Making Work Pay Credit – What Is It and Can I Use It?
A popular credit people once had the last couple of tax seasons was the Making Work Pay Credit. It was slightly different in what most people associate with a tax credit and therefore some people have questions about it. In addition, many taxpayers are asking if it has been extended or whether it’ll return, but to date it is no longer available as it expired December 31, 2010.
The Making Work Pay Credit was replaced by the Payroll Tax Holiday and will not impact your tax return. The Payroll Tax Holiday gives you a tax benefit in the form of higher paychecks with the reduction in the amount of Social Security taxes(reduced by 2-percentage points) taken out of your paycheck.
I wanted to go ahead and ask some of the more popular questions to help tax filers get the most up to date information.
What is the Making Work Pay Credit?
The Making Work Pay credit was just one piece of the American Recovery and Reinvestment Act of 2009. What made it popular with tax fliers was that it was a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers (provided that filed jointly).
Tax credits are important because they directly reduce your tax liability. Most tax credits we’re familiar with, like the earned income tax credit or the lifetime learning credit taken as we file our taxes and meet the qualifications.
However with this credit, changes were made to the federal income tax withholding tables. Many workers saw this tax credit reflected as an increase in their paychecks through the year. (Self-employed workers could claim this credit when they filed their taxes.) It was meant to be a micro-stimulus for families as the United States government was hoping households would spend more.
Who Could Claim Making Work Pay Credit?
Like many tax credits, there are specific criteria that had to be met for tax filers to get this credit. The credit was not available for individuals who had a modified adjusted gross income that was $95,000 or higher and married couples (filing jointly) who had a modified adjusted gross income of $190,000 or higher. Those receiving the credit were also required to have a valid Social Security number.
Can I Get the Making Work Pay Credit for My 2011 Tax Filings?
No, it has expired. fortunately there other other options. While you can’t use the Making Work Pay Tax Credit, there are plenty of deductions and tax credits out there that can help you lower your tax burden and possibly increase your tax refunds.
The big benefit of using tax software and sites like TurboTax is easily finding which tax credits you qualify for without poring over all the updates from the IRS. You also have tax experts you can contact to get answers to your tax related questions.
Thoughts on Tax Credits
Even if you’re not a fan of filing taxes, it’s really to your advantage to make sure you try to get every tax credit you can qualify for when you file your taxes.