Paycheck Increase? Have your paychecks been looking a bit bigger lately? This is due to the Making Work Pay Credit, which is basically a $400 cut in payroll tax. The money is distributed in small increments of about $8 per paycheck, which is designed to encourage you to spend the money instead of save it (like you would be inclined to do if you recieved a check for $400.00). Well, cash is cash, right? Wrong! If you don't watch out, this "Tax Credit" can have you owing the IRS.
Smaller Refunds, or Owing More... The extra money comes with one small caveat. If you qualify for the Making Work Pay Credit, you may recieve a smaller refund, or no refund at all! Conversely, if you usually have to pay the IRS, you could end up paying more. Everyone needs to pay close attention to their withholding to make sure the proper amount is being withdrawn.
Those who should pay particular attention to their withholding include:
- Pensioners (see more information under Pensioners, below)
- Married couples with two incomes
- Individuals with multiple jobs
- Dependents
- Some Social Security recipients who work
- Workers without valid Social Security numbers
If you want to double check your withholding, use the IRS Withholding Calculator (http://www.irs.gov/individuals/article/0,,id=96196,00.html).Labels: Tax Refunds
