With the passage of the economic stimulus package recently there are a great deal of changes that will more than likely effect all taxpayers. One of the more important parts of the stimulus package is the Making Work Pay credit. In a nutshell the credit will increase the amount of an employees take home pay. There are income limitations however so higher income taxpayers may not apply. Typically an increase in an employee’s take home pay would be caused by a change in their withholding information (Form W-4). This credit ($400 for individuals and $800 for married couples filing jointly) can be claimed on the 2009 income tax return.
When Should a Taxpayer change their Withholding?
Taxpayers may want to update their withholdings if the following conditions apply:
• Taxpayer started a new job
• Taxpayer has self employment taxes and no estimated tax payments were calculated
• Taxpayer is employed and receives alimony
• Taxpayer is employed only part of the year
• Taxpayer held more than one job during the year.
Be sure to speak to your professional tax advisor regarding the stimulus tax changes, or withholding changes.
Taxes N Synergy