A component of The American Recovery and Reinvestment Act is the Making Work Pay tax credit.
This credit is designed to refund up to $400 to working individuals and up to $800 for married couples filing jointly. The credit is based on household income and is phased out for individuals with an adjusted gross income (AGI) of over $75,000, or families filing jointly with an AGI over $150,000.
Rather than being issued in a one-time check, the credit will be issued in the form of lower taxes deducted from employee paychecks through the remainder of 2009 and 2010.
The IRS has released new tax tables that will be effective by April 1, 2009. At that time, eligible employees will see less federal taxes deducted from their paychecks. FICA and state tax deductions (if applicable) will remain the same.
Nextep is updating our system with the new tax tables so that they will be in use by the April 1, 2009 deadline.