On Wednesday, the White House instructed employers to began adjusting their payroll systems so eligible employees could start benefitting from the new “Making Work Pay” tax credit, which is part of the economic recovery package that Congress p
On Wednesday, the White House instructed employers to began adjusting their payroll systems so eligible employees could start benefitting from the new “Making Work Pay” tax credit, which is part of the economic recovery package that Congress passed in February. President Barack Obama said the credit, available for 2009 and 2010, was designed to put a little extra cash in employees’ pockets. The amount of money employees will see depends on their marital status, salary and how many allowances or exemptions they normally take. Single employees may get between $10 to $15 per paycheck, if they get paid weekly. Those married and filing jointly will likely see an extra $15 to $20 per paycheck, said Norman Bishop, a spokesman for the Internal Revenue Service.
“I am a single mother of three and I make less than $30,000 a year,” said Shelia Classic, 34. “An extra $30 a month on my paycheck will allow me to buy more food to feed my children.”
Married couples also like the idea that their net income will soon go up.
“I see it as a way to obtain more credit. I was denied an auto loan last year because my income was too low,” said Jackson Hightower, 44. “My wife was also denied because she makes less than me. But now that are net income is set to rise, perhaps when we apply the next time, our paystubs will show we have more disposable income.”
The tax credit is available to employees with valid social security numbers and is worth up to $400 a year for single filers and $800 for joint filers.
The full credit will be paid to people with modified adjusted gross incomes of $75,000 or less ($150,000 per couple). A partial credit would be paid to those who make more no more than $95,000 ($190,000 for couples).
Bishop said it’s also important to know that even if someone works they would not qualify for the credit if someone else can claim them as a dependent.
Those who are eligible for social security, railroad retirement and veteran’s compensation or pension benefits would also not be eligible for the tax credit.
However, if they were eligible for those benefits sometime between November 2008 and January 2009, they would receive a one-time, $250 emergency payment no later than mid-June.
Employers were to implement the tax credits by April 1, but they won’t be penalized if they didn’t. It just means that employees could get less of a credit. If that should happen Bishop said employees could claim the rest of the credit when they file their 2009 tax return.
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