The Making Work Pay tax credit, part of the American Recovery and Reinvestment Act of 2009, will give a 6.2% earned income credit max $800 for a married couple filing jointly and $400 for singles and other taxpayers. If married couples filing jointly have a combined Adjusted Gross Income (AGI) of $150-190K or above, the credit is phased out, as it is for other taxpayers earning modified AGI between $75,000 and $95,000.
New withholding tables have been released by the IRS and for those in the Military, they will be implemented by April 1, 2009. The credit will be spread out over the year. Military members can expect to see a change in federal withholdings. Military members do not need to fill out a new W-4 to receive this tax credit.
If you have more than one job (such as a Reservist with a regular full-time job), you may want to review your W-4 forms to ensure enough withholding is held to cover the tax for the combined income.
The IRS also released new tables for computing the advance payment of earned income credit. These tables change the percentage formula to increase payments for some married military members. The new percentage formula was implemented in March 2009.
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