you in the form of a check, then your $250 payment will be mailed to you as a check, as well.
Working retirees will have to return the $250 dollars, since you will have gotten your Making Work Pay Tax Credit in your withholding, as part of the work force.
The Making Work Pay Tax Credit you claim when filing your 2009 income tax return will be deducted, dollar for dollar, for the $250 payment you receive as a Social Security, Railroad Retirement, or Veterans Administration beneficiary.
The Making Work Pay Tax Credit is appropriated through reduced withholding from your paycheck.
The withholding change is automatic, so you should not have to do anything to get it.
It's duration runs from April 1, 2009 and results in a monthly savings of about $45 for single taxpayers and $65 for those who are married.
Most taxpayers will not have to pay back the increased take home pay.
Some people have worried that a lower withholding might mean a smaller tax refund.
Reduced withholding, for most taxpayers, reflects that they will owe less tax for 2009.
In fact, the estimate is that the Making Work Pay Tax Credit will reduce tax bills around 6.
25%, with a maximum of $400 for single filers and $800 for married couples filing jointly.
It is true, however, that refunds might be affected in some cases.
In the case of a single taxpayer who gets just $380 in lowered withholding, they will see their remaining $20 as part of a larger refund, while a married couple with two wage earners might actually see their refund reduced.
The new withholding tables are designed to give a married worker a reduction of $600 in his or her withholding.
So, a working couple will get $1200 in reduced withholding, but only an $800 tax credit.
This could, effectively, take a $400 chunk out of their refund.
Since retirees don't have paychecks to plump up through withholding, they should look in the mailbox.
Retires who received Social Security, Railroad Retirement, or Veterans Administration Retirement benefits are entitled to a $250 payment.
Eligible recipients will receive their payment in the same way they receive their benefits.
Therefore, if your retirement benefits are direct deposited into a checking account, your $250 will be, as well.
If your benefits are generally mailed to you in the form of a check, then your $250 payment will be mailed to you as a check, as well.
Working retirees will have to return the $250 dollars, since you will have gotten your Making Work Pay Tax Credit in your withholding, as part of the work force.
The Making Work Pay Tax Credit you claim when filing your 2009 income tax return will be deducted, dollar for dollar, for the $250 payment you receive as a Social Security, Railroad Retirement, or Veterans Administration beneficiary.
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