Making Work Pay Tax Credit

 

The Making Work Pay tax credit expired at the end of 2010.

The Payroll Tax Cut replaces this central tax break for middle- and low-income Americans in last year’s economic stimulus measure, White House officials said.

The Making Work Pay Tax credit was part of the 2009 stimulus package. The provision boosted paychecks in 2009 and 2010 by up to $400 for working single filers and $800 for married taxpayers filing a joint return by reducing the withheld tax. That is $33 or $67 a month.

The biggest gains were going to people with the lowest incomes. Taxpayers who make $75,000 or less are eligible for the full credit, while the credit is phased out for higher earners - single workers who have an adjusted gross income of between $75,000 and $95,000, and married couples filing jointly who make between $150,000 and $190,000.

More than 90% of the working Americans have been helped by this tax break.

On Monday, December 6th, 2010 President Obama announced a deal with Republican leaders to extend the Bush-era tax cuts for 2 years for all Americans. As a concession Republicans agreed to extend unemployment benefits for 13 months, and lower the payroll tax by two percentage points for a year.

By reducing the payroll tax a family earning $70,000 would see $1,400 more in their paychecks if the deal is approved. According to CNN that's $600 more than the about to expire Making Work Pay credit.

Read more about the Making Work Pay tax credit on IRS.gov.

Making Work Pay Tax Tips

 

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