Make Work Pay Stimulus Tax Credit

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PaycheckI’ve been getting a lot of emails about what people are calling a 2009 stimulus check, passed by Congress and signed by President Obama last month. People are confused, wondering what the stimulus check is, if it’s a tax credit, who is eligible, etc. It’s a little confusing but I think I can put it all to rest.

Make Work Pay Tax Credit

The Make Work Pay Tax Credit was a law included in the new stimulus package called the American Recovery & Reinvestment Plan and called for a refundable tax credit to workers in 2009 and 2010.


  • Workers get a tax credit of 6.2% of their earned income, up to $400 for individuals and $800 for couples.
  • Nonresident aliens and individuals claimed as dependents are not eligible.
  • The credit phases out at 2% of income over $150,000 for couples and $75,000 for single filers, with the credit completely eliminated for couples earning more than $190,000 and singles earning more than $95,000.
  • The credit is reduced by any other payments associated with the stimulus package, such as the Social Security benefit of $250.

The credit will come by way of a reduction of paycheck withholdings, meaning your paycheck will be slightly larger than before. It won’t seem like a lot but it’ll be $400 or $800 (or less, based on your income) you didn’t have before! The Tax Policy Center has a little writeup about it, giving it a B+.

One thing to watch out for is how employers implement this. For single filers, you don’t have to worry because your employer knows your complete tax picture. For couples, you may want to work with your HR to determine the proper amounts. If you believe your combined income is in the phaseout region, or above it, be sure to tell your HR representative. If they give you the credit and you aren’t supposed to get it, you will owe taxes, and perhaps penalties, next year, warns MarketWatch.

That’s it! That’s the Make Work Pay Credit and what some people call the new stimulus check!

(Photo: oyf)

{ 115 comments, please add your thoughts now! }

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115 Responses to “Make Work Pay Stimulus Tax Credit”

  1. Alan S says:

    C’MON PEOPLE! WAKE UP! This is just Obama’s failed attempt of making you think he’s such a great guy, when in fact he’s just using this to divert attention from the tax hike that we all will see on 2009 taxes. Now if you’re making between $66,530 and $84,300 and are single or from $118,130 to $144,800 and are married, you’ll pay 28 % of your income instead of the 25% you paid last year. OBAMA GIVES YOU A DIME WITH HIS LEFT HAND AND TAKES FROM YOU $1 WITH HIS RIGHT HAND.

  2. Tom Catchings says:

    From what I understand with regard to this initiative, it is totally misleading. Taking out less now but leaving your net annual tax the same is not a credit in even the loosest interpretation. It is nothing more than a forced loan, which must be paid back at the end of the year.

  3. linda says:

    I work for a corporation which employs approx 45 people. They have not implemented the new withholding tax, claim we will get a check at the end of the year. Can they do this

  4. Larry says:

    I have a pension from California State Teachers System STRS which did not participate in Social Security. Does this mean I am eligible for the $250 MWP credit??? Not sure. Larry

  5. Rich says:

    You all have computers, right? Go to the IRS website and review the new Schedule M. Am I right in believing this a refundable credit, to be added with any withholding or other payments, then subtracted from your tax liability. If it is more, you get a refund, if it is less, you owe.
    I cannot see the mystery here!

    • saladdin says:

      That’s exactly how it shows on my taxes I did last night. People just have a horrible understanding of how it works.


  6. Rich says:

    Comlpete Schedule M, enter amount on Line 63, form 1040, or Line 40 form 1040A or complete the worksheet on the back of form 1040EZ if you use that form to file your taxes.

  7. Sue says:

    Is this extra stimulus money going to end in 2010, or is this going to continue on? I thought it was just for one year. Will our federal tax deductions go back to the old rate?

  8. Coopsta says:

    Yet another gimmick by our teleprompter-in-chief to make it look like working people are better off. But Obama call big bankers “fat cats” while he lines their pockets with taxpayers’ money.
    This stimulus money did not stimulate anything except the deficit. “Deficit” means we spend alot more than we make (especially on a national level), which is what made this bad economy in the first place; also means the complete lack of economic knowlege and common sense displayed by the current administration.
    Obama = disingenuous

  9. jason says:

    While I do not really understand the tax system I do know that I owe an additional 1000.00 in federal taxes for 09 than last year! Its like the extra money that was not taken during the year I now have to pay back in one lump sum! married filling joint two jobs

  10. Jennifer says:

    Like you Jason, my husband and I have filed jointly as we are both working and we now have to PAY 1600 to the IRS because of this “Stimulus Package” I also do not fully understand the tax system but I feel like I got screwed big time by our wonderful President and his cronies. I can not believe how blind the people of our country are to believe this man is actually “helping” better our Government. Not pleased at all!

  11. Maggie L Williams says:

    I have not received a single dime from the stimilus package. My employer has not taken less taxes out on me. The only taxes that they are taking out are the ones that has always been taken out + the $3.00 extra that I had them to take out. The only change in my paycheck last year was a 10% decrease and beginning the year 2010 my federal withholding has increased.

  12. Kris says:

    If you don’t pay that close attention to your pay stubs, how do you know if you received the stimilus? I did look back at some of my old pay stubs and by the looks of them the withholding in my federal was the same all year except for 1, which isn’t even close to the $400.00.

  13. Cassie says:

    I had to call my HR department to find out why I only paid in 393. this year and 1090. last year and 899. the year before that. They told me it was due to Obama’s tax stimulus. Although I do get a refund back each year, this year I am getting about 900 less than I would have. This blows. It didn’t even really make a difference. I still was just making ends meet even with the “tax credit”. Wow…. so is this still in effect for 2010… and what if you claim 0 instead of 2, will that make a difference?

