Posts Tagged ‘Additional Contributions’

Measures to stimulate the economy through the Recovery and Reinvestment Act of the United States (American Recovery and Reinvestment Act) includes a temporary tax credit “Making Work Pay” for two years. The credit will provide workers the option to charge a little more during 2009 and 2010. Specifically, the tax credit will reduce the amount of federal tax withheld by employers from workers’ wages or who pay self-employment, allowing these workers receive a higher net salary.

To qualify, workers must earn an income from an employer or through self-employment. They must be U.S. citizens or resident alien with a valid Social Security number. Who are claimed as a dependent (ie, being a child, college student or elderly relative who lives in the same household) of a third party can not claim the tax credit.

Workers will receive a credit of 6.2% of their annual income up to $ 400 for single workers and up to $ 800 for married couples who file their income taxes jointly. However, the credit is phased out based on income limits. People earning between $ 75,000 and $ 95,000 will receive less back (down 2% of income above $ 75,000). Those earning $ 95,000 or more are not eligible to receive credit. Married couples filing who earn a combined income between $ 150,000 and $ 190,000 will earn a bit less (down 2% of income above $ 150,000) and those earning $ 190,000 or more will receive no credit.

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