| With tax season on the way and the economy in | | | | earned income over the course of the year, so |
| shambles, it's just about time for some good | | | | those on unemployment don't qualify. Additionally, |
| news on the financial front. One of the provisions | | | | if you are claimed as a dependent by someone |
| of the Obama stimulus package more properly | | | | you don't qualify for the credit, even if you're |
| known as the American Recovery and | | | | working. This includes college students still claimed |
| Reinvestment Act, the Making Work Pay tax | | | | by their parents as dependents. Those working |
| credit is part of an attempt to reduce the tax | | | | multiple jobs or receiving social security are also |
| burden on certain income brackets of America's | | | | not eligible for the Making Work Pay credit. |
| populace. Making Work is a temporary provision | | | | If your taxes are filed through your employer, |
| added to tax law designed to phase out after the | | | | they may have already adjusted for the tax |
| 2010 tax year. Making Work Pay tax credits are | | | | credit, so you should check your W-2s carefully in |
| briefly explained below: | | | | order to make sure you haven't underreported |
| The actual effect of the Making Work Pay credit | | | | your income taxes for the year. Any job where |
| is pretty simple. It's a refundable tax credit for 6.2 | | | | your income and other taxes are automatically |
| percent of your total earned income. A refundable | | | | withheld can potentially have cause the |
| tax credit is a credit that can exceed the cost of | | | | underreporting. The opposite applies to those who |
| your taxes and increase the size of your tax | | | | file their own taxes through self-employment and |
| refund, unlike a child tax credit which can't exceed | | | | the like: check your forms to make sure that |
| your total taxes for the year. The Making Work | | | | you're taking the Making Work Pay credit into |
| Pay credit is capped at $400 dollars for a single | | | | account. |
| payer and $800 for a married couple filing | | | | If you've received other stimulus aid (like the |
| together. | | | | $6500 Tax Credit for Homebuyers) over the |
| You'll generally qualify for this credit if you make | | | | course of the year you may not be eligible for |
| less than $75,000 in adjusted total income in a | | | | the Making Work Pay credit. The Making Work |
| given year. Joint households will qualify if they | | | | Pay credit also won't include any income not |
| make less than twice that, again using adjusted | | | | counted as taxable income, which can include |
| total income. Once you pass that threshold, the | | | | some retirement benefits or combat pay for |
| credit fades in proportion to how much more you | | | | those in the military. Check carefully as you don't |
| make than the $75,000/$150,000 mark. | | | | want to make a mistake when you are filing your |
| There are several other requirements necessary | | | | tax return that could cause an audit or require |
| to qualify for the Making Work Pay credit. You | | | | you to pay back taxes. |
| must have a social security number and have | | | | |