  14. Jessica says:

    My employer uses a third party payroll service. The payroll service adjusted our withholdings starting April 1, 2009. I started on my taxes last night using a very reputable online tax preparation service and it added the $400 credit to my taxes after stating that based on my entries it could determine what I was eligible for. Maybe I am missing something but why would I still have the credit on my taxes if my employer already adjusted my withholdings? What am I missing?

    • BEV says:

      thank you for asking the question that I am trying to find the answer to. I do not know and was just about to file when that came up. I hope someone out there can answer this question for us. I have been online for over an hour trying to find the answer, so someone please help

      • Jessica says:

        I am just not understanding how this works. I would assume that the online system I am using would have the appropriate information to handle this properly but I do not want to file something on my taxes incorrectly. I am going to do it by hand on schedule M instead of using the online system and see what it comes out to that way. Maybe then I will understand it better. However, if someone can explain how this credit works to me in terms that are easy to understand I would be very grateful! Thanks!

      • ruth says:

        did you know you can come up with different amounts owed if you use different online systems, schedule m….earned credit….and so on, if you miss something do u realy think that they are going to point it out to you?

  15. Maggie L Williams says:

    Everybody is talking about what they have received with this stimulus package but I still say that I have not received anything. My federal withholding taxes are still the same as they have always been. There is no difference in them. Now I would like to know why I have not received anything. Is this just for certain people?

  16. Cassie says:

    Ok, well, I just filled out my taxes, and holy crap, I actually got more back than I thought! After I went through all the deductions, credits and what-not, it made the return go up even more… off the topic though, if your child got a credit for SSI do I have to claim that in my taxes? ThankS 1

  17. Pete says:

    Have one question – we file joint 1040EZ – I
    worked almost 4 months in 2009 (Jan-April) before going on SDI – our MWP credit is found
    on a worksheet on the back of 1040EZ – if my
    math is correct should get an $800 credit –
    however I read following: “credit will come by
    way of a reduction of paycheck withholdings..”
    I know there was never any reduction in my
    payroll earnings for 2009 and yet the MWP
    worksheet allows me to post $800 (Line 8)as
    a credit. Is this strictly for 1040EZ users or
    am I missing something ??

  18. Maggie L Williams says:

    I do not ubnderstand any of this tax stuff. So far I have not got one answer to my question so I am leaving this to you all. I am going to sign out of the news letter. SORRY but I am not getting any understanding.

  19. John Birrane says:

    THIS IS NOT A CREDIT for anyone but those
    that don’t pay taxes. It is a loan until
    you do your Taxs. Here’s the Catch. If
    you Claim More than yourself as a Dependant,
    you will be Paying 400.00 dlrs per dependent.
    I claimed my 3 kids, and need to Send Obama
    a check for 1,200.00 dlrs. If you have more
    than one Job (where Taxes are deducted) you
    will need to repay 400.00 dlrs back for each additional Job. If you received the 250.00
    SS check, that will be deducted from the 400.00
    dlrs, you don’t get both. This is just another way for the Fed to extort Money from
    working class. Botton line is, you cannot
    claim more than one dependant or have more than
    one Job, if you want to break even on this deal. THIS THING IS A RIPOFF for anyone trying
    to raise kids, and even worse for those working
    more than one Job to raise their Kids. It had the Political benefit of allowing Mr. Obama
    to claim a tax credit for 95% of American’s
    however its effect was to force everyone to
    spend their Federal Taxes in advance, and pay
    it all back on your Tax forms. That would be
    OK if the IQ level of those that drafted the
    thing, had taken into account anyone other
    than Single taxpayers with one Job.

  20. bk says:

    What is the difference in Obama’s make work pay plan and me just changing my witholding to a lesser rate myself. If in the end you still have to pay federal taxes at the same rate it turns out to be absolutely pointless. It will cause most people to get a smaller return and thus not stimulating the economy at all. In fact actually do more harm than good to the economy.

    • stink says:

      Spread the money out is much more healthy for the economy then getting large amounts once a year.

  21. margaret says:

    I am confused! I am getting this $400 refunded to me. Its not going to be given to me through my paycheck. Is this not right? I did my taxes online and it just gave me the 400 please explain

  22. stink says:

    Fill out your Schedule M and you get $400 if filing single or $800 married filing jointly. This amount is to guarantee that you got the right amount in the stimulus. If your employer(s) took more than $800 out of you and your spouses checks then you got your stimulus “up front”. If they took less then you are getting the rest now in your tax return. Personally, anyone getting over $1200 in a tax return should redo their W4 so they can keep their money and not give it to the Feds.

  23. Dolores says:

    Ok, I THOUGHT I understood this stuff… BUT now the Stimulas is being called the Make Work Pay Credit??? I already filed my 2009 taxes and put I didn’t receive it, bc I thought it meant a check in the yr 2009 ONLY! I got something in 2008, so now I have to pay them back? Bc it didn’t increase my refund at all! Please help!!

  24. Frank says:

    In the case of wage earning dependent children, is it better to not claim these dependents on the parents tax forms and ,instead, file the “dependents” taxes as non dependents in order to receive the $400 MakingWorkPay credit (rather than losing it altogether if included as a depentdeant on parent’s return).

  25. Bernard Chec says:

    Help fught organized crime and abolish the IRS, but again who said they were organized?

    • Rich says:

      Looks like that fellow in Texas who flew his plane into the IRS building took you at your word.

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