Are you feeling stimulated? Well, you should be. I was updating Quicken over the weekend when I noticed that the reduced federal income tax withholding schedules have kicked in. In case you haven’t heard, that’s how the “Making Work Pay” tax credit is being handed out.
According to an IRS press release:
“Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayerâ€™s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers, but it is phased out for higher income taxpayers. Most workers will qualify for the maximum credit. Because the credit is refundable (people can get it even if they owe no tax), most low-income workers will also qualify for the full credit.
Though all eligible taxpayers will need to claim the credit when they file their 2009 income tax return next year, the benefit will generally be spread out over the paychecks they receive beginning this spring and continue until the end of the year.
Many higher-income taxpayers will see little or no change in their take-home pay. Thatâ€™s because the Making Work Pay credit is phased out for a married couple filing a joint return whose modified adjusted gross income (AGI) is between $150, 000 and $190, 000 and other taxpayers whose modified AGI is between $75, 000 and $95, 000.”
No, reduced withholding isn’t as exciting as a second stimulus check, but it has a similar effect. In my case, I get paid monthly, and my federal withholding dropped by $80/check.
Have any of you else noticed a bit more take home pay?