Employers were required to start using new withholding tables by April 1 that affected some workers based on income.
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.
The tables, however, don't take into account situations like the following so if you find yourself in one of these categories you may want to revisit your withholdings and complete a new W4 form and change the amount withheld from your paycheck.
For example:
-A single worker with two jobs will get a $400 boost in take-home pay at each of them, for a total of $800. That worker, however, may only be eligible for a maximum credit of $400 (if income is too high and is phased-out), so the remaining $400 may have to be paid back at tax time - either through a smaller refund or a payment to the IRS.
- A married couple with a combined income under the phase-out amount is eligible for an $800 credit. However, if both spouses work and make too much, the new withholding tables may give them each a $600 boost (not $400) - for a total of $1,200, which may be too little withheld.
- A single college student with a part-time job may get a $400 boost in pay. However, if that student is claimed as a dependent on a parent's tax return, the student doesn't qualify for the credit and would have to repay it when filing next year.
Many people will not have to make any changes. More information at the IRS site:
http://www.irs.gov/newsroom/article/0,,id=204521,00.html
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.