Have you noticed a few more bucks in your paycheck lately? It could be the result of the Making Work Pay Tax Credit. It’s part of the Stimulus Package, but not everyone will benefit. In fact some people could end up owing money when tax season rolls around. If you fall into one of these categories, you may want to do a little research to make sure you’re still withholding enough money from your paycheck:
* Pensioners
* Married couples with two incomes
* Individuals with multiple jobs
* Dependents
* Some Social Security recipients who work
* Workers without valid Social Security numbers
The tax credit works out to 6.2% of your income up to $400 for individuals or up to $800 for couples. Wondering if you’re withholding enough from your paycheck? Try using this withholding calculator from the IRS. If you figure out that you need to be withholding a different amount, simply fill out a revised W-4 and submit it to your employer.
There are some exceptions and unique situations when it comes to the Making Work Pay Tax Credit. Pensioners for example do not qualify for this credit unless they receive earned income. If you are a pensioner and you have questions the IRS advises you to contact your pension plan administrator.
If you’re self-employed, you can still benefit from the Making Work Pay Tax Credit. Simply re-evaluate your expected income tax payment and make adjustments regarding the Making Work Pay Tax Credit. This may reduce the amount of your regular estimated tax payments. The good news is this tax credit will stick around for 2010 as well.
