Tax credit “Making Work Pay” may not work for all
Posted By JK Harris on May 5, 2009
By now, you may have noticed a small boost in your take home pay due to President Obama’s “Making Work Pay” tax credit. In the past month, millions of taxpayers have been receiving the credit designed as part of the economic recovery package enacted by Congress in February.
The problem lies in new withholding tables issued by the IRS, which would cause taxpayers to get hundreds of dollars more than they are entitled to under the credit. This is money that will have to be repaid at tax time.
Taxpayers affected by this problem include married couples in which both people work, taxpayers with more than one job, retirees who have income taxes withheld from their pension plans, and Social Security recipients with jobs providing taxable income.
What should you do? Check your federal withholding to make sure you have enough taxes being taken out. If you are married and both you and your spouse work, you might consider having taxes withheld at the higher single filer rate. If you are currently working two jobs, you might consider having one of your employers withhold more taxes. You can do this by requesting a W-4 from your employer.
Not sure if your taxes are being withheld properly? You can use the IRS’ online withholding calculator at www.irs.gov.
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