Get a few more dollars in your paycheck
This year, you might get a whole bunch of little stimulus checks. But they won't look like this.
As of April 1 the “Making Work Pay” tax credit is in effect for working Americans. You probably read or heard about this back when the economic stimulus package was the No. 1 topic among news media. Well, now it’s here, and you might start noticing a difference in your take-home pay.
How much more?
How much extra cash you will see depends on your marital status, salary and how many exemptions you take. The credit works by withholding slightly less from your paycheck now, unlike most tax credits, which appear in your tax refund. Single taxpayers will probably get about $10 to $15 per week.
Who will not get the credit?
Of course, this tax credit will only go out to those who need it, so people who make higher salaries will still have the same amount withheld from their checks. The stimulus measure is not meant for people who already have enough money. That would be like taking out payday loans for things you don’t need: a financially irresponsible idea.
For married couples filing jointly, you will only get the credit if your adjusted gross income is less than $150,000 annually. For single-filing workers, you will get the credit if your AGI is less than $75,000.
What do I have to do?
In order to get your “Making Work Pay” tax credit, follow these instructions closely: Do nothing. Well, OK, you do need to pick up your paycheck. But your money will automatically appear in your check without any effort from you. If you are like me, meaning you have direct deposit, you don’t have to do a thing. Just spend your extra dollars wisely.
What if I don’t have a job?
Look, ma! More coffee money!
Unfortunately, as you might surmise from the “Making Work Pay” moniker, this tax credit is only for working people in the United States. If you’re retired or on Social Security, you aren’t eligible for this credit. Likewise, this particular provision won’t increase your unemployment checks.
However, the stimulus package does include other types of help for unemployed Americans, such as extending benefits an additional five weeks.
Why make work pay?
The philosophy behind the “making work pay” tax credit is simple: try to get Americans to spend more money. It is similar in idea to the stimulus checks Bush issued last year, which gave workers $300-$600 in one lump sum.
That stimulus effort did not appear to have much effect. However, the Obama team is hoping that spreading out the money over several paychecks will make people less likely to stow it away in a savings account and more likely to spend the extra money on everyday items.
I like the idea of another tax rebate, but I still preferred the check in May to a few more bucks every pay period. It amounts to about an extra $20 every two weeks. So we’re supposed to fend off the recession and stimulate spending with beer money? Granted – if it must be done, it must be done.