On February 17, 2009, the “American Recovery and Reinvestment Act of
2009” (ARRA) was signed into law. The centerpiece of this legislation
is the Making Work Pay credit, which is aimed at jump-starting the
American economy. Effective April 1, 2009, an income tax credit in the
amount of $400 for individuals and $800 for joint filers will be
distributed through reduced withholding from workers’ paychecks for
2009 and 2010.
The tax reduction is based on your W4 Status. Be aware that if you
are working another job with another employer or if filing married and
both spouses are employed, both employers will be applying the tax
savings. Thus, you may need to adjust your W4 to prevent being under
withheld. The tax savings begin to decrease for individual filers with
Adjusted Gross Incomes (AGI) between $75,000 and $95,000 and between
$150,000 and $190,000 for joint filers.
For more information regarding the AARA, click here or check out American Payroll.
Resources for calculating your withholdings and paycheck are available on Techworks under Payroll and Compensation.