"make work pay" credit

RatLabGuy

RatLabGuy

You look like a monkey and smell like one too
Joined
May 18, 2005
Location
Churchville, MD
So from what I understand, this new credit is showing up immediately in paychecks etc.
Everybody gets a smal reduction in tax, in the form of a credit, that is a reduction NOW in what you pay in taxes/have witheld from regular pay.
I'm just curious for whom this has kicked in yet.

this is NOT intended to become a political debate

Also - has anybody heard or read specific confirmation regarding who qualifies? The IRs page is pretty vague - sounds liek an extention of the Earned Income credit, for which many flks do not qualify.
Is it only for 'earned income"?
E.g. my income is technically a fellowship - taxable but not "for work" - so I'm suspicious I may be getting screwed on thsi one too.
 
if i didnt get the credit, i wouldnt feel like i was getting screwed. its 7 dollars a week.

Also, i have heard the phrase "the tables are changing but not the rates". apparently that means that all the money we are getting is our money to start with, and will be considered taxible income on 2009 taxes. We will be giving it back. The only problem is that the IRS is going to let us have a little bit at a time, they are going to want it back all at once.

The advice i have been hearing is adjust your fed withholding so that you are not getting anything more than you were before and it wont affect you in april of 2009.
 
I am 90% sure on this one, too lazy to look it up right at the moment.

Essentially it is a $400 credit per worker. It is against or a credit of FICA wages (6.2% being taken out)...

So if you pay Social Security (or "Self employment taxes") then you are getting the credit.

They are adjusting the tables to start giving that $400 in March/April. (For a 2 income couple that is $800 back)

Then what happens in on the tax return it will show the credit against tax, but since you already got the extra cash during the year your "refund" will be approx the same amount.

Example:

Assuming you normally get a $1,500 refund from Feds

You will start seeing $400 / 9 months = an extra $44.44 approx per month in your take home pay.

Then at the end of the year, your refund would have dropped to $1,100 since you withheld "less" each week.

But then the $400 credit is added back and wahlah, you are once again at your normal $1500 refund.

So...IF you pay SS tax you are getting this (Assuming you have more than $6500 in SS taxable wages)...but it is coming in bits and pieces instead of in a single chunk.

To me...most folks won't even notice it or have any idea, whereas if they got a check for $400 ($800) then they would actually get some immediate use.

Since my wife is disabled / not working, she would not get this, so again you must have wages to earn this. (I am sure there is an exception for older folks on SS, haven't checked it out)

Sam
 
SHINTON said:
...It is against or a credit of FICA wages (6.2% being taken out)...
So if you pay Social Security (or "Self employment taxes") then you are getting the credit.
...IF you pay SS tax you are getting this (Assuming you have more than $6500 in SS taxable wages)...

...Since my wife is disabled / not working, she would not get this, so again you must have wages to earn this. (I am sure there is an exception for older folks on SS, haven't checked it out)
Sam
Click to expand...

Thanks Sam.
So it does indeed sound like I will NOT be getting it then. My income is 1099-misc Box 3 "other income" as opposed to wages or self employment; rather, "fellowship". Taxable, but not considered wages or "earned income". Grrr. Don't have to pay FICA, but I'm finidng I get screwed in alot more ways by having this oddball classification.
However I assume my wife does qualify, she works part time W-2.
 
I just noticed my pending payroll deposit will be more than it used to be, almost inline with what Sam posted. I don't get my paystub til Friday, so I don't know which category is changing. I was happy to see it was a little bigger nonetheless :)
 
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