On February 21, 2009, the Internal Revenue Service released new withholding tables implementing the new Making Work Pay credit, one of the key tax provisions included in the American Recovery and Reinvestment Act of 2009.
The new withholding tables, along with other instructions related to the new tax law, will be incorporated in new Publication 15-T. This publication will be posted to this Web site next week and mailed to more than 9 million employers in mid-March. The IRS states that employers start using these new tables as soon as possible but not later than April 1.
Eligible workers will get the benefit of this change without any action on their part. Workers don’t need to fill out a new W-4 withholding form to get the Making Work Pay credit reflected in their take-home pay.
Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayer’s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers. Most workers will qualify for the maximum credit. 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