The Making Work Pay economic stimulus measure may boost the income of over 110 million American workers slightly this year. It may also cause a surprise for some taxpayers who discover that they need to adjust their withholding amounts, or owe at tax time. Liberty Tax Service encourages consumers to figure out exactly where they stand by using a new online Making Work Pay calculator located on its public website.
Taxpayers who have more than one job and families with two working spouses may be having too little withheld. Working dependents, pensioners who have earned income, and some employees receiving Social Security, SSI, Railroad Retirement or Veteran’s Disability payments may also be in this category, and find it beneficial to check their withholding amounts.
“With the Making Work Pay credit in effect through 2010, it’s a good time to check and possibly adjust the withholding amount from your paycheck to match your tax liability. You can adjust the withholding amount and the allowances you are claiming by filling out a new Form W-4 Employee’s Withholding Allowance Certificate and giving it to your employer,” said John Hewitt, CEO and founder of Liberty Tax Service.
Other life changes such as marriage and divorce, birth of a child, and changes in employment and income may mean too little or too much tax is being withheld. To increase withholding, decrease the number of allowances you claim on Form W-4. To decrease your withholding, increase the number of allowances that you claim on Form W-4. An employer should make the withholding changes within 30 days of receiving a revised Form W-4.
More about the Making Work Pay credit
The American Recovery and Reinvestment Act of 2009 ushered in the Making Work Pay credit as an economic stimulus for working taxpayers this year and in 2010. The credit was designed to give a refundable tax credit of up to $400 to working individuals and $800 for working married couples. Working Americans are benefitting by seeing slight increases on their paychecks because the withholding tables have changed. The credit applies in full for individuals whose modified adjusted gross income (MAGI) does not exceed $75,000, or $150,000 in the case of married couples filing jointly. The credit is phased out at a two percent rate above that limit.
Liberty Tax Service is the fastest growing retail tax preparation company in the industry’s history. The company plans to open up to 500 new offices in January 2010. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 7,000,000 individual income tax returns. With 41 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service (NYSE:JTX).
Liberty Tax Service provides computerized income tax preparation, electronic filing, refund loans and online filing through eSmart Tax. Each office offers customers audit assistance, a money back guarantee and free tax return checking. The Liberty Tax Service franchise opportunity has climbed to #3 on the latest Entrepreneur “Franchise 500.”
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