- Bargaineering - http://www.bargaineering.com/articles -

Make Work Pay Stimulus Tax Credit

I’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 [3] and called for a refundable tax credit to workers in 2009 and 2010.

Details:

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 [4] 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 [5].

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

(Photo: oyf [6])